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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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Mortgage Rates web

Interest rate hikes may not cost you as much as you think

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Interest rate hikes may not cost you as much as you think

Mortgage Rates web

By Wayne Karl

When the Bank of Canada announced an interest rate hike  on Oct. 24 – and within hours all of Canada’s major banks followed suit in hiking their prime lending rates – consumers largely groaned.

All of CIBC, TD Canada Trust, Scotiabank, RBC Royal Bank and BMO Bank of Montreal almost immediately issued virtually the same statement, word for word: “(Insert bank name here) announced that it has increased its prime lending rate by 25 basis points from 3.70 per cent to 3.95 per cent, effective Oct. 25, 2018.”

Yes, the numbers, too, are identical.

BoC had already raised its influential overnight rate target three times since July 2017, to 1.5 per cent from 0.75 per cent, and now this most recent hike to 1.75 per cent, while hinting that further increases are likely.

For mortgage holders, though, the increases may not cost you as much as you fear.

Fixed rates

The majority of Canadian mortgage holders are on fixed-rate products, which is why a more moderate pace of rate increases likely won’t impact the market significantly, according to Canada Mortgage and Housing Corp. (CMHC).

Nearly half of existing mortgages in Canada will come up for renewal in 2018, according to a data release from CIBC Capital Markets. However, despite having to renew their mortgage in a rising interest rate environment, a borrower with a five-year mortgage rate may be able to get a better deal on their mortgage renewal today than when they entered the housing market five years ago.

According to calculations from mortgage rate comparison website  Ratehub.ca:

The best five-year fixed rate in September 2013 was 3.29 per cent. With that rate, a borrower with a $400,000 mortgage amortized over 25 years would have had a monthly mortgage payment of $1,953 over the last five years.

If that same borrower renewed their mortgage at today’s best five-year fixed rate of 3.19 per cent, their monthly mortgage payment would decrease by $17 per month to $1,936.

“Canadians who require a new mortgage in coming months should lock in a fixed rate as soon as possible,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “This includes those who are purchasing a home, and homeowners whose mortgage is coming up for renewal.

“Remember that, on average, mortgage providers will offer their existing customers a discount of 0.25 per cent off their posted rate on a renewal. However, there may be more competitive rates out there. Be sure to shop around online or use a mortgage broker to negotiate the best rate for your renewal.”

Laird says borrowers should begin shopping around 120 days in advance of their renewal date in order to negotiate a competitive mortgage rate.

A rising interest rate environment could put downward pressure on home prices, he says, but upward pressure will come from predicted economic growth, lack of housing supply, immigration and first-time homebuyers.

Variable rates

“Borrowers should expect variable rates to perfectly correlate with Bank of Canada rate increases,” Laird says. “Variable rate mortgage holders should also be prepared for several increases to their interest rate in coming months and, with general interest rates in Canada on the rise, fixed rates will rise as well. However, those currently in fixed rates have nothing to worry about until their next mortgage renewal date.”


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





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Toronto and Hamilton highlight evidence of overvaluation, CMHC says

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Toronto and Hamilton highlight evidence of overvaluation, CMHC says


One day after the Bank of Canada raised its overnight lending rate – and hinted at further increases in the near term – the Canadian housing market got another sobering reminder this week: the latest Housing Market Assessment (HMA) from Canada Mortgage and Housing Corp. (CMHC).

CMHA warns that Canada’s overall housing market remains highly vulnerable, though conditions of overvaluation are easing as a whole.

The quarterly report acts as an “early warning system” for the country’s housing markets – an important tool supporting financial and housing market stability.

In Ontario, Toronto and Hamilton home prices are moving closer to levels supported by housing market fundamentals such as income, mortgage rates and population. Still, these markets continue to exhibit a high degree of overall vulnerability.

Source: CMHC Housing Market Assessment
Source: CMHC Housing Market Assessment

Toronto continues to show moderate evidence of overheating and price acceleration, and strong evidence of overvaluation, CMHC says. On the plus side, there is weak evidence of overbuilding, as the number of completed and unsold units is at a historic low.

Hamilton CMHC
Source: CMHC Housing Market Assessment

In Hamilton, moderate evidence of overheating exists, due to a high sales-to-new listings ratio in eight of the last 12 quarters. Price growth has persisted over the last 12 quarters, contributing to moderate evidence of price acceleration. Overvaluation in Hamilton has decreased on average, but moderate evidence remains since house prices are considerably higher than levels supported by economic fundamentals, CMHC says.


  • Evidence of overbuilding remains high in Edmonton, Calgary, Saskatoon and Regina, so those markets continue to receive a moderate degree of vulnerability in the overall assessment.
  • A low degree of overall vulnerability is sustained for Ottawa, Quebec City, Moncton, Halifax and St. John’s where house prices continue to follow the path of fundamentals.
  • Montreal’s resale market is close to overheating, creating significant upward pressure on prices as a result of a sharp tightening between supply and demand.
  • In Winnipeg, evidence of overbuilding as well as the degree of overall vulnerability changed from low to moderate, reflecting increases in the inventory of newly completed but unsold units.



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

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GTA 2019

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

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

GTA 2019

By Wayne Karl

GTA homebuyers, we have some good news and some bad news.

First, the good news: You live in one of the most desirable areas and housing markets in Canada – maybe even the world.

The bad news? That affordability challenge we’re all facing.

“The affordability issue is not going away,” PricewaterhouseCoopers says plainly, in its Emerging Trends in Real Estate 2019 report.

Why? See point number one.

“Potential homebuyers will need to alter their expectations and possibly delay entry into homeownership,” Dana Senagama, manager, market analysis for Canada Mortgage and Housing Corp. (CMHC), told Homes Publishing.

Not exactly the most hopeful outlook for those – especially first-timers – looking to buy a home in and around the GTA.

But it’s not all bad. Let’s look at what’s going on in the market, and what would-be buyers can do to help their cause.

1 Return to price growth

Following the introduction of the Ontario Fair Housing Plan in April 2017, recent interest rate hikes and other changes, sales and prices in the GTA have seen some moderation.

But the slowing will be short-lived, Senagama says. Key economic fundamentals such as population and employment growth will continue to drive housing market demand, but the supply of new homes is not being addressed. The result? A return to price growth.

“CMHC is working on data gaps like supply with many industry stakeholders and partners,” she says. “Currently, we are participating in a working group with the province of Ontario to find solutions and best practices.”

PwC says the region is feeling the effects of demographic shifts. Millennials have begun to compete with Baby Boomers for real estate, and over the next decade, almost 700,000 first-time buyers will target the GTA or Hamilton markets, according to a May 2018 report from the Ontario Real Estate Association.

2 Risk of overvaluation

Senagama cautions, however, that the Toronto market is still showing signs of overvaluation.

“This happens when house price growth is surpassing the population and income growth. So, despite some of the moderation you’re seeing, we’re still calling for a high degree of vulnerability in Toronto in the foreseeable future.”

3 Inelastic supply

The GTA housing market is characterized by inelastic supply. “Supply is slow to respond to any change in price, and we’re seeing that time and time again,” she says.

Recent research from CMHC and Altus Group, in fact, shows that of the lowrise new home projects that were started in 2016 and 2017, it took 15 years for those developments to go from the initial land purchase to product hitting the market.

Supply response
Source: CMHC


“We have a problem, in terms of supply.”

With very limited new home supply hitting the market, once buyers get used to temporary shocks to the system brought on by policy issues and rising interest rates, they return to buying homes, which in turn drives up prices.

4 Condo demand

With lowrise home prices enjoying spectacular growth in recent years, there was a compositional shift in demand toward less expensive product – namely condos – particular among first-time buyers.

But now, with price growth even in this category – with average condo prices rising 8.4 per cent year-over-year to $552,269 in the third quarter this year – and pre-construction units in the $700,000 range…

“These are not price points for first-time buyers,” Senagama says, “so we’re still looking at very high prices across the GTA.”

5 Mortgage rates

The Bank of Canada has already raised its influential overnight rate target three times since July 2017, to 1.5 per cent from 0.75 per cent. Experts expect at least one more increase this year, possibly as early as the next rate announcement on Oct. 24.

A more moderate pace of rate increases could impact the market, but not significantly since the majority of mortgage holders are on fixed-rate mortgages, CMHC research shows.

6 Rental market

Any discussion about affordability needs to include the rental market, Senagama says. “Much like the ownership segment, supply is a huge constraint in the Toronto rental market.”


With the average vacancy rate in the GTA 1.1 per cent, and 0.7 per cent for condo rentals, rental rate increases are picking up steam. “Because we have a supply problem. And because we don’t have enough supply of the purpose-built rental units, the gap has been filled in by the condo market.”

About 33 per cent of all condos in Toronto are being rented out by investors, according to CMHC. This results in renters paying a much higher premium to rent a condo versus a purpose-built apartment – on average 50 per cent more, for a two-bedroom unit.

“We talk about affordability, and this raises so many other concerns, especially in a market that is supply-strapped,” Senagama says.

7 Catch 22

investors are buying into the condo market to rent out their units, taking advantage of the tight rental market. But first-time buyers – who typically aren’t equity-rich or wealthy – have to compete for available condo product, which again drives up prices.




1 Affordability

More supply of new homes is a big part of the solution. But despite ongoing lobbying from the housing industry, and apparent increasing awareness of new elected municipal leaders, this problem won’t be solved overnight. It will take time. Lots of it. In the meantime, as PricewaterhouseCoopers says: The affordability issue is not going away. It might even get worse before it gets better.

2 Market moderation waning

With little relief on the supply side expected, price growth will continue to be strong, even if somewhat muted compared to the double-digit increases seen over the last few years. In short, the longer buyers wait, the more it could cost you.

3 Interest rates

Experts expect at least one more increase this year, possibly as early as the next rate announcement on Oct. 24. To protect yourself against a more moderate pace of rate increases, consider a fixed-rate mortgage product.

4 Pent-up demand

Buyers believe prices are going to increase, but not to the same degree we’ve seen in recent years. This will lead to pent-up demand, which when released over the next year, will contribute to increasing buying activity and rising prices. So, if you’re able to buy before then, you could beat the rush.

5 Rental market

If you’re a Millennial planning to move out of home and into the rental market, consider this: Toronto is the most expensive Canadian rental market, with average rates for one-bedroom units at slightly more than $1,900 per month (up 2.8 per cent from August to September); $2,374 for two-bedrooms (up 7.1 per cent). Try saving up for a down payment at those rates; maybe staying at home a little longer isn’t so bad after all.

Wayne Karl is Senior Digital Editor at Homes Publishing. wayne.karl@homesmag.com 


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Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

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Home prices and affordability still a concern – CMHC Mortgage Consumer Survey


Rising home prices and affordability continue to weigh on prospective homebuyers, according to Canada Mortgage Housing Corp., in its 2018 Mortgage Consumer Survey.

Indeed, for first-time buyers, price and affordability are the most important factors they consider when buying a home – more than type of neighbourhood, proximity to work and overall condition of the home.

While decreasing steadily for four consecutive surveys, more than one-third (37 per cent) of homebuyers continue to feel concern or uncertainty when buying a home. “Concerns related to affordability top the list with more than 50 per cent of concerned buyers worrying about paying too much for their home while nearly one-third worry about rising interest rates and mortgage qualification,” the survey says.

Other survey highlights include:

  • Eighty-five per cent of first-time buyers spent the most they could afford on their home purchase.  However, a majority (76 per cent) are confident that they will be able to meet their future mortgage payment obligations.
  • Sixty per cent of first-time buyers and 69 per cent of repeat buyers indicated that, if they were to run into some financial trouble, they would have sufficient assets (such as investments and other property) to supplement their needs.
  • About 50 per cent of homebuyers agreed they would feel comfortable using more technology to arrange their next mortgage transaction. However, the majority agree it is important to meet face-to-face with their mortgage professional when negotiating and finalizing their mortgage.
  • Slightly more than half (52 per cent) of homebuyers were aware of the latest mortgage qualification rules. About one in five first-time buyers indicated the rules impacted their purchase decision with most opting to decrease non-essential expenses, purchase a less expensive home or use savings to increase their down payment.
  • Consumers continue to show confidence in their homebuying and mortgage decisions, with 80 per cent believing that homeownership remains a good long-term financial investment and 66 per cent believing the value of their home will increase in the next 12 months.
  • More than one in five (22 per cent) first-time buyers were newcomers to Canada and almost 50 per cent were millennials (aged of 25 to 34), down from 60 per cent in 2017.


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THE ANALYST : Premier Ford: Seven steps to housing affordability

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THE ANALYST : Premier Ford: Seven steps to housing affordability

By Andrew Brethour
PMA Realty

It’s early in the mandate, but here are seven steps to relieving the price pressure and improving housing affordability in the GTA that Ontario Premier Doug Ford should consider. None of these ideas are quick fixes and each will require careful examination and implementation over several years. It took us 15 years to get into the untenable position we find ourselves in today and it will take a while to turn the “affordable ship” around.


Supply, Supply, Supply

The last year of the housing supply study coordinated by our firm, PMA Realty, in consultation with CMHC, the Ministry of Housing and BILD was in 2003. The study was completed annually from 1997 and created a databank of net residual residential land supply covering 37 municipalities in the GTA. The total number of lots (low density) and units (high density) were identified as in process, at draft stage and in registered plans of subdivision. All zoned land was included but not yet identified.

Provincial policy at the time was to maintain a three-year supply in these three noted categories. Today, 15 years later, we have a three-month supply. The province introduced the growth plan in 2004 but never did an economic impact statement. In 2004, a serviced 40-foot lot sold for $2,500 per front foot, or $100,000. Today, that same lot — if you can find one — sells for $20,000 per front foot, or $800,000. This reckless and irresponsible escalation in the underlying price of land was driven mostly by provincial policy, not consumer demand.

Mr. Premier, step one is to re-institute the annual land supply analysis and clearly determine the current and projected supply of lots and units in the now Greater Toronto and Hamilton Area. By 2030, only 12 years from now, population growth is projected to move from six million to nearly nine million people. Without a barometer of supply, growth will stagnate and go elsewhere.


Approval Process

The approval process takes too long and is too costly, further affecting affordability. Mr. Premier, review, streamline and deregulate the approval process. The GTA must compete on a North American, even global, basis for new employment opportunities. Many southern U.S. cities where growth is comparable to the GTA take a matter of months from land purchase to approval for construction. In the GTHA, it is an average of more than 10 years. Provincial policy should be set at a maximum of three years.

Mr. Premier, that is your challenge.


Rent Controls

Mr. Premier, much has been written, studied, reviewed and “controlled” in rental housing, yet these controls have not produced more rental stock but, in fact, less. And the existing stock is crumbling.

Yet the divide between the “protected consumer” and the purpose-built rental developer is not that far apart. Rent controls were reset last year in the fair housing plan at an annual increase limit of 2 per cent. Rental buildings are financed over a 20 to 30 year project life period. An extra 1.5 per cent in annual rental increase would make the difference between thousands of projects being cancelled and thousands being built.

Mr. Premier, allow annual rent increases to rise to 3.5 per cent and you will be amazed at the amount of rental activity that will produce.


Hidden Taxes

The tax component of a new home was recently outlined in an excellent C.D. Howe Institute study — over $100,000 per unit in Ontario and over $150,000 per unit in the GTA. If we truly want greater affordability, it can be delivered with lower taxes and greater supply. As sales volumes have declined drastically in the last two years, the municipalities’ response to declining revenue is to increase the development charge. A Catch 22 when it comes to affordability.

Mr. Premier, examine municipalities’ ability to finance infrastructure with an underlying purpose to reducing taxes on new construction. Let’s look for alternatives. One might look at sewer and water infrastructure, currently financed by 30 to 40 per cent of the development charges on new homes. The real cost, in fact, subsidizes existing homeowners. Raise sewer and water rates on all housing to properly reflect the cost, which in turn will lead to greater conservation and more affordable new housing.


Replace the OMB

Mr. Premier, the new system introduced in the dying days of the Wynne government eliminated the OMB and replaced it with a Local Planning Appeal Tribunal (LPAT), where “not in it in my backyard” reigns supreme. This will further delay the approval process. Create a Provincial Dispute Resolution Panel with the oversight to look at the “bigger picture,” the provincial vision for housing density and affordability.

Mr. Premier, re-introduce the office of the Development Ombudsman so that disputes or delays are resolved or arbitrated before reaching the OMB or its replacement body.


Modify the Planning Act

Re-introduce the ability of a developer to bring forward a plan from outside an urban boundary. Let the developer front the cost of services. The municipality can still say no. This provision was removed from the planning act in 2004, further constricting supply.


The Hidden Supply – Employment Lands

Currently, Mr. Premier, employment lands are untouchable. They cannot be considered for residential use yet the very nature and scope of industrial commercial lands has changed dramatically in the last 15 years.

Introduction of Robotics and AI have modified the design and formation of today’s employment spaces. Malone Givens Parsons points out we have used only 34 per cent of available employment lands in the GTA. Conversely, we have used or allocated over 57 per cent of available residential lands. Integrating mixed-use development into employment lands would open up supply dramatically from the current rigid lines drawn on our municipal maps.

Just take a walk around existing older employment designated lands today and the potential supply jumps right out. An instant supply solution is available by potentially converting employment land to mixed-use residential.

Mr. Premier, study the implication and provide the supply solution.

So, there you have it, Mr. Premier, seven steps to improving housing affordability in the GTA.

Mr. Premier, start with theses simple Seven Steps and perhaps another “promise made, promise kept” is possible on the affordable housing file in your first term. Good Luck Mr. Premier!

Andrew Brethour is chairman and CEO of PMA Brethour Realty Group. http://www.pmabrethour.com/


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Condo Market: Is A Condo Right For You?

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Condo Market: Is A Condo Right For You?

This is such a good question that CMHC has devoted an entire section of its “Condominium Buyer’s Guide” to “The Pros and Cons of Condominium Ownership.” Yes, there are a few cons for some people, but the advantages far outweigh them. Still, it is important to be realistic when it comes to making your purchase decision. The best way to do that is to consider all of the parameters of buying a condominium suite in a new building, and then to be realistic about condo living.

For example, CMHC lists one “con” as possibly paying for amenities you hardly ever or never use. The first thing that comes to mind is the swimming pool. Depending on the buyer, the existence or absence of a pool can be a deal-breaker. In fact, savvy buyers who rarely use a pool understand that the portion of their maintenance fees that covers this amenity is very small, and the fact that there is a beautiful pool in the building can add to a suite’s future resale value.

Another point under CMHC’s “cons” is the possibility of having less privacy and more noise in a condo. Today’s developers are going to great lengths to use construction materials and techniques that keep noise to a minimum. In addition, most balconies have privacy walls. As for the interior of the building, by virtue of what a condominium is, residents do interact with people on a daily basis in elevators and common spaces. They have privacy in their suites, and they can socialize when they want to.

And take CMHC’s “con” of restrictions on things such as pets, smoking, window coverings, what you can keep on your balcony, etc. It is true that the condominium corporation will set out standards that are expected to be followed to protect residents’ privacy, safety and quality of life. This benefits everyone in the building.

I could go on, but my point is, are these really “cons,” or are they simply the realities of condo living? The pros listed are enticing: having a say in the running of the condominium; fewer responsibilities for maintenance and repairs; access to gorgeous building amenities; security features; predictable condo fees; and more.

This goes for singles, couples and families. It really does take a community to raise a child, and more parents are realizing that condominiums are in essence vertical communities where people get to know their neighbours in the hallways, elevators and shared amenity spaces. Today’s condominiums are graced with familyfriendly amenities, from fitness facilities to games rooms, theatres, party rooms, pools and rooftop barbecue terraces. Some condos even feature daycare facilities. Remember, too, that the condominium lifestyle includes the peace-of-mind of built-in security measures, beginning with eyes-on-the-street concierge service.

Whatever your situation, if you are shopping for a condo for the first time, gather all of the resources you can. Visit www.cmhc-schl.gc.ca/en/buying/condominium-buyers-guide and read through it carefully. I cannot say enough about the joys of condominium living. What a wonderful lifestyle choice for people of all ages!

BARBARA LAWLOR is president and CEO of Baker Real Estate Incorporated, winner of the pinnacle 2017 Riley Brethour Award from BILD, and an in-demand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas. Keep current with The Baker Blog at blog.bakerrealestate.com


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