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REMAX forecasts Canadian markets in 2019

According to the REMAX 2019 Housing Market Outlook, the country’s average sale prices will get a 1.7% boost, an indication that the balance has finally returned to Canada.

The report notes that markets throughout the country stabilized this year after the 2017 aberration that saw prices in markets like Toronto’s surge beyond reasonable levels. Stabilization is expected to continue through 2019, a likely consequence of interest rate hikes that are believed will increase as the year goes on.

Thirty-one percent of REMAX survey respondents don’t believe interest rates have hitherto affected their ability to afford a mortgage, but that optimism doesn’t extend beyond December. Another REMAX survey of its brokers and agents revealed 83% expect interest rates to make Canadians’ home purchases cumbersome next year.

The report also expects sale prices in Vancouver to decline 3% in 2019 because obtaining a mortgage in the Metro region is becoming well-nigh impossible.

"The drop in sales in key markets across British Columbia can be partially attributed to Canadians' increasing difficulty in getting an affordable mortgage in the region," says Elton Ash, REMAX of Western Canada’s regional executive vice president. "The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market."

The Greater Toronto Area, on the other hand, is expected to fare better next year as REMAX predicts sale prices will rise 2%, thanks to high demand for homes priced below $1 million. Demand will be weaker for homes above $1.5m, though. According to Christopher Alexander, REMAX’s vice president and regional director for Ontario-Atlantic Region, looming rate hikes might be spurring the restraint.

“People are a little more cautious than they were in the past because interest rates are starting to rise,” he said. “Government said it would be more aggressive with interest rates and people are waiting to see how it will all shake out.”

Alexander added that Toronto remains a popular destination, which should balance out weaknesses in its market.

“It’s not surprising [November sales in the GTA] were down year-over-year, but because Toronto is such a big destination, both domestically and globally, there will be good pockets of the city that balance everything gout.”

by Neil Sharma12 Dec 2018 | www.canadianrealestatemagazine.ca

After a relatively sedate 2018, Toronto is heating up again

After exhibiting relatively modest performance for most of 2018 with the advent of stricter mortgage qualification rules, Toronto is seeing a resurgence in market competition once again.

The latest numbers from the city’s real estate professionals’ association indicated that the total number of active for-sale listings in the GTA saw a 9.8% year-over-year decrease in November, down to 16,420 units.

During the same time frame, the volume of new for-sale listings in the region shrank by 26.1%.

“New listings were actually down more than sales on a year-over-year basis in November,” TREB President Garry Bhaura said, as quoted by Bloomberg.

Read more: Toronto apartment inventory having trouble catching up with demand

“This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” Bhaura added.

Average home sales price last month was $788,345, growing by 3.5% from the same time last year.

Meanwhile, total sales in November stood at at 6,251 completed deals, representing a 14.5% annual decline.

TREB stressed, however, that any year-over-year comparison should take into account that November 2017’s performance is “distorted” due to a large number of buyers rushing to beat the implementation of B-20 in January 2018.

www.canadianrealestatemagazine.ca
by Ephraim Vecina07 Dec 2018

Mortgage stress test could become election issue

The Conservative Party of Canada plans to make the mortgage stress test a hot button issue in time for next year’s election, but explaining such a convoluted issue to Canadians could pose a challenge.

The party’s Deputy Shadow Minister for Finance tabled two motions this year to study the impact of the stress test, known as B-20, but they were both rejected by the Liberals. Nevertheless, MP Tom Kmiec has vowed to put the mortgage stress test on the agenda in time for the Oct. 2019 federal election.

“It will be an election issue, absolutely,” said Kmiec. “I’m willing to use procedural tools to get this study done. I’m not necessarily saying to get rid of B-20 completely; I’m saying take a look at the data and then make a decision on it. I’m asking the Liberals to provide any internal documents they have showing why the mortgage rules were introduced in the first place.”

Kmiec has started a website to pressure the Liberals into studying B-20’s effects. He claims that he was initially told B-20 wouldn’t be examined in the absence of more data, however, much has since come to light about Canadians being shut out of the housing market.

Kmiec is dogged, to be sure. He participated in the electoral reform committee’s filibuster.

“If it comes down to it, I’m happy to use up every two-hour time limit on every single committee until we agree to do a mortgage study,” said Kmiec. “I’m not asking for the moon, either. All I want are a few meetings in Ottawa where we can invite people with data who can then tell us what’s happening with the market.”

But communicating the message will doubtless be challenging for the Conservatives. Ron Butler of Butler Mortgage can attest to how difficult buying homes has become this year, but too few Canadians have born that brunt for the impact to truly be understood.

However, given that mortgage renewals are subject to the same stringent B-20 qualification rules, Butler believes it is still possible to make Canadians understand how detrimental the stress test is.

“It won’t be hot button, but if it’s messaged right, it could be,” he said. “If it’s presented properly as a group of themes about the incompetence, in terms of the ability to handle the file—why has Mexico settled NAFTA already and Canada hasn’t? Why did we buy a pipeline that got shut down? It’s a good thing to add to the general list of incompetence. On its own, it isn’t a hot button issue, but if you want to weave it into a tapestry of every day, practical fiscal management, it could work.”

 

by Neil Sharma01 Oct 2018, www.canadianrealestatemagazine.ca

Commercial sales volumes down – except in multi-family market

Multi-family assets continue to be crowd favourite among investors, while sales in office and industrial properties slow due to limited supply

 

Sales volumes in nearly every commercial real estate sectors have declined in the second quarter of 2018 – though not for a lack of demand, according to a new report. 

The growing disconnect between supply and demand in Canadian real estate has lead to a decrease in sales velocity and an acceleration of lease rates, according to research by the Morguard Corporation

"A drop in transaction volume in the second quarter is very much a function of low product availability rather than a drop in demand," said Keith Reading, director of research at Morguard. "With quality office and industrial space at a premium, apartments are a crowd favourite as investors search for yield."

Office sales have dropped nearly 50 per cent across Canada year-over-year, while industrial volume has plunged 17.8 per cent. Meanwhile, multi-family sales increased 17.5 per cent.

Average sale prices for multi-family properties also increased year-over-year, from $8.5 million in the first half of 2017 to $13 million during the same period of 2018. 

Morguard expects investor sentiment in residential rental properties to remain strong into next term. 

 


 

 Tanya Commisso | Western Investor | July 18, 2018

Zoning could be key to funding downtown relief line

Toronto’s downtown relief subway line—should the political will needed to build it ever materialize—could partly fund itself, to say nothing of the skyrocketing valuations that will result.

According to Andy Manahan, executive director of the Residential and Civil Construction Alliance of Ontario, the municipal government can use zoning as a bargaining chip with developers to pay for the proposed network expansion by negotiating additional storeys.

 

“If a building is only zoned for five storeys but the developer is given 20 storeys, that extra 15 storeys is worth a lot of money and developers would be willing to pay it,”said Manahan. “If we build a relief line, we have to place more density at the station so that there’s more land value capture. If you do that link between land use and transit, you can do some creative financing in the long-run as well, and get some more developers on board.”

Many existing TTC subway stations were created as architectural monuments rather than into the sides of buildings, which is what would adequately succour density.  And if the mere rumour of below-grade infrastructure is enough to cause property values to rise, imagine what a unit 25 storeys above a subway platform would be worth.

“Typically, once an announcement is made about where the line will go, property values do increase, so the trick is how we ensure we can capture some of that increase in value,” continued Manahan.

However, more is at stake than optimizing real estate values. Toronto’s current subway network is overcapacity and its platforms dangerously brim with people. Given how many skyscrapers will continue sprouting downtown, not to mention the already low office vacancy rate, Manahan warns that the network’s capacity troubles are worsening.

“We have a lot of growth in the downtown core, and it’s not just residential,” he said. “There’s about 5.7mln square feet that will be added to the downtown office segment by 2020.”

Davelle Morrison of Bosley Real Estate echoed Manahan: “Right now, without further additional building of office space downtown, we already know we need the relief line. If you add more people working downtown and more people living downtown, because immigration numbers are high and more and more people are moving to Toronto in particular, it’s a no-brainer to me about why you would need the downtown relief line. It’s already needed, but 10, 15 years from now, it’s going to be needed even more.”

The RCCAO has been an outspoken proponent of the downtown relief line, taking out full-page newspaper ads and even launching a Twitter campaign called #GimmeRelief.

The earliest the downtown relief line could complete is 2031, however, there’s no official plan to build it. In fact, it’s as much of a pipe dream today as it was a decade ago—and making matters more frustrating for commuters, the Scarborough subway line has been given priority.

Backwards thinking, says Manahan, because sequencing is important and dictates building the network outward rather than inward, where support infrastructure is presently non-existent.

But he takes solace in Ontario’s political parties acknowledgment that the downtown relief line needs to be built.

“Over the last 50 years, the relief line is talked about occasionally and never gets built. It’s an important project and recognized by all four provincial parties. After June 7, no matter which party is in power, they will have to continue.”

by Neil Sharma30 May 2018 | Canadian RealEstate Wealth

Unlikely Canadian city attracting foreign buyers

Ottawa is experiencing a rental shortage, and savvy foreign investors are swooping in.

“There’s a shortage of inventory in the rental market here, so there’s a need for rental properties,” said Chris Lacharity, a sales representative with Marilyn Wilson Dream Properties, which deals in the luxury market. “An astute buyer knows that. There are a lot of foreign buyers who buy for personal use, but there’s a lot of investment, too.”

 

The nation’s capital is situated between Toronto and Montreal—two cities with significant foreign buyer activity—so the presence of non-resident investors shouldn’t come as much of a surprise.

“Ottawa is growing faster than it ever has, but there’s still growth potential,” said Lacharity. “It has a ways to go, in terms of growth, but it’s also a capital city, a government city. It has rivers and lakes, and it’s aesthetically pleasing. If you have a family, it’s safe and hasn’t experienced all the issues that come with large metropolises. It’s also close to Montreal and Toronto.”

Montreal has arguably the hottest real estate market in Canada right now. Government initiatives brought in to cool skyrocketing housing prices in Vancouver and Toronto are believed to be responsible for that. But Ottawa is another city in the midst of a renaissance. In addition to an LRT project, it has a thriving tech sector, robust student population, and well-paying government jobs.

It is also very stable—and given investors’ distaste for volatility, that’s perfect.

“Real estate doesn’t just shoot up, it conservatively rises here 3-5% on average,” said Lacharity, adding foreign buyers park money in the city’s real estate. “It’s a pretty safe bet for that.”

Bernadette Deschenes of Your Choice Realty notes overheating in Toronto and Vancouver are catalysts for foreign buyer activity in Canada’s capital city. But the city’s two universities have also impelled foreign buyers into action.

“They buy more student residences, like condos or townhomes,” said Deschenes. “Most of our foreign buyers are buying for their children who are attending university. We have a huge student population in this city. There’s a fair bit of older brownstone that’s near Ottawa U in the Sandy Hill region.”

by Neil Sharma09 May 2018 | www.canadianrealestatemagazine.ca

Vancouver usurped as 'Canada's craziest property market'

Benchmark property prices in Whistler, the ski town two hours north, have now surpassed those in the Pacific Coast city. Businesses are buying million-dollar properties to house employees as living costs drive out workers. The cost of visiting has also spiraled, with overnight rates during the winter peak topping anywhere else in the nation.

Phil Bonham, a 31-year-old ski patroller, has been living out of a 1984 Dodge camper van for four years, unable to afford the surging cost of housing.

Styrofoam cutouts are wedged into his windows to keep out the chill during cold snaps, when temperatures can plummet to minus 25 degrees Celsius (-15 Fahrenheit). He doesn’t bother with the propane-fired refrigerator in the tiny kitchen between the driver’s seat and bed -- nothing thaws anyway in winter, and he eats fruits and vegetables immediately before they freeze.

The small wood-burning stove in the back corner is the “hippie killer,” a reference to stoves like this that have been known to asphyxiate people in their sleep as they try to stay warm. The winter before last, he found himself lying under the van during a snow storm rebuilding pieces of the engine -- “a bit of a low point,” as he describes it. But that’s what a take-home wage of about C$2,800 ($2,180) a month after taxes buys in Whistler.

“I only expected to do it for a season,” Bonham said in an interview in a parking lot near the ski slopes, where he identified at least seven other vehicles being used as full-time residences. “Without getting a second job or a girlfriend, there’s no way I could afford a room to myself. And I make a decent wage in comparison to many other jobs in Whistler.”

Vancouver has made global headlines in recent years, consistently ranking among the top 10 major cities worldwide most at risk of a housing bubble. Last year, Toronto took the top spot giving Canada the ignominious distinction of being the only country with two cities to make the cut in UBS Group AG’s annual list. Yet price price gains in Whistler have outpaced both cities.

“We think housing is the single most important issue we are facing as a community,” Marc Riddell, a spokesman for Whistler Blackcomb, owned by Vail Resorts Inc. and the area’s biggest employer, said in an email.

With a permanent population of fewer than 12,000 residents, there are more than 1,300 applicants on wait lists to either rent or buy homes at below-market rates in a residents-only pool managed by the Whistler Housing Authority. The agency aims to provide housing for at least 75 percent of the town’s employees -- a target that “will be very challenging to continue to meet,” according to a December assessment.

Four-Season Destination

It’s the dark underbelly of Whistler’s soaring popularity. Its transition from a skiing mecca into a four-season destination for golfers, hikers and bikers means the pressure for accommodation from seasonal workers and tourists no longer eases when the snow melts. “We’re as busy now in the summer as in the winter,” said Mark Lamming, owner of Purebread, a bakery with two locations in Whistler.

Mayor Nancy Wilhelm-Morden has a task force dedicated solely to resident housing that’s sought to explain the massive run up. Young families have migrated in to fill year-round jobs, but there aren’t enough homes to accommodate them. Suites that once housed local tenants are being replaced by lavish, sparsely used vacation chalets. Online home-share websites have made it easier for owners to illegally rent properties intended for residents to higher-paying tourists.

Restrictive Zoning

Much of the supply-side woes are also self-imposed. Canada’s first resort municipality, Whistler was purpose-built in the 1980s in the image of a pedestrian-free Swiss alpine village, and restrictive zoning and land-use rules to prevent over-development also choke supply. Meanwhile, a byzantine web of rules dictate how residences can be used in the broader community.

In October, the benchmark price of a townhouse in Whistler surpassed C$1 million for the first time. Vancouver is a steal in comparison -- only C$835,000. A detached house in Whistler is now C$1.67 million, 4 percent costlier than in Vancouver.

The rental market is more mind-boggling. One recent listing sought two female tenants for a single room in a shared house: the price was C$780 -- each -- to share a double bed. Many renters spend more than 50 percent of their income on housing. Mayor Wilhelm-Morden, incensed by landlords raking in cash from illegal short-term rentals, has imposed a C$1,000-a-day fine for violators, saying Whistler won’t tolerate “employees shoved out the back door” to make way for tourists.

‘Absolute Gong Show’

“It’s an absolute gong show,” said Russell Kling, a former hedge fund manager turned developer, whose Pangea Pod Hotel is set to open this summer aimed at delivering more affordable tourist accommodation. Whistler was the most expensive place in Canada to spend New Year’s Eve -- C$745 for a double room compared to C$414 in second-place Quebec City.

“People told us, ‘Your biggest issue will be accommodation -- if your staff can’t find accommodation, it doesn’t matter how much you pay them,’” recounts Kling, whose co-founder is his wife, Jelena. “So we took that risk off the table and purchased a home.”

The seven-bedroom residence cost “close to a couple million dollars” and will house the hotel’s general manager and a handful of key employees. The Klings even looked at buying a second staff property. “But so much of this stuff now -- forget about buying, I wouldn’t want to put my worst enemy there,” he said.

They’re not alone. Scandinave Spa, a 20,000-square-foot thermal bath facility, built five housing units on site when it opened in 2010, bought an additional staff property in nearby Cheakamus, and helps arrange rentals for employees. Vail houses 31 percent of its workforce and is considering investing in developments for employee accommodation.

Read more about local reaction to Vail’s takeover of Whistler’s ski resort

One in three businesses were unable to find enough staff last year, according to the housing authority. The town council has committed to adding 1,000 new resident beds by 2023 though one local developer says that’s less than half what’s needed. It’s loosening zoning rules to allow some neighborhoods to densify and releasing part of its land to build more affordable housing. It plans to require commercial and tourist developers to either construct affordable employee housing as part of their projects or pay cash-in-lieu.

For some it’s too late. Cathy Zeglinski, a family doctor, closed her Whistler practice last September, saying the young residents who once comprised the backbone of her clinic can no longer afford to live in Whistler.

“We’re earning Canadian dollars, but the people coming in aren’t tied to the local economy -- we can’t compete,” she said. “Whistler was once a very special place but with real estate prices stratospheric, there’s no place left for locals.”

 

Copyright Bloomberg News

 

by Bloomberg30 Apr 2018 | by Natalie Obiko Pearson - www.canadianrealestatemagazine.ca

Richmond Centre redevelopment not subject to usual rules

The pre-zoned site isn't beholden to the usual development demands made by municipalities

Richmond Centre sits on a pre-zoned site and as such its massive redevelopment will not be subject to the usual demands made by municipalities to ensure developers and new residents have contributed fairly to the community's growth.

“This is not normal. It’s very unusual because it was pre-zoned in the 1980s,” explained Coun. Linda McPhail, chair of city council’s planning committee.

The Richmond Centre South Redevelopment Plan will add about 2,000 new dwellings in roughly a dozen new towers between No. 3 Road and Minoru Boulevard. The old, brick Sears building and mall parkade will be demolished, as will the southern-most parking lots. Park Road will be extended through the development, which will neighbour Richmond City Hall alongside a new east-west road.

“The City's ability to secure community amenities, such as affordable housing, is severely compromised because Council does not have the discretionary power of a rezoning application,” notes a staff report to city council.

However, despite the pre-zoning — which is somewhat of a question mark to McPhail, as its roots are not explained in a staff report to council — the site will be subject to amendments to the City Centre Area Plan and, as such, city planners are nevertheless able to negotiate some community amenity contributions from developer GBL Architects, which has several projects on the go in Richmond.

For example, according to the report, GBL Architects proposes “approximately 150 dwellings for low-income, workforce households (e.g., retail sales employees, teachers nurses, etc.) in two purpose-built rental buildings suitable for operation by non-profit housing providers.”

This, however, represents only five per cent of dwelling space, not the 10 per cent now required (as of July 2017) under a rezoning application of similar magnitude. Considering nothing was required initially, McPhail called the contribution “significant.”

These rent-fixed-to-income dwellings will be made possible by the city lowering costly parking space requirements, from 1.5 spaces per dwelling to one space per dwelling.

Typically, for social aspects, city planners promote mixing such housing with market dwellings, but they appear to be separated here as part of the negotiations.

The development proposes 50 per cent “family-friendly” housing, meaning half the dwellings will be two or more bedrooms. Because a pre-zoned development does not require consultation with the Richmond School District, the application will only be forwarded to the Board of Education as a courtesy.

 

richmond-centre.jpg

Nearby City Centre schools are already bursting at the seams and there are no plans yet announced by the district and Ministry of Education as to how to accommodate such growth.

Schools are paid for through general tax revenue and modest contributions from new developments. A high density development, such as this one, is charged a “school acquisition rate” of $463 per unit. With 2,000 new units that is close to one million dollars for the district, which has admittedly struggled to parlay the 2013 $41 million sale of Steveston High into a City Centre school, as intended.

“Population is increasing at a rate faster than we thought,” said McPhail.

“This is something that came up in planning. You think, with about 2,000 units, how many more children will there be?” asked McPhail, a former school trustee herself.

 

Around a dozen residential towers with 2,000 new homes will be built under the Richmond Centre redevelopment plan.

Around a dozen residential towers with 2,000 new homes will be built under the Richmond Centre redevelopment plan.


Graeme Wood Vancouver CourierApril 12, 2018