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Why the new CMHC rules may not affect you

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Why the new CMHC rules may not affect you

At the beginning of June, Canada Mortgage and Housing Corp. (CMHC) announced its decision to tighten the guidelines for insured mortgages as of this month. This applies to mortgages with down payments of less than 20 per cent that require CMHC default insurance.

Given the recent COVID-19 pandemic, there have been varying outlooks of how the Canadian housing market will be impacted. Evan Siddall, CEO of CMHC – who is also scheduled to depart from the organization later this year – strongly believes that Canadian housing prices will be lowering despite upward trends seen across the country. As a result, he implemented these new policies to stop borrowing from who he deems to be riskier buyers.

When he made this decision, there was a lot of disappointment among first-time homebuyers, as they believed this directly targeted them and negatively affected their ability to buy a home. Now that the dust has settled around this and these changes are in full effect, we’re gaining more insight into who may be affected, and how – some good news for those worried first-time buyers.

So, what exactly are the new CMHC guidelines?

As of July 1, the following rules came into effect for insured mortgages:

  • The minimum credit score increased to 680 from 600, for at least one borrower
  • Buyers can no longer borrow money for a down payment (does not include family gifts)
  • Gross Debt-Service ratio decreased to 35 from 39 per cent (lowers affordability)
  • Total Debt-Service ratio decreased to 42 from 44 per cent (lowers affordability)
  • Multi-unit mortgage insurance refinancing is suspended (unless funds are used for repairs or reinvestment in the property)

Who could be affected?

These new rules have the potential to cut the purchasing power of many Canadian homebuyers as it decreases their overall housing affordability. At face value, we can expect this to impact first-time buyers the most, as they’re more likely to make down payments of less than 20 per cent, as well as buy a home close to their maximum affordability.

Some may not be affected at all

The mortgage rules technically only apply to lenders who use CMHC as their only insurer. In other words, not every lender (if any) will be following through with these new rules. Genworth MI Canada and Canada Guaranty are two CMHC competitors that have chosen not to adopt these stricter guidelines. So, depending on the lender you’re working with, Canadian buyers may not be impacted at all. In this climate, especially, shopping lenders and finding an unbiased mortgage advisor has never been more important and encouraged.

Changes like this are the exact reason we work with more than 30 banks and lenders at Homewise. Policies and lending guidelines are constantly changing, so having access to multiple lender options ensures that buyers can find the best mortgage for their unique needs.

Recently, we’ve received a lot of questions about how to navigate this situation. Given the many options we have available, we are able to guide our clients to the right lenders so they don’t have to worry about these new CMHC policy changes. Best of all, many top lenders with great features and rates don’t have to abide by this new criteria.

Given that these rules are new, we’re still learning how they can impact Canadian buyers. For the time being, it’s evident there are other avenues for many purchasers to get a great mortgage without being impacted by these new guidelines.

Jesse Abrams is Co-Founder at Homewise, a mortgage advisory and brokerage firm based in Toronto. thinkhomewise.com


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CMHC mortgage regulations

CMHC tightens mortgage regulations slightly

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CMHC tightens mortgage regulations slightly

Canada Mortgage and Housing Corp. (CMHC) has tightened mortgage regulations slightly in response to deteriorating economic conditions brought on by COVID-19.

CMHC mortgage regulations

Effective July 1, new applications for homeowner transactional and portfolio mortgage insurance would have to meet a minimum credit score of 680 for at least one borrower. In addition, funds borrowed for a down payment that increase indebtedness will no longer be treated as equity for insurance purposes, and Gross/Total Debt Servicing ratios are to be limited to the standard requirements of 35/42.


“COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” says Evan Siddall, CMHC president and CEO. “These actions will protect homebuyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth.”

Job losses, business closures and a drop in immigration are adversely impacting Canada’s housing markets, CMHC says, with potentially a nine- to 18-per-cent decrease in house prices over the next 12 months.

“CMHC’s policy changes come at an interesting time when the housing market finally seems to be getting back on track after a substantial drop in sales during April and May,” Jesse Abrams, co-founder and CEO of Homewise told Condo Life magazine. “These changes will not only make qualifications tougher, pushing up the floor for credit scores to 680, but also decrease the affordability of many buyers who need an insured mortgage by lowering debt to income ratios. Unfortunately, the hardest-hit market may be first-time homebuyers.”

Lesser impact

Another national mortgage insurer, Genworth Canada, says it has no plans to change its underwriting policy related to debt service ratio limits, minimum credit score and down payment requirements.

“Genworth’s decision to not follow CMHC’s policy changes creates a competitive advantage for them in the marketplace, while reigniting the flame of many prospective homebuyers who were demotivated by CMHC’s decision,” Abrams says. “Most lenders use both CMHC and Genworth, so it is quite possible that the CMHC policy change does not actually affect any homebuyers.”


Should you refinance your mortgage in the COVID-19 crisis?





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National Homelessnes Charity hosts Ribbon Cutting Ceremony for Innovative Affordable Housing Project

Raising the Roof opens innovative affordable housing project

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Raising the Roof opens innovative affordable housing project

Raising the Roof, a national homelessness prevention charity, was recently joined by Kyle Seeback, MP for Dufferin-Caledon, Sylvia Jones, MPP for Dufferin-Caledon, and Allan Thompson, Mayor of the Town of Caledon, to celebrate the opening of Cedar Mains, a newly renovated home which will offer affordable housing for people with disabilities at risk of homelessness.

The launch of the new housing project comes in the midst of a national housing crisis, where more than 35,000 people sleep on the streets every night, and people with disabilities are particularly affected.

In the face of this growing concern, Raising the Roof developed an innovative new program, Reside, which acquires vacant or underutilized homes, renovates and converts them into affordable housing. The first home launched through the program is 1 Cedar Mains Dr. (Cedar Mains).

“Every night, thousands of low-income Canadians sleep on the streets, and people with disabilities are particularly vulnerable,” says Marc Soberano, executive director of Raising the Roof.. “With Reside, we acquire under-utilized homes, fix them up, and offer them as affordable housing to people who need them most. In the process, we restore a local community asset, create training and employment opportunities for people facing barriers through the construction work, and create housing for vulnerable members of our community. Cedar Mains is the first of many homes we aim to convert into affordable as we partner to provide solutions to the housing crisis.”

Prior to the redevelopment, 1 Cedar Mains Dr. was an abandoned heritage church. The property hadn’t been utilized in many years. Envisioning more for the site, Raising the Roof approached the Toronto Region Conservation Authority, owner of the property, requesting the opportunity to access the property through a long-term lease.

The TRCA agreed, providing a 20-year lease to Raising the Roof for just $1. The charity then partnered with social enterprise contractor, Building Up, to complete an extensive renovation on the property. Through the construction work, Building Up provided training and employment opportunities for over 90 people facing barriers to employment, more than 85 per cent of whom went on to careers in the trades.

Raising the Roof then brokered an innovative partnership with CAFFI Housing Inc. to serve as the affordable housing provider, identifying suitable candidates for housing. CAFFI is a Caledon-based non-profit organization operated by parents of adult children with disabilities that provides housing solutions for their children and other people with developmental disabilities facing housing vulnerability.

In executing this project, Raising the Roof benefitted from tremendous community support. The project’s funders included the Home Depot Canada Foundation, the Province of Ontario, the Region of Peel, the Town of Caledon, the Town of Vaughan, Royal Bank of Canada Foundation, Hockey Helps the Homeless, the Ontario Trillium Foundation, Caledon Heritage Society, Social Venture Partners, and the Canada Mortgage and Housing Corp.

“Working together with our community partners, The Home Depot Canada is committed to ending youth homelessness and we are so proud to support Raising the Roof with the launch of their new home to support youth that are at risk of homelessness,” says Pam O’Rourke, chair, The Home Depot Canada Foundation and vice-president, merchandising, The Home Depot Canada. “By supporting organizations that provide a safe place to call home and important life-skills programs, we can help bring housing and hope to our most vulnerable youth.”





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Outlook 2020 – 5 things you need to know about real estate this year

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Outlook 2020 – 5 things you need to know about real estate this year


Outlook 2020 – it’s a new year and a new decade, and with that come new challenges and opportunities. When it pertains to the housing industry and homebuying, we’ve boiled it down to a handful of items to keep your eye on. Here are five things you really need to understand about real estate – specifically the GTA market.


This is a good place to start, because it’s a simple but important fact that escapes many consumers: Real estate is local. There is no such thing as a Canadian housing market, just as there’s no Canadian traffic or Canadian weather.

Sure, organizations such as the Canadian Real Estate Association (CREA) and Canada Mortgage and Housing Corp. (CMHC) are mandated to analyze what goes on across the country. But what’s most important to you is what’s happening in your market. When you buy a home, you don’t buy a national market. You buy one property, on one street, in one neighbourhood, in one city and region.

If you live in Ontario, why do you care that Alberta’s ongoing oil industry struggles are affecting sales and prices in markets in that province? Or that Vancouver’s affordability challenges are even more serious than those in Toronto?

Forget the national headlines. Examine what’s happening in your market. The same applies to the economy.

Why does this matter? Read on.


Globally, geopolitical uncertainty and softening economic growth will mean Canada faces some challenges with export and investment, leaving the heavy lifting to the consumer, according to Craig Wright, senior vice-president and chief economist at RBC.

RBC forecasts the economy to grow about 1.6 per cent in 2020. The unemployment rate remains at fourdecade lows, though may rise to 5.9 per cent in 2020 from 5.7 per cent in 2019. Companies are having difficulty finding skilled workers, leading to stronger wage growth.

Ontario’s real GDP growth is forecast to slow to 1.6 per cent for 2019 and 1.5 per cent in 2020, according to the Conference Board of Canada. Job creation remains strong, with the province adding more than 200,000 new jobs over the first 10 months of 2019, much of them in full-time work.

Ontarians are among the most positive about the economic outlook, according to a recent public opinion survey from the nonprofit Angus Reid Institute, with 22 per cent of respondents indicating they believe the economy will improve. Only residents in Quebec, at 30 per cent, and BC at 23 per cent, are more optimistic. In Alberta, by contrast, 79 per cent of residents expect their economy to deteriorate over the next year.

Keeping in mind what we wrote about real estate – and even the economy – being local, Ontario is looking strong on both counts for 2020.

Craig Wright, RBC
Craig Wright, RBC

“We continue to see strong employment gains, Ontario is leading Canada in terms of employment growth on a year-over-year basis, and strong population growth,” Wright told Homes Publishing. “So, strong fundamentals supporting it, in a low rate environment.”

The GTA’s robust population growth will continue to drive demand for both ownership and rental housing, Wright says.

Housing markets in Southern Ontario, in fact, led in home price growth last year, and are expected to continue to do so in 2020, according to a new report from ReMax.


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“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions still seeing double-digit gains,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”

Toronto is set to experience a strong housing market this year, thanks to lower unemployment rates, economic growth and improved overall affordability in the GTA. ReMax is forecasting average sale price growth of six per cent, two points higher than the increase from 2018 ($835,422) and 2019 ($880,841).

The Niagara region is also showing strong growth, with average residential sale price increasing almost 13 per cent, from $378,517 in 2018 to $427,487 in 2019. Value-conscious consumers from the GTA are buying in droves, with many choosing to live in the region and commute to Toronto.


In its most recent interest rate announcement, the Bank of Canada maintained its target for the influential overnight rate at 1.75 per cent, where it has been since October 2018. Though there is some global uncertainty, the Bank says, the Canadian economy is resilient, citing moderately expanding consumer spending, stronger wage growth and housing investment, increasing population and continuing low mortgage rates.

Many experts foresee mortgage rates holding where they are throughout 2020 – if not declining.

Indeed, James Laird, co-founder of Ratehub Inc. and president of CanWise Financial mortgage brokerage, predicts BoC will cut the overnight rate by a quarter point in the second half of 2020.

In 2019, central banks around the world cut their rates, but Canada was not among them. Facing somewhat slowing economic growth driven by decreased exports and a slightly higher unemployment rate, Canada will follow this trend and cut the overnight rate by 0.25 per cent in the latter half of 2020, Laird says.

“These savings will be passed along to variable rate mortgage holders in the form of a lower prime rate,” Laird says. “Therefore, Canadians who are in a variable rate will see their interest rate drop in the second half of the year.”

The Bank’s rate policy will cause fixed mortgage rates to remain low throughout the year, he adds. This should provide peace of mind to Canadians who have a mortgage up for renewal or those who have plans to purchase a new home in 2020.


The Canadian Home Builders’ Association, Ontario Home Builders’ Association, Building Industry and Land Development Association, Toronto Real Estate Board – and other relevant industry bodies – are all lobbying hard for the various levels of government to address the issues facing housing. Ranging from the First-Time Home Buyers’ Incentive Program, the mortgage stress test or land-use policies that affect the level of homebuilding – and therefore buying – one thing is clear: Federal, provincial and municipal levels of government are listening.

(Many of the executives in our Outlook 2020 Q&As in the following pages touch on these issues, and we’ll have another related special feature in our February issue.)

At least one major source says governments have little choice but to take action. The Real Estate Investment Network (REIN), a real estate investment education, analysis and research firm, cites increasing immigration as the catalyst for change.

“An increase in the influx of migrants amounting to over one million people in three years is tantamount to increasing rental demand,” says Jennifer Hunt, vice-president of research at REIN. “This is good news for rental housing providers, as migrants have higher tendencies to rent property rather than to purchase their own homes, especially within the first four years of settling in Canada.”

Once settled and secure in employment, however, many of these new Canadians want to become homeowners, which leads to higher demand for housing, including new homes and condos.


The First-Time Home Buyer Incentive is a shared equity mortgage through CMHC. The program is intended to reduce monthly mortgage payments for first-time homebuyers, without increasing the amount they need to save for a down payment.

Though some recent adjustments to the program, including raised purchase limits for high-priced markets such as Toronto and Vancouver, have helped, some are calling for further improvements to the plan.

REIN, for one, suggests watching for a potential increase of the FTHBI’s purchase price limit to nearly $800,000 in high-priced markets.

Ratehub is not convinced, expecting that the FTHBI will not be enhanced, and the existing program will see minimal traction.

“Less than five per cent of Canadians who are eligible for the FTBHI program will elect to use it,” says Laird. “Most Canadians do not want the government to own part of their home.”

REIN and Laird agree the mortgage stress test, which many in the industry have been calling to be changed, will likely remain unchanged.

Special Report: Outlook 2020:

Jordan DeBrincat, Director of Operations, Altree Developments

Fan Yang, Deputy General Manager (Eastern Canada), Aoyuan Property Holdings (Canada) Ltd.

Nick Carnicelli, President, Carriage Gate Homes

Jared Menkes, Executive Vice-President, Menkes High Rise

Anson Kwok, Vice-President Sales & Marketing, Pinnacle International

Angela Marotta, Director of Sales & Marketing, Solmar Development Corp

Samson Fung, Vice-President Marketing, Tridel

Jim Andrews, Director of Sales & Marketing Fieldgate Homes

Shakir Rehmatullah, President Flato Development Inc.

Mike Parker, Vice-President Sales & Marketing Georgian International Build Corp.

Brad Carr, CEO Mattamy Homes Canada

Deena Pantalone, Managing Partner and Director of Marketing & Innovation National Homes

Art Rubino, Contracts Manager & Marketing Manager Regal Crest Homes



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Hombuyer incentives web

Federal government releases details on homebuyer incentive programs unveiled in Budget 2019

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Federal government releases details on homebuyer incentive programs unveiled in Budget 2019


Hombuyer incentives web

The federal government has released the details of the first-time homebuyer incentive programs promised in March in the 2019 budget.

Beginning Sept. 2, 2019, the First-Time Home Buyer Incentive will help middle class families take their first steps towards homeownership by reducing monthly mortgage payments required for first-time homebuyers, without increasing the amount they need to save for a down payment. This program complements other measures taken in Budget 2019 to support first time homebuyers with their down payment such as increased RRSP withdrawal limit from $25,000 to $30,000 The government has allocated $1.25 billion over three years for the program. The incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000.

Budget 2019 also previewed the Shared Equity Mortgage Provider Fund, a five-year, $100-million lending fund to assist providers of shared equity mortgages to help eligible Canadians achieve affordable homeownership. This will support an alternative homeownership model targeted at first-time homebuyers, help attract new providers of shared equity mortgages and encourage additional housing supply. The fund will launch on July 31, 2019, and will be administered by CMHC.


ALSO READ: Budget 2019 comes up short

ALSO READ: How the Liberals missed the boat on affordable housing

“Through the National Housing Strategy, more middle-class Canadians – and people working hard to join it – will find safe, accessible and affordable homes,” says Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for CMHC.“Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will mean more money in the pockets of Canadians and will help up to an estimated 100,000 families across Canada.”

First-Time Homebuyer Incentive facts

  • Canada’s First-Time Home Buyer Incentive will help qualified first-time homebuyers purchase their first home as the incentive reduces their monthly mortgage payment, without increasing the amount that they must save for a down payment. The program will launch on Sept. 2, 2019, with the first closing on Nov. 1, 2019.
  • The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.
  • For the purchase of an existing home, an incentive amount of five per cent may be available. For the purchase of a newly constructed home, an incentive amount of five or 10 per cent may be available.
  • Doubling the incentive for purchasers of new homes encourages new housing supply.
  • No on-going repayments are required, the incentive is not interest bearing and the borrower can repay the incentive at any time without a pre-payment penalty.
  • The buyer must repay the incentive after 25 years, or if the property is sold.


These details confirm that the First-Time Home Buyer Incentive program will be an ownership stake in the property of qualified homebuyers, whereby the government will participate in appreciation of the property and – in the case of the property devaluing – depreciation as well.

“The key issue remains qualifying, and this program diminishes the amount that a first-time homebuyer can qualify for by about 15 to 20 per cent,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “This is because the program limits the mortgage amount to four times the households’ income, whereas those not participating in the program can actually qualify for a mortgage that is 4.5 to 4.7 times their income. Household income for qualified homebuyers is also capped at $120,000.”

Those who would be attracted to the program would be Canadians who are trying to purchase at their maximum qualification, Laird adds. “However, because the program diminishes how much they can qualify for, it doesn’t serve the needs of the group it is targeted at. Canadians can get a larger loan by not participating in the program.”


Maximum affordability calculations

A household with $100,000 of income, putting a minimum down payment of five per cent, can currently qualify for a home valued at $479,888 with a $2,265 monthly mortgage payment.

The maximum purchase price for the same household, if they participate in the First-Time Home Buyer Incentive program, drops to $404,858 with a five-per-cent minimum down payment. The total mortgage amount would then be $400,000 (or four times their household income).

Source: Ratehub.ca 


Mortgage payment calculations

If the household took a five-pre-cent incentive from the government (for resales), their mortgage amount goes to $378,947, and monthly payment is now $1,810.
If the household took a 10-per-cent incentive from the government (for new homes) their mortgage amount goes to $357,894 and  monthly payment is now $1,710.

Source: Ratehub.ca 




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First-time homebuyers catch a break with slowing home price growth

First-time homebuyers catch a break with slowing home price growth

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First-time homebuyers catch a break with slowing home price growth

We have some good news and we have some bad news, prospective homebuyers in Canada.

First, the bad news: According to the latest Royal LePage House Price Survey, home price growth in many of Canada’s real estate markets is slowing. This means, if you’re looking to buy a home, its value may not grow as much as it has recently. The good news, however, is that this same slowing price growth presents a window of opportunity for first-time homebuyers to get while you can.

The price of a home in Canada increased just 2.7 per cent year-over-year to $621,575 in the first quarter of 2019, Royal LePage says, well below the long-term norm of approximately five per cent. When broken out by housing type, the median price of a two-storey home rose 2.6 per cent year-over-year to $729,553, while the median price of a bungalow rose 1.1 per cent to $513,497. Condominiums remained the fastest growing housing type, rising 5.4 per cent year-over-year to $447,260.

Looking ahead to the second quarter, Royal LePage expects national home prices to stay relatively flat throughout the 2019 spring market, with the national aggregate price of a home increasing just one per cent over the next three months. Meanwhile, the housing markets in several larger Canadian cities have shown noticeable signs of slowing, with nearly half of the regions in Royal LePage’s Quarterly Forecast anticipating quarter-over-quarter price declines.

But these are national numbers, and as we’ve written before, there really is no such thing as a Canadian housing market.

But more on this later.

Silver lining

Early in 2018, Canada experienced the most significant housing correction since the 2008 financial crisis. Markets showed signs of recovery late in the year, yet the figures for early 2019 suggest that the market has once again slowed.

We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower for longer interest rates,” says Phil Soper, president and CEO, Royal LePage. “There is a silver lining here. This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities.”

In the federal budget tabled by Finance Minister Bill Morneau in March, the Canadian government announced three new or enhanced housing programs. The First-Time Home Buyer Incentive is a three-year, $1.25-billion shared equity mortgage program whereby  Canada Mortgage and Housing Corp. (CMHC) will co-invest up to five per cent of the purchase price of an existing home. Further, for the first time in a decade, there was an increase in the registered retirement savings plan withdrawal limits in the Home Buyers Plan. The increase, from $25,000 to $35,000, was the largest since the program’s inception in 1992. Finally, an additional $10 billion in financing over nine years was earmarked for the construction of purpose-built rental housing.

Real estate is local

Illustrating our point that real estate is local and not national, the GTA housing market is still showing healthy growth.

“The city of Toronto is still one of Canada’s fastest appreciating real estate markets,” says Soper. “Detached home prices are rising in line with inflation, but condominium prices are increasing at near double-digit levels as vertical living has become the primary new-build option in this growing, world-class city.”

Median home prices in Toronto rose 5.8 per cent year-over-year in the first quarter of 2019. Two-storey home prices and bungalow home prices rose 4.8 per cent and 2.5 per cent year-over-year, respectively, while condo prices rose 9.3 per cent year-over-year. The overall GTA’s aggregate home price rose 3.4 per cent over the same period.

Real estate values in Ontario’s Greater Golden Horseshoe region continued to appreciate at a brisk clip, as local economies grew and workers from the GTA looked to trade commuting time for lower house prices. Niagara-St. Catharines, Hamilton and Kitchener-Waterloo-Cambridge aggregate prices were up by 6.9 per cent, 6.3 per cent and 8.9 per cent, respectively.


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DESIGN/BUILD EXPERT: Crash Course to real estate royalty

Crash Course to real estate royalty

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Crash Course to real estate royalty

Homes in Canada are expensive. In the outlying GTA, the average price of a condo is over $600,000—a single detached home is approaching $1 million ($914,000 in October of 2018) and a staggering $1.31 million for the same product in Toronto proper. With the time and financial costs required to commute, which CMHC estimates at an average of between $400 and $800 per month—the perceived savings of living in a bedroom community and travelling into the core for work is seeming less of an ideal plan—especially when you factor in our weather and gridlock woes that are only worsening with intensification. One way to help bridge the gap, or help transition from condo living to a low-rise product, is to subsidize oneself by renting out a secondary suite within the building, or even outside of it, with the new option of laneway housing. In order to service the $311,000 to $386,000 of additional mortgage, you would hypothetically require to upgrade from a condo to a house, or to move from the suburbs into the city, you would need to add roughly $1,500 to $1,900 extra per month to cover it. No small amount, I know.

CAPTION: Before (Photography by Eurodale Development Inc.)

CAPTION: After (Photography by Andrew Snow)

CAPTION: After (Photography by Andrew Snow)

Rent on the rise

Coincidentally, the average rental amount for a one-bedroom apartment in the city of Toronto has also been climbing, and now sits at $2,200 in the core, and $1,200 in the outer lying GTA. If you look at those numbers, they start to offset each other, in some instances, creating a cash-flow-positive position. This means, for a bit of legwork, creating or finding a home with a secondary suite could be your ticket to upgrading your living situation by either transitioning from a condo to a singlefamily home, or by reducing or eliminating your commute. Does the thought of becoming a landlady or landlord sound good to you? Read on.

Before you sign the lease

Secondary suites or dwellings are permitted As-of-Right via provincial legislation in Ontario. Every municipality has their own governing rules that you want to familiarize yourself with—here are some of the keys.

A permit is required to create one, and is only allowed in a building aged five years or older. If an existing unit, Municipal Licenses & Standards, Fire and Electrical Safety Authority must have signed off for it to be legal. Minimum ceiling height 6’5″ for at least 50 per cent of the area, with at least 97 sq.ft. of space per occupant, so the space doesn’t have to be huge.

Fire egress (to escape) and firefighter access (to enter to save you) are generally 3.8 sq.ft. and 1.0m clear respectively, with some fine print nuances that are important.

Fifteen to 30 minute fire separation and a Sound Transmission Rating minimum of 50 must be achieved for safety and privacy. Interconnected smoke alarms with the main dwelling unit are also a must for optimal safety and the lower separation. Sprinklers are the best, but carry a high upfront cost.

The unit must be smaller than the main dwelling, and if there is parking, the accessory dwelling must also have parking, except in the case of a laneway house, which negates all needs for parking at the property completely, other than for a pair of bicycles.

CAPTION: Before (Photography by Eurodale Development Inc.)

CAPTION: After (Photography by Andrew Snow)

Landlord training

Once you have a compliant unit, you then need to learn the ropes when it comes to being a landlord. First, advise your insurer in writing of the tenancy. Second, read the new Ontario standardized residential lease and develop your own set of individual lease terms to insert under section 15 to protect yourself and the property, and ultimately help govern the relationship. Spell out rules around guests, smoking, parking, access to and/or maintenance of the grounds,and utility splits, so it is clear and concise. Then, when selecting your tenants: Exercise caution. It’s one thing to rent a unit to a tenant, it can be altogether different to rent a space connected to your personal home to someone. Familiarize yourself with the laws and rights of the parties, which will rule your new business relationship. The website landlordselfhelp.com has great videos and podcasts that cover many potential hurdles you could face.

Know the rules

Thinking short-term rental such as Airbnb, VRBO, and the like? Not so fast! Many municipalities are working through by-law changes to restrict them, as in Toronto where the new bylaw is still under appeal, but can have large implications on the compliance and viability of your unit as a legal, short-term option. Setting up furnished, vacation-type rentals can be costly; therefore, you want to be sure you don’t get shut down if you are not fully compliant after having spent thousands of dollars on furniture, artwork, and supplies.

The payoff

Setting up a secondary suite has huge benefits to help pay down a mortgage. It also allows you to afford a better home, or a home in a better area, increase income, and pay increased dividends at the time of a sale. It can also be a lot of work, and as with anything, what you put into it, you will get out of it. The more seriously you take this business venture, the smoother it will run, and the better the yield will be for you in the end.

When planning your own secondary suite, remember there is real value in working with a professional to design and build the space. We recommend you start your search at the relevant professional associations to explore your options, including BILD & RenoMark—the home of the professional builder and renovator, to find the true industry professionals to help guide you to success.

Happy renting my Lady, my Lord.

Brendan Charters is Partner at Toronto Design-Build Firm Eurodale Developments Inc. – 2017 OHBA Renovator of the Year.



(416) 782-5690


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2018 web

5 things we can learn from real estate in 2018

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5 things we can learn from real estate in 2018

2018 web

With much of 2018 in the rear-view mirror, It’s been quite the year for the housing market in the GTA and elsewhere in Ontario. From sales and price fluctuations to supply concerns to rising housing costs. As 2019 approaches, here are five things we can learn from real estate in 2018.


1 Get used to the affordability issue

Get used to affordability challenges, especially in the GTA. This oft-cited issue is not going away any time soon, despite lobbying from the likes of the Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB).

Key economic fundamentals such as population and employment growth will continue to drive housing market demand. Over the next decade, almost 700,000 first-time buyers will target the GTA or Hamilton markets, according to a report from the Ontario Real Estate Association. Meanwhile, the supply of new homes is not yet being addressed, which contributes to rising prices.

With recent interest rate hikes and other changes, sales and prices in the GTA saw some moderation in 2018. But this will be short-lived, and a return to price growth is expected.


2 Increased government involvement – finally

Government lobbying by BILD and TREB seems to be paying off, in the sense that the Province is increasingly aware of the issues facing the industry – and buyers.

Buyers, you may not realize it, but you should thank BILD, TREB and other associations for that.

In late November, Ontario announced it was committing to a housing action plan “to help create more housing faster, give people more choice and bring down housing costs.”

Like anything involving government, though, this process will likely be slow moving – meaning, some of the challenges, namely increasing housing supply – will take time to be resolved.

But at least the issues are on the agenda.

One real example of this improved awareness is Ontario’s recent plan to change the 40-year-old apprenticeship system in the province – a move the home building industry says is a “game changer.”

It’s a game changer because the new one-to-one ratio, a significant change from the existing 3-to-1 ratio, will enable home builders and renovators to more easily hire and train new apprentices. Besides creating more job opportunities for trades workers, the move also helps builders and renovators operate their businesses


3 Fixing on interest rates

The Bank of Canada raised its overnight rate three times in 2018 – January, July and October – to where it sits now, 1.75 per cent.

Canada’s major banks, as is usually the case, responded by immediately raising their own rates.

Naturally, all of this has Canadians feeling a little uneasy.

The Conference Board of Canada’s latest Index of Consumer Confidence confirms that rising interest rates and weaker wage growth have started to take their toll on confidence. With interest charges squeezing Canadian wallets and weakening wage growth offering little reprieve, consumers have become hesitant to make major purchases and are less positive about the state of their finances.

In its latest rate announcement on Dec. 5, the Bank of Canada noted that global economic expansion is slowing, and the effects of the “oil price shock” are being monitored.

“We expect that the Bank will not move the overnight rate until the effects of the declining energy sector are known,”according to interest rate comparison website ratehub.ca. “However, the Bank makes it clear that they still plan on raising the key interest rate in 2019, likely more than once.”

This moderated stance might put downward pressure on fixed rate mortgages, however, so Canadians may see better fixed rates in the coming weeks, ratehub.ca says.


4 Real estate is more local than ever

It’s a simple point that escapes some consumers: Real estate is local, and in 2018, it became more local than ever.

What do we mean?

Well, the Canadian Real Estate Association (CREA), Canada Mortgage and Housing Corp. (CMHC) and other major real estate bodies are mandated to oversee the national market.

So, when CREA issues a release that says Canadian home sales are down by X per cent, or when CMHC reports the national vacancy rate is down for the second consecutive year – and major media report such headlines – people tend to worry.

It’s essential to remember, however, that when you buy a home, you don’t buy the national market. You buy one house, on one street, in one neighbourhood, in one city and region.

If you live in Ontario, why do you care that Alberta’s ongoing oil industry struggles are pulling sales and prices down in markets in that province? Or that prices in Vancouver are even less affordable than in Toronto?

Forget the national headlines. Drill down into what’s happening in your market.

And why is real estate more local then ever? Because…


5 Lessons from Oshawa

General Motors Canada’s November announcement that it was closing its Oshawa assembly plant sent shockwaves not just through the province but all of Canada. To be sure, the loss of at least 2,500 jobs – not to mention untold positions in related suppliers – in a community of 170,000, is going to hurt. Hurt whom, and how badly, are the only questions.

This development should serve as a stark reminder to us all – of how important it is for cities to develop diversified, modern economies. Overdependence on any one ge, singular industries leads to overexposure in the case of downturns or, in GM’s case, outright shutdowns. It hurts the local economy, which impacts employment and wage growth, which impacts the housing market.

Oshawa, thankfully in recent years, has been diversifying its economy and expanding in technology, education and other industries. It will help, but the impact of the GM closure will likely play out over many months, if not years.

These developments could push housing in Oshawa into a buyers’ market, and prospective buyers could benefit from more options and softening prices.

In new homes, builders remain undeterred, encouraged by the longer-term growth and development throughout the Durham Region. Still, some may offer incentives such as discounts or inclusions to entice qualified buyers.



GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

What the GM plant closure means for Oshawa’s economy and housing market

New home buying opportunities abound in Oshawa and Durham Region

Where are interest rates headed in 2019?




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THE INDUSTRY INSIDER: Affordability is a challenge

Affordability is a challenge: The prices of condos have been rising

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Affordability is a challenge: The prices of condos have been rising

The prices of condos, which used to offer homebuyers a more affordable choice, have been rising, reducing the advantage of this option.

Every fall, BILD invites experts on economics and housing to join us for breakfast and speak to our members about what the GTA housing market will look like in the coming year. This fall was no exception and I was heartened by much of what I heard about current and future trends from Patricia Arsenault of Altus Group and Dana Senagama of the Canada Mortgage and Housing Corporation (CMHC). I also saw we have much left to do around housing supply and affordability in our region.

There’s no doubt we have a lot to look forward to in the GTA. Economic conditions are expected to be solid in the short term, with the employment growth rate projected to be 1.8 per cent in 2019, according to Arsenault, who is Altus Group’s executive vice president, data solutions. More GTA households than last year are planning renovations of over $5,000 in the next year, and the percentage of GTA households that currently rent but plan to buy a home in the next year has rebounded after softening last summer, according to Altus Group’s survey.

But these survey results only indicate what homeowners and potential new homebuyers intend to do, not what they are ultimately able to do, and Arsenault noted that households may take longer to save for that first home in the face of new mortgage hurdles and housing affordability challenges. The prices of condo apartments, which used to offer potential homebuyers a more affordable choice than single-family homes, have been rising, reducing the advantage of this option. In September, the benchmark price of new condo apartments was $789,643 and the benchmark price of new single-family homes at $1,119,533.

Despite rapid price gains in both ownership and rental markets, the supply response has been weak or inelastic, said Senagama, who is CMHC’s manager of market analysis. That means our housing supply is not rising in response to increased demand for housing and the corresponding increase in the prices of homes, as the law of supply and demand would lead us to expect. In fact, Senagama showed that Toronto is one of the markets in Canada that are not at the risk of overbuilding.

I was not surprised to hear this. BILD has consistently delivered the same message. We have said that we are not building enough housing to accommodate the 115,000 new residents who are arriving in our region every year. We should be building 50,000 homes every year, and last year we only built 38,000. A big reason for this supply shortfall is the lengthy development process that housing projects face in the GTA, slowed down by outdated regulation and red tape.

We should be updating zoning bylaws and official plans and streamlining the list of conditions for municipal approvals, so that we can build the housing our growing region needs. Only then will potential homebuyers be able to afford to make their dream of owning a home a reality.

David Wilkes is president and CEO of BILD.


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Canada Outlook NEW

Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

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Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

Canada Outlook NEW


By Wayne Karl

Canada’s housing market should see a moderation in both housing starts and sales, while home prices are expected to reach levels that are more in line with economic fundamentals such as income, job and population growth. This forecast for 2019 and 2020 is drawn from the 2018 Housing Market Outlook from the Canada Mortgage and Housing Corp. (CMHC).

Source: CMHC Housing Market Outlook
Source: CMHC Housing Market Outlook

Nationally, CMHC’s outlook for 2019 projects total housing starts to edge down and range between 193,700 to 204,500, with the downward trend expected for both single and multi-unit starts. MLS sales are expected to be between 478,400 and 497,400 units annually while MLS prices should lie between $501,400 and $521,600.

“Our key takeaway from this year’s outlook is moderation in Canada’s housing markets for 2019 into 2020,” says Bob Dugan, chief economist, CMHC. “Housing starts are expected to decline from the higher levels we’ve seen recently. We expect resales in 2019 and 2020 to remain below recent peaks while prices should reach levels that are more in line with economic fundamentals such as income, job and populations growth.”

Ontario recovery

After dampened market activity in 2018, existing home sales and housing starts in Ontario, particularly in single-family homes, will post a partial recovery in 2019. Buyers are expected to re-enter the market on the strength of stronger than expected job growth and in-migration, before the downward trend in starts and sales resumes in 2020.

Source: CMHC Housing Market Outlook
Source: CMHC Housing Market Outlook

GTA growth

With balanced conditions prevailing in the GTA, CMHC expects moderate sales growth and home prices growing in line with inflation. The rising costs of homeownership will result in strong rental demand, while new supply will add some upward pressure on vacancy rates. Toronto buyers should see more housing choices as builders concentrate their efforts on new highrise projects.


Housing starts activity and MLS sales in BC should moderate, as economic and population growth slows while MLS average prices are expected to see a flatter growth profile through 2020.

Over the next two years, Metro Vancouver’s resale market will see lower sales, higher inventories of homes for sale and lower home prices compared with recent market highs. Through 2018, demand and home prices softened across all market segments and local geographies.

Buyers’ market conditions in Alberta and Saskatchewan should gradually shift to a balanced market with gradual improvement in economic and demographic fundamentals. Balanced market conditions in Manitoba are expected to continue.

Various factors will push and pull the demand for housing in Calgary in 2019 and 2020. Calgary’s economy will experience stronger growth in population and employment. This will help support demand and lift sales in 2019 and 2020. However, the average MLS price will continue to face downward pressure but is expected to stabilize in 2019 and modestly rise in 2020.

Housing starts and sales of existing homes will both be sustained, however, slower economic growth and rising borrowing costs will moderate activity through 2020. Starts will continue to be dominated by the apartment market segment, while demand for resale single-detached homes will remain relatively strong.

In 2018 and 2019, rental housing demand will increase slightly faster than supply in Montreal, which will put some downward pressure on the vacancy rate. Demand will be supported by rising net migration over the forecast horizon.

The Atlantic region will see sustained activity, notably in Nova Scotia, where existing home sales and average prices should trend higher while rental demand will drive growth in apartment construction.


7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW




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