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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 12, 2019 93 0 0 0 0 0
Sales activity in the Greater Toronto Area investment market considerably slowed down in Q1 2019, according to a new quarterly analysis by Altus Group. A total of 502 investment property sales valued at over $1 million transpired in the GTA during the quarter, and overall investment stood at $4.1 billion.This made Q1 2019 the fifth consecutive quarter of decline in investments, with the total volume fully 29% lower than the level seen in Q1 2018.The deal count was also the lowest measured since Q1 2015. However, Altus assured that the trend was impelled more by product shortages than by lack of demand, “as investor sentiment remains confident.” “Quality asset supply issues continue, translating to a decline in overall investment activity.Demand for these assets has driven Toronto to a year-over-year decline in overall cap rates at 4.25% to 4.15% in Q1 2019,” the analysis noted. The GTA’s land market led the charge, representing 32% ($1.3 billion) of total sales for that quarter.The sale of the Celestica Campus in North York (valued at nearly $348 million) was the largest residential land transaction for Q1 2019. The industrial sector was the region’s most traded asset during Q1 2019, but the volume was not enough to prevent losses as the total transaction value went down
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 12, 2019 90 0 0 0 0 0
The B.C.government has launched a public education initiative to improve security and fairness in the province’s rental market. As the first step in addressing various recommendations offered recently by a rental housing task force, B.C.’s Ministry of Municipal Affairs and Housing has promised to bolster public education and enforcement to protect renters’ and landlords’ rights. “To make renting work better for everyone, we need to make sure both renters and landlords know their rights under the law and have a place to go when there's an issue with those rights,” Municipal Affairs and Housing Minister Selina Robinson said, as quoted by The Canadian Press. The Ministry noted that the campaign, which will be funded by the province through Landlord BC and the Tenant Resource and Advisory Centre, will particularly aim at enlightening the public about renovictions – especially the cases when ending a tenant’s term could be considered illegal or unnecessary. The Ministry added that a new compliance and enforcement unit, nested in the Residential Tenancy Branch, will investigate and penalize repeat or serious offenders among renters and landlords alike. “Housing is the foundation of people’s lives.We want to create a rental market where there are no surprises, renters and landlords are treated fairly and there is better security for both sides,” Robinson
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 09, 2019 93 0 0 0 0 0
Trying to put a positive spin on Vancouver’s luxury property prices—where a two-bedroom, 1,831 square foot condo costs $2,660,000—is a tall order. Sure, in Monaco, a three-bedroom apartment in the District de Fontvieille will go for $14,897,938, and in Hong Kong a three-bedroom apartment on Kennedy Rd.goes for $13,635,200—making that downtown condo in Vancouver look like a bargain. However, the population of Vancouver proper in 2017 was 675,218, and presuming it has hitherto increased, it will likely only be a marginal boost.Monaco’s population is considerably less, but it’s a known playground for the wealthy.In 2017, Hong Kong estimated its population was 7.392 million, so how does a two-bedroom unit go for over $2 million in Vancouver? “[Comparing Vancouver to global markets] is totally incongruent,” said Robert Mogensen, a broker with The Mortgage Advantage.“Vancouver is a branch office city, not a head office city, for one thing.It’s not a central banking city like those other world cities, so to compare it is ridiculous.Is it a pleasant place to live?Yes.Is it great for proximity to the mountains for skiing, or for going golfing?Yes.But it’s still a branch office city.” Point2 Homes recently made the comparison, and while it does have merit—Vancouver is a global real estate staple and prices are a relative bargain compared to those
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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing   May 09, 2019 94 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 97 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 101 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 94 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 94 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 101 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 100 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 128 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 171 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 239 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 250 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 259 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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