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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 09, 2019 173 0 0 0 0 0
Amid cooler market conditions in Canada, the UK-based Grosvenor Group has posted better-than-expected revenue in 2018, according to the firm’s latest earnings report. With Canada offices situated in Calgary and Vancouver, Grosvenor develops, manages, and invests in primarily retail, office, and residential property in more than 60 cities worldwide. The privately-owned property business saw its total Canadian return for last year more than double to 5.5%, from the 2.7% performance in 2017. Grosvenor noted that this level – which was the firm’s third strongest Canadian performance to date – came about in spite of sluggish activity in the West Coast. Among the company’s highlights was its Grosvenor Ambleside project in Vancouver. “2018 saw the completion of the first phase of Grosvenor Ambleside, our landmark mixed-use development that has revitalised a beloved but underused neighbourhood in West Vancouver,” the firm’s report stated. “As well as high-quality residences, we have created a vibrant public plaza with restaurants, shops and public art.” Such large-scale developments in Vancouver helped boost the national housing starts trend to 206,103 units in April, the Canada Mortgage and Housing Corporation reported in its latest study. The city’s multi-family starts went up by 3% annually, helping offset the 2% decline in starts across all housing types.
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 09, 2019 170 0 0 0 0 0
The median sizes of new condos in Vancouver and Toronto have been on a significant downward trajectory over the last few years, according to a Better Dwelling analysis of assessments and floor area numbers from Statistics Canada. Newly built units in Vancouver are approximately 16% smaller than the city’s peak condo size, which was seen between 1971 and 1991.A unit dating from 2016 to 2017 measured 769 square feet on average, around 3.6% smaller than a unit built between 2011 and 2015. The decrease was even more dramatic in Toronto – an unexpected result considering the prevalence of tiny units in Vancouver, Better Dwelling stated. Toronto’s newest condos are nearly a full 40% smaller than the market’s peak condo size seen in 1990.The average-sized unit in 2016 and 2017 was 647 sq.ft., a floor area 5% lower than that in a condo built from 2011 to 2015. “Toronto condos had a median size of 1,070 sq ft.from 1981 to 1990, 16.81% larger than Vancouver during the same period.Worth remembering that Toronto is both ‘cheaper’ and less densely populated than Vancouver,” the analysis added. Assessed condo unit values in these markets also considerably exceed those of other housing types, separate figures from Statistics Canada indicated. “The gap between
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 07, 2019 186 0 0 0 0 0
Long-term residential leases aren’t popular in North America like they are in other parts of the world, but a Vancouver-based company endeavours to change that. With Eventide, Deecorp Properties is offering a three-unit luxury boutique condominium on the sunniest part of the downtown peninsula.The kicker:Chosen residents will be living there on a 30-year lease. “There are quite a few advantages,” said Stanley Dee, Deecorp’s president and CEO. “There’s no transfer tax if ever someone wants to move, but there’s also less cash outlay, meaning we’re in a situation where we can rent on an annual basis or it can be prepaid for 30 years.They pay slightly under half of the value, which is essentially the freehold value on a 30-year prepaid lease.” The British Columbia government recently introduced a few regulatory measures to curb rapid price escalation in Vancouver, Canada’s third-largest, yet most expensive, city.But where there’s no purchase, there’s no tax, says Dee. “It helps avoid the vacancy tax and the foreign buyer tax,” he said, “because there’s no purchase;just a lease.In Canada, if you’re 30 years or less there’s no transfer tax, which starts at 2% and goes up to 5%, so that would be $500,000 on a $10 million home.” Dee stresses that the 30-year lease wasn’t conjured in a
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 07, 2019 176 0 0 0 0 0
Of the Greater Toronto Area’s residential property types, detached homes magnetized the strongest demand in the market last month, according to updated numbers from the Toronto Real Estate Board. Sales volume in the asset class grew by a significant 21.9% annually, markedly above the average sales growth (16.8% year-over-year for a total of 9,042 transactions) across all housing types. Price growth considerably lagged behind, however, with only a 1.9% annual gain to reach $820,148.Much of the weakness stemmed from the inhibiting influence of B-20’s mortgage stress tests, TREB stated “While sales were up year-over-year in April, it is important to note that they remain well below April levels for much of the past decade,” TREB chief market analyst Jason Mercer explained, as quoted by BNN Bloomberg. “Many potential homebuyers arguably remain on the sidelines as they reassess their options in light of the OSFI-mandated two percentage point stress test on mortgages.” Ontario Real Estate Association CEO Tim Hudak said early last week that the federal government should now consider a sharp about-face from the policy, warning that it has already done damage “beyond what many thought was the worst case.” Despite the boost provided by a healthy economic engine, there were 11% fewer housing resales natonwide in 2018 compared to
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 07, 2019 162 0 0 0 0 0
Weak demand continues to pull down the Vancouver housing market’s sales volume, according to new figures from the Real Estate Board of Greater Vancouver (REBGV). Overall transactions declined by 29.1% annually in April, down to 1,829 sales.This is despite a gain of 5.9% from the 1,727 deals in March. The region’s inventory saw the addition of 5,742 new for-sale listings last month, up by 16% from the 4,949 new listings in March. Overall supply in Greater Vancouver was 14,357 homes for sale, around 46% greater than the supply seen on April 2018. “There are more homes for sale in our market today than we’ve seen since October 2014,” REBGV president Ashley Smith said, as quoted by BNN Bloomberg. “This trend is more about reduced demand than increased supply.” The REBGV pointed at B-20, especially the mandated stress testing, as the main factor behind the region’s feeble activity. “Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand,” Smith noted. “The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20%, which is causing people at the entry-level side of the market to struggle to secure financing.” In its recent report, Zoocasa
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 05, 2019 191 0 0 0 0 0
With disastrous flooding becoming an annual event in parts of Canada, waterproofing properties is imperative. While some flood damage is well-nigh impossible to prevent—as residents in Montreal, Ottawa and Bracebridge have sadly learned—some precautions can avert minor flooding from metastasizing into an astronomical remediation bill. Lee Strauss, owner of Strauss Investments, had the basement of an unoccupied investment property flood years back while he was out of town.By the time he returned, water had been flooding into the basement for five days, and with his insurance company reticent to step in, he rented a dump truck and paid the cost of remediation to prevent any further damage lest more mould accumulate. He eventually received his claim but because the property wasn’t tenanted, the insurance didn’t cover lost rental income. “The whole remediation process took about six months, and with rent averaging about $1,800 a month, do the math,” said Strauss. A property can flood for different reasons, including because of water lines running below old homes. “The metals have had time to rot and decay, and one day they give in because they’re always under pressure and it can pool beneath the basement floor, then rise,” said Strauss.“One of the easiest ways to alleviate it before it even happens
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 05, 2019 180 0 0 0 0 0
Initially meant as a strong policy intervention against red-hot home price growth in Canada’s most in-demand markets, B-20 was responsible for around 40,000 fewer transactions across the country (on a year-over-year basis) during Q4 2018, according to Toronto-Dominion economists. In a client note last week, the bank said that the impact of the stress testing has been far more enduring and extensive than anticipated – echoing recent sentiments by Ontario Real Estate Association CEO Tim Hudak. Hudak stated that B-20 has had a market impact “beyond what many thought was the worst case,” with resale activity declining by 11% annually in 2018, the first year of the policy’s implementation. “Not only are many people unable to become home owners at all;others can’t upgrade as their families grow, which in turn means they aren’t selling their starter homes to people trying to buy for the first time,” Hudak wrote in a piece for Financial Post. TD Bank economists Rishi Sondhi, Ksenia Bushmeneva, and Derek Burleton argued that immediately rescinding B-20 would noticeably increase Canadian home prices by around 6%, which will be on top of the bank’s 4% growth forecast, by the end of next year. Considering the situation, the federal government should certainly begin looking at a more relaxed approach from
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 02, 2019 207 0 0 0 0 0
The Ontario provincial government introduced measures yesterday to reduce the cost of building housing in a bid to increase supply. In particular, it hopes to catalyze the development of missing middle housing. “The missing middle is critical,” said Richard Lyall, president of the Residential Construction Council of Ontario.“We’re building lots of towers, but not enough medium- and lower-density housing.If you go to other cities in the world, they have large towers but they also have missing middle housing.It’s difficult to do here because, as the government said in its announcement, it takes 10 years to get projects done, and carrying a project through that length of time is expensive, therefore, builders will choose to build 40 or 50 storeys instead of 10 or 20.” Additionally, development charges for secondary suites, like basements or laneway housing, is being scrapped, and development charges, parkland fees and Section 37 will be rolled into one formula so that there’s more predictability with final costs. The province will also defer charges on rental and not-for-profit housing for five years, although municipalities can still charge interest. “Our industry talks about needing certainty around costs to get personal rentals built, and if we can have greater certainty with a formula used to determine what the cost will be, that’s
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 02, 2019 270 0 0 0 0 0
B.C.’s home affordability crisis is forcing more and more of the province’s young women into starting their families later in life, according to a recent survey by the University of Calgary. “This is the province where hard work pays off the least for younger people in their prime childbearing years,” UBC professor and affordable housing advocate Paul Kershaw told CBC News. The study found that the total number of mothers age 35-39 in the province has increased by 60% between 2000 and 2017. B.C.’s mothers in the 40-44 age bracket have also doubled during the same time frame. The trend has had a tangible impact in B.C.’s average age of first birth, which is now at 31.6 according to Statistics Canada.This is markedly higher than the 29.2 average nationally. Kershaw added that compared to a generation ago, full-time incomes among B.C.’s working professionals fell the most nationwide.This drastic decline came as the province experienced the largest increase in housing prices during the same period. In a new analysis, Zoocasa said that an individual or household needs to earn at least $205,475 to be able to purchase a Vancouver home at the benchmark price ($1,441,000), assuming a 20% down payment at a 3.75% mortgage rate on a 30-year term.
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 02, 2019 328 0 0 0 0 0
Immigrants, mostly young individuals and households, will account for a significant portion of renewed housing demand in Canada’s largest cities, according to RBC Economic Research. The millennial influx will be especially important in light of the increasingly important role that the tech industry is plating in Canadian real estate.Considering the nation’s status as a world leader in innovation, a significant portion of the demographic is expected to work in the technology sector. In 2018 alone, approximately 28,200 net non-permanent residents (mostly students and temporary workers) originated from overseas, and 3,800 net migrants moved from other parts of the country to Canada’s most active metropolitan markets. “In total, Canada’s three largest cities saw a net inflow of 108,400 millennials from other countries and provinces last year.So for every net millennial lost to other cities in the same province, Vancouver, Toronto and Montreal collectively gained roughly eight net millennials from abroad or other parts of the country,” RBC stated in a recent study. The analysis added that this inward movement more than offsets any market weakness, and even actually improves overall purchasing power due to the growing number of high-earning tech professionals. “In recent years, [the largest cities] welcomed approximately half of all new immigrants aged 20-34.We don’t see this share really weakening in the
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   April 30, 2019 358 0 0 0 0 0
Canadians exchanging their money into U.S.dollars are at a decided disadvantage, but an RBC Bank financing plan will alleviate that problem for Canadians looking for investment properties and second homes south of the border. At the current exchange rate, should a Canadian buy a $400,000 (USD) property in Florida’s white-hot, yet affordable, real estate market in cash, they will end up paying $528,000 (CAD).However, using RBC Bank’s real estate lending solution, they’d only need to put down $90,000 (USD), which is the 20% down payment, and have to pay $118,800 at closing.If it’s an investment property, they will put 25% down. Using a 30-year amortization on a five-year term at 3.75%, diligent investors can hedge their bets on the Canadian and American dollars returning to parity, and considering that the RBC Bank financing plan doesn’t have a prepayment penalty, they can easily repay the loan. “If they finance 80% of the U.S.mortgage, they don’t have to exchange the full amount and they can save $100,000 (CAD) on a $400,000 (USD) purchase,” said Alain Forget, RBC Bank’s director of business development in the U.S.“There’s no prepayment penalty during the term of the loan, so they can repay it at any time, and it gives them the full flexibility of using some leverage and financing for their
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   April 30, 2019 373 0 0 0 0 0
Canadians exchanging their money into U.S.dollars are at a decided disadvantage, but an RBC Bank financing plan will alleviate that problem for Canadians looking for investment properties and second homes south of the border. At the current exchange rate, should a Canadian buy a $400,000 (USD) property in Florida’s white-hot, yet affordable, real estate market in cash, they will end up paying $528,000 (CAD).However, using RBC Bank’s real estate lending solution, they’d only need to put down $90,000 (USD), which is the 20% down payment, and have to pay $118,800 at closing.If it’s an investment property, they will put 25% down. Using a 30-year amortization on a five-year term at 3.75%, diligent investors can hedge their bets on the Canadian and American dollars returning to parity, and considering that the RBC Bank financing plan doesn’t have a prepayment penalty, they can easily repay the loan. “If they finance 80% of the U.S.mortgage, they don’t have to exchange the full amount and they can save $100,000 (CAD) on a $400,000 (USD) purchase,” said Alain Forget, RBC Bank’s director of business development in the U.S.“There’s no prepayment penalty during the term of the loan, so they can repay it at any time, and it gives them the full flexibility of using some leverage and financing for their
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   April 30, 2019 371 0 0 0 0 0
The flow of new homes into Ontario’s bustling housing sector is hampered by extremely lengthy development approval timelines, according to the Ontario Building Officials Association. Strong funding and construction activity are seemingly having negligible impact in ensuring new supply.Per OBOA estimates, it takes as long as 10 years to complete the required planning to get new building permits in the province. “We have the best building codes in the world, which is why Ontarians feel safe in the places they live, work and play,” OBOA president Matt Farrell said. “We need to be cutting the red tape throughout the approvals processes to bring this housing to the market as quickly as possible.” A significant portion of funding is slated to come from the federal and provincial governments, which will make the implementation of a streamlined approvals process even more important. “Premier Ford announced $1-billion in funding for affordable housing last month, and the prime minister committed another $1.3-billion before that, but cumbersome processes are going to delay making that housing available to the people who so desperately need it,” Farrell emphasized. Any new supply will most likely be on the higher end, as shown by developer Cortel Group’s latest projects across the province. The Towers 3 and 4 luxury condo
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   April 30, 2019 377 0 0 0 0 0
RBC Ventures has announced the launch of a highly customizable, AI-based property search platform covering the Greater Toronto Area. The OJO Home virtual assistant combines image recognition software, mobile messaging, and web-based insights to provide comprehensive results tailored towards each user’s particular preferences. Its creators stated that the platform is ultimately aimed at making property searches easier and more intuitive for GTA’s hopeful home buyers. “OJO analyzes information about a customer’s lifestyle, neighbourhood and home preferences including commute, kitchen style, and parking to find listings that meet a buyer’s needs.This deeper level of customization allows home buyers to zero in on what they really want before engaging a real estate agent,” RBC Ventures said in an email to Canadian Real Estate Wealth. According to RBC’s recent Home Ownership Poll, fully 83% of first-time home buyers agreed that online resources are critical in ensuring a successful home search.Nearly two-thirds (62%) of Canadian home owners also indicated the same belief. Most importantly, OJO offers a powerful option in cases where a user might prefer to interact with an expert reference. “Once a customer is ready to take the next step in their home buying journey, OJO can connect them to an RBC financial professional or a real estate agent to help
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   April 28, 2019 498 0 0 0 0 0
Downtown Toronto’s extremely low office vacancy rate could climb to “just south of 6%” within four years and curb rapid rent escalation. “Rental rate growth has been quite high and that’s why you’re getting the construction activity, but the question, then, becomes how does it continue performing once you get further down the timeline?” said to Roelof van Dijk, market economist for Canada at CoStar Group, a multinational commercial real estate research and technology firm. “With all the new supply, it won’t be enough to fill everything, but you can anticipate vacancy to rise in the next three to five years as all these new builds come to fruition.In downtown Toronto, you’ll see vacancy go from just north of 3% to just south of 6% by 2022-23.As a result, you’ll see rental growth come down.” Although there’s about 11 million square feet of commercial construction in Toronto, chartered banks are expected to occupy much of it as they house expansive anti-money laundering operations.Much of the old stock presently housing banks will likely be renovated and modernized. Keith Reading, director of research at Morguard, added that units slated for completion in the near future are already taken. “Outside of a couple of little pockets, there are virtually no new speculative developments,” he said.“Buildings
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