Grappling with affordability in the low-rise market and paucity
of space in condo apartments, Greater Toronto Area homebuyers are
flocking to townhouses in droves.
In 2008, townhouses comprised only a quarter of sales in the
low-rise sector, but as of this October, row houses accounted for
42% of low-rise sales.
“Townhouse product fits between apartments and the detached
housing market, and we expect to see more demand for that asset,”
said Matthew Boukall, VP of product management, data solutions at
Altus Group.“When we look across different markets they’re
generally flat.In Toronto, the market had a rough start to the
year, where we saw sales plummet, but within that detached housing
market of single-family homes and row townhouses, the latter
accounted for 42%.They grew the low-rise market segment.”
According to Christine Cowern, a sales representative and team
lead at Keller Williams Reffered Urban Realty, townhouses are ideal
for homebuyers who struggle with affordability but who also resist
too much compromise.
“We’ve been telling our clients for years that townhouses are a
fantastic compromise between a house and a condo apartment,” she
said.“Freehold towns are on the higher end but still cheaper than
owning a house, while condo towns are quite a bit cheaper.For
someone who is new to the market or owns a condo
Toronto’s apartment segment is experiencing a healthy infusion
of new supply, but a new analysis by Marcus &Millichap
indicated that the rate of addition is not proving enough to
address the inflamed levels of demand for the city’s residential
The Toronto Multifamily Spotlight report for November
2018 stated that the first 3 quarters of 2018 saw the addition of
2,500 new apartments, putting the delivery rate on track to reach
the highest level since 1994.
However, elevated prices in the single-family segment and
increased population growth fuelled by immigration have pushed the
benchmark price for the property type at $863,500 in September,
well out of reach of most entry-level buyers.
“With a limited number of starter homes on the market,
apartments have been virtually filled to capacity with a vacancy
rate under 1%, keeping rent growth in the mid-single-digit range
and motivating the development of new units,” Marcus &Millichap
Read more:Construction costs, land crunch threatening GTA
In addition, the influx of skilled professionals that will be
employed by Toronto’s burgeoning tech sector is predicted to add
43,500 new households over the next 18 months.
“Intel, Microsoft and Uber are just some of the companies to
recently announce plans to grow their footprint and
The latest Altus Group analysis found that demand for
Vancouver’s office spaces significantly pushed down vacancy from a
near-record level of almost 11% in mid-2016 to around the 7% range
in the middle of this year.
This was even more pronounced in the downtown area, which saw
vacancy shrink from 7% a year ago to below 5% in mid-2018.
However, the Vancouver Flash Report 2018 noted that
Vancouver’s office space supply received approximately 1.3 million
square feet of new additions over the past 8 quarters, which was
only less than half the amount injected in the market from mid-2014
Moreover, this paled in comparison to the 5 million sq.ft.of new
industrial space that Vancouver had from mid-2016 to mid-2018.
Fortunately, the nearly 2.8 million sq.ft.of office space under
construction as of mid-2018 is expected to keep up with demand.The
new additions would comprise 2 years of supply, taking into account
the annual absorption trends from 2015 onwards.
Read more:Vancouver commercial project to significantly
pump up supply
A late October report by RE/MAX Western Canada indicated that
sustained investment by major technology firms will propel the
Vancouver office market for the foreseeable future.
With leading tech companies like Amazon and WeWork steadily
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
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
Juwai.com, 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
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
“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.
demand to boost further apartment construction – CMHC
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
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
“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.
offers slowing down in non-Toronto ON markets
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
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
Non-Toronto markets in Ontario
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
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
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
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
“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
According to survey conducted by Century 21, Greater Vancouver
comes up on top as Canada’s most expensive metropolitan area to buy
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
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
A report analysing the impact of augmented transportation on
Greater Vancouver housing could help real estate investors find
Specifically, the report by the Real Estate Intelligence
Network, uses a precise formula to determine where valuation
“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
The report uses peer-reviewed research, which Hunt says builds
upon itself, from cities across the world and applied it to case
“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
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.”
rents continue surge
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
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%
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
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
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
condo segment continuously drawing in buyers
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.
are Toronto’s most appreciated and depreciated
luxury property markets maintain strong performances
Are you looking to invest in property?If you like, we can get
one of our mortgage experts to tell you exactly how much
Investing in Energy Star-grade upgrades can yield investors
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
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
Major cannabis producers and sellers are struggling to keep up
with the enormous demand for the plant after it was legalized last
Canadians’ craving for the herb was such that shortages have
become all too apparent in the few short weeks after October
“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
FSD has acquired its cultivation license back in 2017, but it
has yet to receive its sales license.
industry investors should take heed of this fact
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