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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 30, 2019 279 0 0 0 0 0
Consumer demographics are an increasingly important driver of sales activity in the Montreal housing market, according to Royal LePage Altitude broker Maxime Tardif. “Baby boomers looking for smaller units, millennials increasing their purchasing power, and more foreign buyers contributed to a hike in condo prices and demand in the past three years,” Tardif said. In addition, the region’s geography is contributing to the steadily growing presence and popularity of multi-unit housing. “Available land is limited on the island;builders and developers are making every square foot count.As a result, more high-end, spacious units are being constructed in the suburbs, particularly near transit stations.” “The outskirts of the city are becoming attractive to many home buyers who are willing to trade shorter commute times for more square footage and better affordability.With the transit system expansion that the REM will bring by 2021, commuting to the city core will be easier and make living outside the city centre more desirable.” These findings supported the latest figures from the Quebec Professional Association of Real Estate Brokers, which stated that the city’s condo sales volume increased by 16% annually in July.This mirrored the percentage growth in activity across
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 30, 2019 301 0 0 0 0 0
In the Greater Toronto Area, supply scarcity is a major force driving home prices upward, according to Tom Storey of Royal LePage Signature Realty. “Low inventory levels are putting upward pressure on price per square foot in the Greater Toronto Area, especially for entry-level properties like condos,” Storey explained. From January to July of this year, the aggregate price across all housing types went up by 6.1% annually to $782 per square foot. During this period the median price of Toronto’s condos had a 9.1% annual uptick, up to $743 per square foot.This had made it noticeably more difficult for more households to afford the property type. To compare, single detached homes had a far lower 1% year-over-year increase, up to $486 per square foot. Among the most active market participants are starting households and young professionals, who would rather live in a constricted condo over a detached home if it means greater access to work and amenities. “Millennials know what they want and, in some cases, are willing to pay more for less space in order to be in their desired neighbourhood.This is consistent with the trend of location being an
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 30, 2019 303 0 0 0 0 0
Disproportionate population distribution is causing economic and fiscal crises throughout Ontario, including in the Greater Toronto Area. The GTA is home to 45% of Ontario’s population, yet received 77% of the province’s immigrants last year, which The Conference Board of Canada warns is overburdening the region’s infrastructure while leaving other census metropolitan areas looking skeletal. The challenge, says Pedro Antunes, chief economist at The Conference Board of Canada—which released a report entitled Immigration Beyond the GTA:Toward an Ontario Immigration Strategy—has been convincing immigrants to choose some of these CMAs, many of which even have buoyant labour prospects. “Toronto has diasporas that are much more attractive to new immigrants because they have local contacts and family that allow them to integrate into that market, so they favour the GTA more than other regions,” he said.“The reason to regionalize immigration is the demographical challenge all Ontario municipalities are facing with respect to population growth:In some CMAs, we see negative population growth.More importantly, it’s a challenge to grow their labour forces, and baby boomers are leaving the workforce and coming into their older years where they need more health care.” Last year, 106,000 immigrants chose the GTA
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 28, 2019 321 0 0 0 0 0
Even Prince Edward Island is now seeing bidding wars, which in turn have become major drivers of home price growth over the past few years. A rental vacancy rate of 0.2% in Charlottetown has helped propel this phenomenon. “It does happen, no question,” Century 21 and Colonial Realty broker/owner Joel Ives told CBC News. “People are banging on doors, saying ‘I really like your house, are you interested in selling?’ And some people say ‘yes, maybe we are if the price is right.’” Competition is especially fierce in the $250,000 to $350,000 price bracket – all the more because any new construction in Charlottetown tends to be either in the starter home or luxury categories. From 2016 to 2019, the average home price in PEI’s capital grew by 38.5%, settling at $277,000 as of mid-year. This considerably outpaced other high-volume cities like Victoria (33.3%), Toronto (25.3%), Montreal (17.7%), and Vancouver (10.93%).The only markets that exceeded the Charlottetown figure were Ontario’s Niagara Region and some sections of Vancouver Island. PEI Real Estate Association president Greg Lipton noted that a steady influx of new consumers represented further demand.From 2010 to 2018, the province
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 28, 2019 300 0 0 0 0 0
Vancouver’s home price madness does not appear to be cooling down any time soon, with one of the most outrageous recent examples being a $2,850/month “affordable” rental suite in the West End. In a piece for the Vancouver Sun, columnist and markets observer Dan Fumano noted that a recent Craigslist entry advertised a three-bedroom rental home supposedly aimed at “low-income” families. The asking rent rate for the property indicated otherwise, as it would have been affordable only for tenants who have incomes roughly two times larger than the market average. Said listing was removed early last week, amid frank astonishment from a local market already labouring under exorbitant housing costs. Danny Laufer, who previously occupied the unit for seven years with his wife and two children, expressed hope for a new local owner after moving out in early 2019. Upon learning of the absurd price, he expressed his dismay to the mayor and every other significant local official, including the BC Housing Minister. In his letter, Laufer wrote that Vancouver’s current situation is unsustainable, “taking away precious family housing that exists, and replacing it with market rate housing that is
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 28, 2019 285 0 0 0 0 0
Vendor take-back mortgages[1] were fairly popular in Canada 25 to 30 years ago when interest rates were stratospheric compared to where they are today. While seemingly a relic, could vendor tack-back mortgages make a comeback in the residential real estate market now that B-20 has made mortgage qualification a nightmare for many would-be buyers? “B-20 could definitely make vendor tack-back mortgages more attractive,” said Tim Syrianos, broker-owner of REMAX Ultimate Realty in Toronto.“If people have the qualifications necessary other than 200 extra basis points, that is. “The seller could benefit by having the vendor take-back mortgage because they earn interest on money lenders don’t offer and it’s a more secure environment because it’s against real estate.” While Syrianos acknowledged vendor tack-back mortgages could function as a solution to B-20, he does not expect they will resurface in the residential real estate market anytime soon.The growth of private lenders and mortgage investment corporations are a big reason.The other is reason is sellers usually need the money they earn from selling their homes to purchase new ones. “They’re not as commonplace in the market today because people need money to purchase their own
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 26, 2019 320 0 0 0 0 0
Greater Vancouver was a major contributor to the slowdown of Canadian housing price growth, Statistics Canada data indicated. The most recent Teranet – National Bank of Canada House Price Index (TNB HPI) showed that the year-over-year growth plummeted to its lowest level in a decade last month. In its analysis of the data, Better Dwelling deemed Greater Vancouver as having posted the weakest housing price performance across Canada.In July, the market saw a 6.23% annual price drop, along with a 1.04% month-over-month loss. “Since July 2018 was the peak, it’s also how much prices have fallen from peak.The market is now at the same price level experienced in September 2017.” Last month, the national Index was at 0.44% annual growth, along with a 0.72% uptick from June 2019.The monthly growth is also markedly lower than the 21-year average of 1%. “The 12 month growth has been trending lower, and is now at the lowest it has been since 2009,” Better Dwelling explained.“The growth is below normal, and due entirely to seasonal pressure.” The Greater Toronto Area fared much better, fortunately, with home prices increasing by 3.24% annually and
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 26, 2019 291 0 0 0 0 0
In Toronto, the neighbourhoods with markedly lower condo inventories are seeing faster growth in average unit price. Data from the Toronto Real Estate Board showed that the downtown core saw its average unit cost rise by 55% from July 2014 up to July 2019, ending up at $692,592 last month.Meanwhile, the City of Toronto’s overall average condo price increased by 66%, up to $627,927. A new analysis by real estate information portal Zoocasa stated that in those five years, condo price growth in the market was particularly observed in the city’s east and far northwest extremities. “While provincial and federal policies introduced to cool the market have had a pulldown effect on sales and price growth between late 2017 – mid 2018 … over a five-year time period, dramatic price increases have persisted in pockets across the city,” Zoocasa explained. The greatest growth was apparent in locales where condos sold for below the city’s average. “These neighbourhoods also have an overall lower inventory with sales that are significantly lower than in more central neighbourhoods, which can contribute to heating prices.” West Hill, Centennial Scarborough saw the most dramatic increase, with a massive
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 26, 2019 281 0 0 0 0 0
Canadian Real Estate Wealth’s November/December mega-issue[1] is on the way.In addition to our cover feature, 75 Cash Flow Plays for 2020, we will, as usual, be sharing the strategies of successful investors like you. One article we’re particularly excited about is Kirill Perelyguine’s piece on triple-net leases.In it, Perelyguine writes: Commercial leases offer a number of benefits for the investor-owner.First, the type of commercial lease agreement that the tenant signs - Triple Net - means that the tenant is responsible for their proportionate amount of the property tax, maintenance and insurance, sometimes even the major structural repairs to the property.In the case of a single-tenant property, the tenant usually pays for all of the associated costs, leaving the landlord with the “clean” net amount of rent, which makes it much easier to calculate cash flow and make long-term financial projections. CREW[2] readers can look forward to reading Perelyguine’s expert take on the many pros and handful of cons that commercial investors run into when working with triple-net clients when the next issue hits newsstands in October. Our impatience getting the best of us, we asked Perelyguine, who is both
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 23, 2019 284 0 0 0 0 0
Toronto developers have long favoured building condominiums at the expense of purpose-built rental apartments, but that is beginning to change. Chronically low vacancy rates in Metro Toronto have caused rents to spike in a mere matter of years, thereby providing developers the economic panacea that has eluded the purpose-built rental market for decades. “More groups are looking at rentals simply because rents keep rising, and if you look back five or 10 years, condos were more lucrative and that’s because rents weren’t at a level that allowed rental apartments to compete with them,” said Keith Reading, director of research at Morguard.“If you look at Toronto especially, but most of the country’s major cities, rents have gotten to levels whereby rental apartments have become better propositions financially, and especially over longer terms, because the money coming in doesn’t stop, whereas with condos it does stop.” Condominiums still make sense for developers because of the expeditious exits, but tempests have emerged in the retail sector and REITs—which typically don’t have development experience—are starting to diversify their portfolios. “If you’re looking at the longer term and you’re a REIT, like RioCan, there’s a lot of change and
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 23, 2019 281 0 0 0 0 0
As of the end of June, more than 21 million square feet of office space is being built throughout Canada, according to Avison Young’s Mid-Year 2019 Global Office Market Report. This volume was fully 40% larger year-over-year, and came amid the positive absorption of 9 million square feet (msf) in the 12 months ending June 30, 2019. The rate far outpaced the nearly 6 msf absorption during the prior 12-month period (ending June 2018), and contributed to overall office vacancy settling at 10.3%. Toronto, Montreal, and Vancouver posted the strongest performances.Over the last few years, all three cities have seen the steady entry of tech sector giants. “The labour market remains the major catalyst for Canada’s economic expansion and thriving commercial real estate sector,” Avison Young principal and president (Canada) Mark Fieder explained. “Urban intensification boosted by immigration, a growing knowledge-based economy and the rising co-working industry have powered Canada’s office market,” he added.“The growing technology sector is taking a bigger slice of the leasing pie – especially in Vancouver, Toronto, Montreal and Ottawa – and, in many cases, driving innovation within traditional businesses.” In particular, the co-working set-up is forcing
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 23, 2019 278 0 0 0 0 0
Toronto developers have long favoured building condominiums at the expense of purpose-built rental apartments, but that is beginning to change. Chronically low vacancy rates in Metro Toronto have caused rents to spike in a mere matter of years, thereby providing developers the economic panacea that has eluded the purpose-built rental market for decades. “More groups are looking at rentals simply because rents keep rising, and if you look back five or 10 years, condos were more lucrative and that’s because rents weren’t at a level that allowed rental apartments to compete with them,” said Keith Reading, director of research at Morguard.“If you look at Toronto especially, but most of the country’s major cities, rents have gotten to levels whereby rental apartments have become better propositions financially, and especially over longer terms, because the money coming in doesn’t stop, whereas with condos it does stop.” Condominiums still make sense for developers because of the expeditious exits, but tempests have emerged in the retail sector and REITs—which typically don’t have development experience—are starting to diversify their portfolios. “If you’re looking at the longer term and you’re a REIT, like RioCan, there’s a lot of change and
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 21, 2019 305 0 0 0 0 0
Montreal’s plexes and condos are seeing increased popularity, providing significant contributions to the market’s home sales volume last month. According to latest figures from the Quebec Professional Association of Real Estate Brokers, the city’s sales volume across all housing types was 3,698 transactions in July.This was 16% larger year-over-year, and represented a new high point for that month. Plex and condo sales respectively had 23% and 16% growth during the same time frame. “The sales growth that we’ve been witnessing since the start of the year reached a new peak in July with the largest increase in sales since May 2017,” QPAREB board of directors president Nathalie Bégin said. “What’s remarkable is that the resale market continues to be so strong after 53 consecutive months of increases.” The average price of plexes increased by 10% annually in July, ending up at $583,000.Meanwhile, condos had 5% growth in value, up to $278,600. Montreal’s active listings shrunk for the 43rd straight month, “thereby accelerating the tightening of market conditions in a context where sales are setting new records at the same time,” the QPAREB’s report added. The market’s Centris system recorded 16,898 active
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 21, 2019 317 0 0 0 0 0
Strong employment – especially in the high-technology sector – is a major driving force in the steady growth of Toronto’s rental segment. In turn, this trend is feeding the strength of the region’s investment property market, according to Marcus &Millichap’s Q3 2019 Multifamily Market Report covering the GTA. In the first half of this year alone, 81,600 new employees were added to the GTA’s workforce, with a sizeable contingent representing tech companies.Such organizations have gravitated towards the region’s supportive environment. “A less restrictive immigration policy in contrast to the U.S., coupled with a mature tech ecosystem backed by government incentives and world-class universities, has Microsoft, Amazon, Pinterest and many other global firms searching for talent in the metro,” Marcus &Millichap explained. Overall employment in the GTA grew by 3.4% annually in June, exceeding the 2.9% year-over-year upswing during the same month in 2018. The resultant stronger economy has led to the formation of more households, “a key driver of apartment demand.” The average price of an investment rental property has increased by 9% year-over-year, ending up at just above $277,000 per unit and as high as $300,000 in the downtown core. Over
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   August 21, 2019 306 0 0 0 0 0
While residential market activity in Vancouver is markedly slower than in years past, the commercial sector is on fire. “There’s a significant amount of commercial activity going on within Metro Vancouver, with 2.8 million square feet of office product under construction,” said Kirk Kuester, Colliers International’s executive managing director for British Columbia.“The development business, from a residential perspective, is either grinding to a halt or has ground to a halt.When projects finish, there’s not a lot to be introduced on the residential side that will pick up the slack, other than what’s happening on the commercial side with retail, industrial and office.” One such project is The Post by QuadReal Property Group, where Amazon has committed to occupy 35% of its 1.13 million square feet.Upon competition in 2023, The Post will host an estimated 7,000 workers. That isn’t to suggest heightened commercial real estate construction means space is aplenty.Kuester says vacancy continues to be an issue for would-be tenants, especially in the industrial sector. “The industrial market is going like gangbusters,” he said.“It’s a challenge today because of extremely low vacancy and extremely limited land, and lots of ongoing demand as a result of
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