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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 14   0   0   0   0   0
These days, Montreal is riding high—the city`s economy is surging and so is its real estate market—but that’s inevitably attracted interest from foreign buyers whom the mayor fears is driving unaffordability. Valerie Plante, elected mayor last year, wants to follow Vancouver and Toronto’s lead in implementing a foreign buyer tax.However, according to Carrie Law, CEO and director of, the largest website in China for international real estate, the proposed tax would actually harm Montreal’s renters who comprise two-thirds of the city’s households. “A foreign buyer tax would favour the one-third of Montreal households who are owners over the two-thirds who are renters,” she said.“That means two out of three care more about rents than prices.I do agree that buyers from China play an important, minority role in certain parts of the condo market.Most new condos bought as investments by foreign buyers will end up as rentals.The current condo boom could lead to foreign buyers financing lower rents for locals.It’s hard to understand why the government opposes the possibility of lower rents.Rents have a bigger impact on many more people than do prices.” As mortgage broker George Macris of Dominion Lending Centres Centre-Ouest in Montreal notes, the municipal government doesn’t have the power to instate a housing tax.Plante’s party, Projet Montreal, first called for a tax
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 14   0   0   0   0   0
Mounting development costs along with geographic limits are placing the Toronto condominium segment’s relative affordability at risk, according to a new market report by RE/MAX of Ontario-Atlantic Canada Region. Robust immigration and population growth have galvanized demand to the point where resale condos (along with townhouses) now represent almost 37% of total residential activity in the GTA, but this boon for the industry might also prove to be a double-edged sword. “The necessity to ‘build up’ has never been more prevalent in a city that has seen its population climb from one census to the next,” RE/MAX of Ontario-Atlantic Canada Region executive VP and regional director Christopher Alexander said. The onus is upon the regulatory side to remedy this ticking time bomb, he argued. “To prevent the run-up we’ve seen in housing values in the past, all levels of government must work together with developers to streamline the building process.We need to create more affordable GTA housing options that can accommodate buyers and renters at every price point,” Alexander explained. Read more:Rental demand to boost further apartment construction – CMHC[1] The market pressure is evident when one considers that the city’s condo apartments keep getting snapped up by hopeful home owners and investors alike, despite the average price increasing
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 14   0   0   0   0   0
While the Waterloo Region is still a relatively affordable haven especially when compared to red-hot Toronto, the near future of the market will primarily cater to the preferences of two major demographics:middle-aged buyers of second homes, and baby boomers (ages 55-74). “These two age cohorts represent great opportunity,” Canada Mortgage and Housing Corp.regional economist Ted Tsiakopoulos noted last week, as quoted by the Waterloo Region Record. The average home price in the region grew by 7.7% year-over-year in October to reach $489,725.This trend has made access to equity – something that a large proportion of younger would-be buyers simply won’t have at the time – a particularly powerful tool. Read more:Multiple offers slowing down in non-Toronto ON markets[1] What’s worse, a bevy of other factors including tighter mortgage rules and interest rate hikes would only make life even harder for the younger generation hoping to establish roots in the region. “First-time homebuyers aren't going to be in the driver’s seat,” Tsiakopoulos said.“This is a different market that we are heading into.” Updated numbers from the Kitchener-Waterloo Association of Realtors showed that affordability pressures pulled down year-to-date sales volume by 13% compared to the same time last year.   Related stories: Non-Toronto markets in Ontario
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 11, 2018 20   0   0   0   0   0
Canadian Real Estate Wealth’s Property Forecast issue will be out in December, and after this year’s real estate market turbulence, readers will breathe easier next year. The theme that will likely carry through the year is cautious optimism, as market fundamentals throughout the country will remain robust.Some provinces, however, will still face significant fiscal headwinds, while several key industries are running at full capacity, and that will taper growth.Prices aren’t expected to surge as they have in recent years past, but that doesn’t mean markets like Toronto and Vancouver won’t remain out of reach for a great many. This year could have been catastrophic for Canada’s real estate market, thanks to repeated government intervention dating back to 2017.Ontario had its Fair Housing Plan, B-20 made its impact immediately, and British Columbia’s NDP government seems determined lower the cost of housing by stymieing market activity as much as it possibly can.However, markets remained resilient, and in the case of Toronto, have trended upward since the beginning of summer. Heavily-leveraged investors relying on appreciation had a rough year, as did buyers hoping to wait out the market only to be torpedoed by stringent mortgage stress testing.Nevertheless, as 2018 draws to a close, investors in Canadian real estate markets still stand tall.While sales and average prices suffered a great deal,
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 11, 2018 11   0   0   0   0   0
Continued economic growth will drive Montreal’s housing upswing to 2020, according to the latest Housing Market Outlook report from the Canada Mortgage and Housing Corporation (CMHC). The report also forecasts that the Montreal construction boom will continue its growth, with new projects coming off the ground in the next few months. “In the condominium segment, construction will increase thanks to a steady demand supported by employment growth and also to significantly lower inventories of new and existing condominiums for sale,” said CMHC. CMHC also expects prices for property and rental rates to continue to rise, while supply is expected to steadily drop.“In 2018 and 2019, rental housing demand will increase slightly faster than supply, which will put some downward pressure on the vacancy rate,” said CMHC. “Demand will be supported by rising net migration over the forecast horizon, mainly as a result of the significant numbers of immigrants and non-permanent residents who will settle in Montreal.” “As for supply, many new units will be added to the rental housing stock from now until 2019, given the high levels of starts that have been observed for more than two years now.” “It’s a global city, a world-class city, that is continuing to come into its own,” Brad Henderson, CEO of Sotheby’s
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 11, 2018 11   0   0   0   0   0
According to survey conducted by Century 21, Greater Vancouver comes up on top as Canada’s most expensive metropolitan area to buy a home. Vancouver has eight neighbourhoods in Canada’s top ten most expensive areas in price per square foot, with its downtown coming in at first place at an average price of $1,345 per square foot. To collect this data, Century 21 asked its franchisees to track the average price per square foot in their local markets from January 1 to June 30 of each year.This information was then compared with past data to gather insights on pricing trends. “This year’s annual survey of prices per square foot underline that many Canadian markets are seeing fluctuating prices,” said Brian Rushton, executive vice-president at Century 21 Canada. “In several urban areas we saw prices decline in one suburb but increase in the neighbouring one.That trend has very likely only increased further since our cut-off for data earlier this summer.Now more than ever it is important to have good information when making real estate buying and selling decisions.” Downtown Vancouver and West Side Vancouver take the top two slots, with the average price per square foot of the latter neighbourhood at $1,147.Downtown Toronto and Montreal are the only neighbourhoods in the top ten
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 08, 2018 26   0   0   0   0   0
A report analysing the impact of augmented transportation on Greater Vancouver housing could help real estate investors find shrewd deals. Specifically, the report by the Real Estate Intelligence Network, uses a precise formula to determine where valuation increases lie. “The formula is fantastic because it’s an added layer of security for your investment,” said Jennifer Hunt, REIN’s vice president of research.“The transportation formula goes right down to the metre, so we’re largely looking at accessibility to highways, LRTs, the SkyTrain or some sort of commuter train, and that can increase value.Infrastructure affects different property types differently.For example, multi-family residential gets a bigger lift in rents and value than single-family homes closer to the SkyTrain, but all property types get a lift of about 15% in rent and value if they’re within around 800 metres of a SkyTrain.” The report uses peer-reviewed research, which Hunt says builds upon itself, from cities across the world and applied it to case studies. “If you want to know right down to when an announcement about major infrastructure development is made, you’ll see an increase, then a decrease during construction, and then there’s an overall net benefit when it’s complete,” she said.“By knowing this, you’ll know even when to purchase real estate around transportation.Not only that, but you’ll know which property
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 08, 2018 24   0   0   0   0   0
Ever-increasing prices in Canada’s hottest residential markets will trigger accelerated demand for rental space – in turn driving near-future growth in apartment construction, according to the Canada Mortgage and Housing Corporation. In its Fall 2018 Housing Market Outlook, the Crown corporation stated that this would be especially evident in Ontario and Atlantic Canada. “Single-family existing home sales and starts will post a partial recovery in 2019 as better than expected job growth and migration levels encourage buyers to re-enter the market before sales and starts ease further into 2020.” Preliminary housing starts data for October 2018 showed that multi-family dwellings were the main drivers of Toronto’s starts volume, which grew by 53% year-over-year. “Strong pre-construction sales of more affordable townhomes and condominium apartments over the past two years continue to lead to housing starts in 2018.” Read more:GTA rents continue surge[1] Meanwhile, activity in British Columbia is “anticipated to moderate as a result of slowing economic and population growth while MLS® average prices are anticipated to see a halt to growth as market conditions in parts of the province have softened considerably.” Indeed, the CMHC’s preliminary numbers indicated a massive 49% year-over-year decline in Vancouver’s starts last month.The single-detached sector took a major hit with a 19%
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 06, 2018 26   0   0   0   0   0
According to the Toronto Real Estate Board, the condo segment remains the market’s most desired and valuable asset class, having enjoyed an 8.6% year-over-year increase in average sales price last month (reaching $603,153). The TREB noted that this performance played a major role in pushing the composite benchmark price in the region up by 2.6% during the same time frame, while the average sale price grew by 3.5% to reach $807,340. Meanwhile, Toronto detached homes had their average price at $1.31 million in October.This level was at $914,179 in the rest of the GTA, altogether making this asset class simply unattainable for a majority of would-be buyers. Read more:Ontario’s condo values, taxes pressing upon this consumer segment[1] Sales activity did not slow down despite the increases, the TREB added.Total number of sales last month was 7,492, which was a 6% increase compared to last year. The number of active for-sale listings felt the bite of the sustained demand, falling by 2.7% annually to 14,431 new listings injected into the market in October. “Annual sales growth has outstripped annual growth in new listings for the last five months, underpinning the fact that listings supply remains an issue in the Greater Toronto Area,” TREB director of market analysis Jason Mercer
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 06, 2018 26   0   0   0   0   0
The latest edition of the Prime Global Cities Index by Knight Frank LLP revealed that Toronto ranked 2nd in terms of prime real estate growth across all of North America. The city’s luxury prices increased by 8.5% year-over-year in Q3 2018, according to the study that analyzed the top 5% most expensive properties in each market. This placed it behind only San Francisco’s 9.5% growth, and 7th place overall in the worldwide power rankings. Knight Frank’s analysis pointed at the Rosedale and Yorkville neighborhoods as the main drivers of the Toronto luxury market’s exceptional performance. Read more:Luxury condo segment continuously drawing in buyers[1] Another contributing factor is that the city’s most expensive condo units are only getting pricier, according to the  2018 RE/MAX Spotlight on Luxury Report. Toronto’s highest-priced condo sold for $11.5 million this year, a dramatic 44% increase from 2017’s $8 million.Luxury condo sales across the region also increased by 2% year-over-year.   Related stories: These are Toronto’s most appreciated and depreciated neighbourhoods Canada’s luxury property markets maintain strong performances[2][3]   Are you looking to invest in property?If you like, we can get one of our mortgage experts to tell you exactly how much
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 04, 2018 36   0   0   0   0   0
Investing in Energy Star-grade upgrades can yield investors higher returns. According to Corey McBurney, president of EnerQuality, which partnered with Natural Resource Canada to develop the Energy Star certification, smart technologies lower investors’ expenses. “It’s twofold,” said McBurney.“If you’re renting out to a tenant, the core value proposition is energy savings, so your monthly operating cost, if you own an apartment building or a single unit, comes down because the occupant enjoys the same level of comfort and temperature, yet the cost is reduced because you’re installing advanced measures, whether they’re lightbulbs or things around the actual construction of the building, like a big mechanic HVAC system.” The asset’s value will also appreciate down the road with Energy Star certification.A major reason, says McBurney, is because consumers are attentive about environmental concerns. “The resale value—and your monthly operating net—and an added brand bump of being a third-party certified government-backed building will make it a more attractive product down the road,” he said, adding there’s a huge market in the purpose-built rental sector for energy-saving buildings. “If you’re building purpose-built rentals, you’re holding property.The owners are keenly interest in, not just their one unit’s energy savings, but the building as a whole, and it’s important to that class of investor and developer, but it applies equally
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 04, 2018 38   0   0   0   0   0
Major cannabis producers and sellers are struggling to keep up with the enormous demand for the plant after it was legalized last month. Canadians’ craving for the herb was such that shortages have become all too apparent in the few short weeks after October 17. “The response has been pretty unbelievable,” Canopy Growth Corp.CEO Bruce Linton told Bloomberg.“I don’t think everything will run out but you might not be able to get the identical stuff you got last time.” The most notable supply-side issue is the sheer amount of time that sales licensing takes, which can take as much as a year. “We’re biting our nails and I think our shareholders are biting their nails too,” according to Anthony Durkacz, director at Ontario-based producer FSD Pharma Inc.“We want to be supplying.” FSD has acquired its cultivation license back in 2017, but it has yet to receive its sales license. Read more:Pot industry investors should take heed of this fact[1] The Ontario Cannabis Store reported that it has received 100,000 orders in just the first 24 hours of its operation, defying even the most optimistic projections. Meanwhile, Quebec’s online and in-store orders almost broke through 140,000 in the first week since legalization.Some locations might even get shut
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 01, 2018 40   0   0   0   0   0
According to a report released this week, private lenders funded 20% of mortgage refinances in the second quarter of this year, highlighting how profitable mortgage investment is becoming. The joint report between Teranet and Realosophy also revealed that private mortgages during Q2 2018 jumped 67% compared to the same period two years ago.While much of that can be attributed to new mortgage rules, says Laura Martin, COO of Matrix Mortgage Global and director of Private Lending Hub, there’s nary a reason for concern because the quality of private mortgage borrowers has improved dramatically over the last decade. “The mortgage default rate in Ontario in 2017 was 0.24%,” Martin told CREW.“The mortgage stress test of plus-2% on the contract rate, as mandated by OSFI [Office of the Superintendent of Financial Institutions], has meant a reduction of 20% in purchasing power.High net worth individuals typically have at least 30% of their investments in real estate holdings.They enjoy the liquidity of an investment that matures every year so that they can reinvest, as well as monthly cash flow that is secured on an inherent and tangible value from the real estate asset.” Private mortgage investors, according to Martin, make 8-10% returns on their investments, even with lower loan-to-value ratios. “The average private mortgage amount in the
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing April 17, 2018 1351   0   2   0   0   0
{JoomFuse FirstName} Real estate delivers better returns than the stock market[1] does, but modeling returns requires critical thinking and a lot of due diligence. The better our due diligence, the better our models, the greater the access to capital. What makes commercial real estate such a unique asset class is that every investment is different and our due diligence needs to adjust accordingly. When it comes to due diligence, information costs money and therefore must have a return on investment. In this article, I discuss the decisions that real estate investors face when it comes to physical due diligence—think environmental site assessments[2], property condition reports, BOMA surveys, ALTA surveys, seismic risk assessments, and the like—and how to wring the most return on investment out of the process. Who should direct the due diligence? A questions I often get asked is: should the seller do pre-disposition due diligence? For most transactions, the buyer performs due diligence assessments at their own expense. However, on large transactions where the broker expects the buyer pool to be large and competitive, I believe that the seller is well-served to provide a full due diligence package at listing. In this case it pays to proactively reveal any issues and hold the asset out for auction “naked to the world.” Because in a competitive bidding process, buyers will discount any imperfections and focus on key economics. With a large data room it is difficult for...
How to avoid renting to the tenant from hell
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing March 22, 2018 825   0   1   0   0   0
Nightmare tenants are afforded a lot of protection under Ontario law, even when they refuse to pay rent or move out, but, fortunately, steps can be taken to ensure your due diligence is foolproof. While asking potential tenants for references and credit reports, as well as having criminal background checks performed, is par for the course, they can be forged or otherwise circumvented, as one Toronto landlord recently found out. A tenant named Mike Lemke had documents forged and friends acting as references—he even enlisted a legitimate real estate sales agent, who happened to be his friend, to represent him—to move into a high-end Liberty Village condo rental.Having experience exploiting the system, he stopped paying rent and refused to move out. Steve Arruda, a sales agent with Century 21 Regal Realty, represented the landlord in that case and had the displeasure of dealing with Lemke.Upon moving into the condo in October 2016, Lemke’s metamorphosis into the tenant from hell didn’t take long. “He paid the first and last month’s rent, then he was there rent-free for six months,” said Arruda.“He’s one of those guys who knows the system and knows exactly how much time he has. “He was bragging about how he’d be there for six months and bragging about how he has rights, like the right not to pay rent. We went to the tribunal, but he’d always stall the hearings, make false accusations—it was just a big mess.It...
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