Tag Archives: Perspectives

h_nov2018_perspective_fi

It’s time to better prepare for the future of Toronto

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It’s time to better prepare for the future of Toronto

Toronto is quickly becoming a city of the future and it is time to start planning for that future.

The world around us is changing at a feverish pace and I am willing to argue that the last time human’s lifestyles were altered so significantly was with the introduction of the automobile and the years that followed the industrial revolution.

In the last 35 years, we have transitioned from a largely analogue way of life to being digital dependent. The integration of personal computers, smartphones, Internet, GPS and texting has “assisted” the way we interact in commerce and in our private lives. However, we are still working and living a in similar fashion to the way we were before the new technology.

More recently, we have frequently been hearing reports of “disrupters” — the term used to define technological advancements that aren’t complimenting the way we are doing things, but rather changing what we do completely.

Google, Apple, Airbnb, Uber, Amazon and Wework are examples of corporations moving us in that direction and the advancements they are making in artificial intelligence, driverless vehicles, block chain and crypto currencies are the at the core of a cultural shift.

At this point (if you are still with me) you may be asking, what does any of this have to do with home buying in the GTA? A lot, actually.

Toronto and its surrounding communities are among the fasting growing technology hubs in North America. Microsoft and Sidewalk labs are two examples of many of the major corporations investing in Toronto — and that is good news for anyone in real estate. Job growth will continue to increase and with that comes the demand for homes. But antiquated approval processes and a shortage of labour will continue to constrain supply, resulting in prices continuing to rise the long run.

When this thought is applied to technology, how will disrupters influence how and where we live? It is difficult to say with certainty, but one thing is for sure — look for a home or income property close to employment and/or transit because chances are you enjoy spending time with your friends and family and not on your commute.

Despite the many positives that come with job creation, there are inevitably some negatives, mostly in the form of congestion. The people who can afford to have it all will be able to buy close to their employment — or anywhere they want to live, for that matter. However, for the majority of us it will become increasingly important to live in communities with close proximity to transit nodes. The ability to move freely and quickly will continue to become increasingly difficult as the GTA continues its growth.

Toronto is quickly becoming a city of the future and it is time to start planning for that future.

Fraser Wilson is vice president at International Home Marketing Group. IHMG.ca

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h_oct18_perpectives_fi

Perspectives: How Big Should Your Home Be?

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Perspectives: How Big Should Your Home Be?

As home prices remain high in the GTA, more homebuyers should appreciate that smaller homes are the way to go.

According to The Globe and Mail, the average home size in Canada in 1975 was 1,050 square feet. By 2010, that figure had nearly doubled to 1,950 square feet. Over roughly the same period, the average number of people living in a home declined from 3.5 to 2.5.

Today, Canada ranks third in the world in terms of average home size according to Point2Homes.com, behind Australia and the U.S.

Our living space per person averages to 618 square feet, which is 36 per cent larger than in the U.K. and 44 per cent more than Brazilians.

Clearly, we are a nation that cherishes our space. However, with average home prices holding steady at over $1 million in Toronto, more homebuyers may have to make due with more modestly sized dwellings.

This is a reality that we might just have to live with. After all, Toronto has finally arrived on the global scene as a truly world class city. So, just as in Hong Kong, London, New York and Paris, more families are probably going to have to consider smaller homes and condominiums.

It’s a trend that is actually already well under way. According to The Toronto Star, as of the last census in 2011, there were 10,500 more Toronto families with children living in condos, up to 129,000 in total from just over 118,000. This meant that growth in condo living families (8.9 per cent) was over double the growth of total number of families living in the region (3.9 per cent).

This may not have been the dream for some homebuyers, but many families will love the sense of community and access to amenities that is available in the condominium scene.

Smaller houses have their benefits, too. They offer reduced maintenance costs, and you’ll need fewer items to furnish them, which can also save you a bundle. Small homes lend a taste of family, they can be cozy and promote more unity.

So, with home prices showing no signs of lowering any time soon, you may want to expand your criteria to consider the concept of life on a smaller scale. It’s the big decision that might just make all the difference in your life, and your finances.

Lisa Chester is vice president, sales and marketing, at International Home Marketing Group. IHMG.ca

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h_sep18_perspectives_fi

Perspectives: Is A Custom Home The Right Choice?

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Perspectives: Is A Custom Home The Right Choice?

It’s becoming a more popular option, just be sure you know what you’re getting into

Many people have been asking what to do with their homes given how volatile the Toronto housing market has been for the last number of years. Most are opting to just stay in a home that no longer works the way they want rather than risk moving somewhere else. However, just because you decide that it’s better to stay put than to jump into the ever-fluctuating market, you don’t need to stay in a house that isn’t for you.

I’m going to explain some of the different options you have available to you that will allow you to stay in the house and neighbourhood you’re comfortable with that includes all amenities you’ve grown to know and love, without sacrificing the home that you truly wish you lived in.

Recently, I have noticed many new “smaller owned” custom homebuilders pop up in and around the city, paving the way for homeowners to make their dreams come true.

I’ve spoken to a number of people who chose to stay put and build rather than move and I’d like to share a few of those experiences with you. There are two things to keep in mind before you start:

  • A custom home renovation can truly be a blank slate. If you have specific ideas in mind, they can always be realized. If you are more comfortable leaving things in the hands of professionals that can be an option, too. If, however, you are really risk averse, the best option might be to consider buying an existing home.
  • Always make sure you find a reputable custom homebuilder who can take you through the entire building process from the initial draft to the final stages.

My first story comes from a woman who loved her neighbourhood and simply wanted to upgrade the home she already lived in. The builder allowed her to help in the design phase so the house would be exactly what she wanted. She lived in the home for the first six months during demolition and then had to move to a rented space while the project was completed.

It’s important to factor these potential costs in when beginning a project. Also, if you’re going to take a handson approach, be prepared to take time off work to help pick out flooring, tiles, paint, etc. so timelines stay intact. In the end, the woman fell in love with the addition and says that she would try and better prepare herself for any added stresses if she were to do it again.

My second story comes from a very hands-off homeowner. He met with an architect and they agreed on a budget and a style. The owner and his family moved out for two years while the house was rebuilt using designs, styles and innovations adopted by the architect. When construction was complete, the owner was thrilled with the results and had no stress issues.

While these are just two people’s experiences, hopefully you can learn a thing or two from them and apply them to your own views. Plus, before you start making any major changes to your living situation, here is a list of eight key things to consider first:

  • Know what you are getting into.
  • Hire the right people.
  • A designer is a must; knowing how much furniture and the placement early in the design phase is key.
  • Plan, plan and plan some more. Communicate everything and never assume.
  • Things look worse before they look better.
  • Mistakes will happen; have a backup plan.
  • Get to know your trades, they are on your team.
  • Listen to the professionals but know when to trust your gut.

If you think this list is manageable, maybe a custom home is the right choice for you. Just remember that the right team will make all the difference as to whether your custom home experience is a dream come true or a renovation nightmare. When you do select a builder and architect, make sure to ask for references, see examples of previous work and do a little bit of research online to make sure that there are no major red flags. When you follow these tips, you dramatically increase your chances of creating the home you’ve always wanted.

Vanessa Bellemare is the vice president, sales and marketing, of International Home Marketing Group (IHMG), a fully integrated sales manage and marketing company.

IHMG.ca

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h_jun18_perspectives_2

Perspectives: It’s Time To Demand Change

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Perspectives: It’s Time To Demand Change

Government intervention has spooked the market and made housing unaffordable for most

There is no denying that the climate of home sales has changed from just over a year ago. Nearly every media outlet jumps at the opportunity to sensationalize the year-over-year comparison statistics. To their credit, those statistics do depict a drastic change in the numbers. Unfortunately, the year-over-year comparison seems to be all that they are focused on. In what has become a vicious news cycle, this narrow scope unjustly pushes the market further down the road from reaching its equilibrium and for that reason I will attempt to speed up the process.

What we know is that the first quarter of 2017 was without doubt the hottest the market Southern Ontario has recorded, which was not healthy or normal but it was a natural result (more on that later). This all came to an abrupt halt with the introduction of the province’s 16-point Fair Housing Plan, also know as government intervention. The plan has successfully spooked the market, but has done little in accomplishing the “fairness” it set out to do. Couple this with the increased mortgage regulations stress test, and what we witness in the year-over-year data is easily explained.

Furthermore, the severity of this data has been exacerbated because it happened at a time when many baby boomers were putting their next step into motion. First-time buyers who were poised to benefit from this rare moment in time cannot capitalize because the net affect of the stress test results in the equivalent of having no price adjustments at all.

Those who made future plans under fair market conditions are now faced with the fallout of the unfair consequences, which stem from a sudden market intervention. Ironically, one that was devised to compensate for the issue that drove prices up in the first place — lack of supply.

The simplest and very first lesson in economics is that of supply and demand. If there is an imbalance in either, price adjustments will occur until equilibrium is naturally met.

An appropriate approach to creating fair housing should have started years ago. Once population growth targets were set and being realized, an adjustment to the policy and the approval process allowing for housing to come to market quicker should have been made. As it currently stands it takes a developer south of the border mere months from purchasing land to selling and building homes, meanwhile in Ontario this same process will take several years at minimum. Our population has been growing according to plan while our housing supply has been shrinking.

So what does this all mean? It means that despite a challenging moment for understanding the home market, in the long term demand will still outpace our lack of supply.

Leave the year-over-year statistics behind and focus on the future. In the immediate term there is a slight edge to buyers in certain places who are ready and able to qualify — but don’t hesitate as prices will soon resume their rise. If the entire market wants to avoid future turbulence we all need to voice our desire for a change of Wynn’d.

Fraser Wilson is the vice president of International Home Marketing Group (IHMG), a fully integrated sales management and marketing company. IHMG.ca

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Perspectives: A Baby Boomer Shaped Hole

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Perspectives: A Baby Boomer Shaped Hole

Shrinking condo sizes and skyrocketing prices are pricing downsizers out of the market

For the first time in the history of Canada, the number of people aged 65 years or over now surpasses the number of children aged 14 years or under. This unprecedented demographic shift means that the market is beginning to be flooded with affluent 65-plus baby boomers looking to downsize from their large family homes.

In the next five to ten years, even more baby boomers will be retiring and looking to downsize, so in many ways the baby boomer is the perfect customer for savvy developers to be targeting right now. Unfortunately, a combination of poorly designed policies and untimely market forces have severely limited the affordable options available to this highly coveted buyer.

While the idea of maintaining a two-storey home in retirement seems like a viable option for some retirees, home upkeep and mobility concerns in homes with flights of stairs are driving many baby boomers towards large-sized condominiums.

There’s just one problem: trying to find an affordable living space that can comfortably accommodate a downsizer is still almost impossible. This is true not only for the existing stock of condominiums, but also for new developments coming to market.

As a condominium sales and marketing consultant, I have the opportunity to meet with several developers on a weekly basis to see firsthand what the current market trends are. While many developers are doing an excellent job at creating products to meet the needs of young professionals, the current design and suite mix across the city is simply not well situated to meet the needs of the baby boomer demographic.

Ironically, a large part of the problem stems from the way the city has been pushing for more multi-bedroom suites. At first this might sound like a good thing until you look at how they are doing it.

It all starts with development fees. They are a huge source of revenue for the city, and they are levied based on how many bedrooms a suite has. The difference in development fees between a one- and two-bedroom suite can be as much as $10,000.

Under the current system, a developer may design a 650-square-foot onebedroom- plus-den suite, only to have the city come back and tell them that they will be charged a two-bedroom suite development fee for that suite layout. This means that the developer will have to redesign that suite so that it can be marketed as a two-bedroom unit.

Because this trend of pushing for more bedrooms is happening across the city, it means the average square footage for one- and two-bedroom suites is going down. At the same time, suite pricing is strongly tied to the number of bedrooms, so this phenomenon is also driving the cost per square foot up. The end result of these market and policy forces is that the average baby boomer is getting pushed out of the condo market.

Imagine you are a retired couple currently living in a 3,000-square-foot home worth $1.5 million. You want to downsize to a 1,500-square-foot condo that is easier to maintain but still gives you enough space to have the kids come to visit. The average cost for a downtown condo of 1,500 square feet is almost exactly the same price as their current home. This means that they are getting half the square footage for the same price. Not much of an incentive.

I recently met one downsizing couple who did the math and thought it would be better value to spend $50,000 installing an elevator so they can stay in their home as they age.

A related issue in the lowrise market is that developers are not building bungalows, either. This is mainly because the cost of land has increased so much, a 2,400-square-foot home in King Township would cost in upwards of $1.2 million. Land has now become so much of the cost of building that a two-storey detached home in the same community, on the same lot size, would cost essentially the same. Where can one retiring find money to live on if they are paying so much more to downsize?

Back in Toronto’s highrise market, we see another problem. The current inventory of larger luxury condo suites are simply not priced to sell. There are some developments that have suites over 2,000 square feet priced anywhere from $3 million to $5 million, plus the cost of monthly maintenance fees. This is simply not an appealing option to many people who could own a very nice Toronto home for much less than this.

The solutions to these problems are complex, but developers and municipalities will be wise to consider them carefully. With over 23 per cent of the population retiring in the next 10 years, the time is now to find solutions that will appeal to this near ideal target buyer.

Vanessa Bellemare is vice president of sales and marketing at International Home Marketing Group. IHMG.ca

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h_mar2018_perspective_1

Perspectives: We All Need Housing

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Perspectives: We All Need Housing

And there is no time like the present to get into the market

Before I get into this article, I want to express my thanks to HOMES Publishing Group for inviting the International Home Marketing Group team to be regular contributors to the magazine. After being a long-time reader, it is an honour to be a first-time provider of information from the sales floor.

Two common questions that we get asked all the time are: “Where are these home prices going?” and “Will it keep getting more expensive over the long term?”

Truth is, if I could answer these questions with complete accuracy I would probably be rich — and retired — by now. The market fundamentals in the GTA are strong and will continue that way. With immigration not slowing down, job growth rising and vacancies for rental properties staying at historic lows — we need housing.

Market forces propelling value upwards are the strongest in Toronto’s downtown core; people want live close to work, and their willingness to live in a vertical world for a lifestyle that puts them in the heart of the action, has fuelled the condo boom. The issue with pricing these types of homes is what it takes to deliver an amazing project in a desirable location.

It starts first with the price of land and where it has been going. If the purchasers think condos have gone up in price lately, you should see what some of the recent land transactions look like. A little over 18 months ago, we saw — and thought — that land price purchases were crazy, but those purchase prices now look like a steal as we have seen many recent transactions more than double what they were just a short time ago.

Selling over 25,000 units preconstruction means one simple thing: we now need to build these units. This puts pressure on the pricing of material, which continues to escalate. As well, well-trained trades and consultants come at a premium, which all adds to putting upward pressure on the ultimate sales price.

One of the biggest factors — and could not only take up a full article, but perhaps a full magazine — are the various levels of government that mire the industry in red tape and delays in timing. This is the industry’s greatest current constraint on being able to bring housing to market and deliver projects in a timely manner. The zoning process has moved well beyond frustrating and, with the current changes in policy, it is almost impossible to make a land deal with the confidence that you will be able to build what will be needed to make the land purchase worthwhile. Not to mention delivery-timing risks that could easily erase any possible profits.

The public never gets an explanation of the true costs involved and risks associated. When we’re pumping gas we can see the breakdown of costs associated with a litre of gas right on the pump, and the small amount left over as pure profit. These narrow margins are also true of our industry. It’s my personal belief that with such great risks, developers and builders will need to take greater profit margins in the future to ensure the sustainability of the industry.

In addition to this, knowing the high prices paid for future sites, the hard costs to build a project, as well as the soft costs and red tape, it’s clear that we cannot sell for less in the future. Supply and absorption may slow down due to economic factors. Supply will most certainly slow down based on government approval factors, but prices should continue to rise.

The key takeaway: if you want to buy and have the means, there is no time like the present.

The lowrise side of our business has many other factors to discuss. I look forward to examining that with you in a future issue.

Elliott Taube is president of International Home Marketing Group, a full-service sales management and marketing firm.

IHMG.ca

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