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Toronto Real Estate

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Printers Row Lofts - 525 Logan AvenueRare, stunning loft conversion by Bob Mitchell, known as Printer’s Row. This vintage architectural gem located in the heart of Riverdale features soaring ceilings and 15-foot windows with a south view. This boutique 12 unit loft building is nestled in a lovely residential area. The suite’s walkout to private terrace was the original entrance to the building and overlooks a picturesque garden. Large master bedroom with two closets. Open concept main floor has a spacious upper loft overlooking the living room. MORE DETAILS HERE

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Spike in Toronto condo completions may help alleviate shortage of rental units

John Clinkard – Daily Commercial News

A recent research report published by the Royal Bank of Canada could well raise some red flags regarding the health of Toronto’s housing market.

Comment: But the RBC CEO also says he is bullish on the Canadian real estate market – http://www.theglobeandmail.com/report-on-business/economy/housing/rbc-ceo-david-mckay-bullish-on-canadian-housing/article23397854/ – so that kinda kills the red flags.

The report notes that following the completion of a record 10,368 apartment units (mostly condos) in December of 2014, the number of completed and unoccupied condo units in the metro area jumped from 917 in December to 1,602 in January, its highest point since March of 1993.

Comment: Completed and unsold units, occupancy has nothing to do with it. And it does need to be pointed out that the unsold units, as a percentage of all new condos, is still the 10-year average range. The value only rose because more condos were completed. But the percentage is still the same. Everyone needs to remember that 95% of new condos are sold. And think about perspective, there were 31,000-odd condos completed from January 1, 2014 to January 31, 2015 – plus almost 92,000 resales in 2014 (houses and condos). Add in another 40,000 new house and condo sales in 2014 and you get over 160,000 new and resale transactions. And everyone is freaking out about 1,602? That isn’t even 1% of the total annual market. Forget about it.

However, before we declare that Toronto’s housing market is headed over a cliff, it is useful to assess the health of the key drivers of housing demand in the city in order to determine if they are about to run out of gas.

Comment: Why would you declare it heading off a cliff? It grows stronger every day, there is no cliff anywhere in sight.

Condo Construction
First, despite the fact that over 10,000 units were completed in January, the fact that the number of completed and unoccupied multiple units only increased by 701 in the month suggests that the majority of the newly completed units are not quite ready to be occupied.

Comment: No, you have it wrong, you don’t understand the numbers you are writing about. First, 1,602 minus 917 is 685 – NOT 701. Second, those units are UNSOLD, not unoccupied. There is a good chance that a ton more SOLD condos are not occupied. It is moot. Lastly, that means that 93.4% of those 10,368 units ARE sold. That is a lot – 9,683 sold condos to be exact.

Looking forward, there are a number of indicators which suggest that the fundamental drivers of housing demand in metro Toronto will absorb the increased supply of new condo units coming onto the market over the next 12 to 18 months without to much difficulty.

Comment: The market only has to absorb 1,602 units. The rest are paid for and thus off the market. That is 90-130 a month over 12-18 months. As compared to almost 93,000 MLS sales, that is a drop in the bucket, statistically insignificant.

Second, despite the jump in completions in January, the ratio of completed and unoccupied multiple dwellings to units under construction at 3.3% is only slightly above its ten-year average of 1.9%.

Comment: Right, so with completions in 13 months that are usually seen in 24 months, and we are in line with long-term trends? There is no bad news in that. It means that everything is as it should be, as it has been historically.

Third, while the most recent RBC Housing Trends and Affordability report indicated that overall housing affordability in the Toronto CMA deteriorated slightly in the final quarter of 2014, this rise in the cost of carrying a home in the metro area is entirely due to higher prices for bungalows and two-storey detached dwellings.

Indeed while bungalow prices were up by 8.5% year over year and prices for two-storey homes rose by 9.1% year over year, the affordability of condominiums in the metro area measured by the percentage of pre-tax income necessary to service principal, interest, taxes and utilities actually improved slightly.

Comment: Condo prices in the 416 actually dropped a touch in February, down 0.9%. And as of mid-March, down another 0.8%. Combine that with a 20 point mortgage rate drop and condos are looking more and more affordable.

Fourth, despite the fact that the Toronto Census Metro Area is home to 17% of the country’s population, over the past ten years it has attracted approximately one out of every four immigrants to the country.

Comment: And they all need somewhere to live. StatsCan predicts that the GTA will gain another 3,000,000 residents in the next 26 years… over 115,000 each year.

Over the past several years there has been strong evidence that a significant portion of the new arrivals do not remain in the CMA but have decided to move further west to Alberta.

However, given the evidence of a slowdown in energy investment and a softening of hiring in the West in general and in the oil patch in particular, plus improving prospects for manufacturing in Central Canada, we expect that an increased proportion of new arrivals will choose to remain in the Toronto CMA thereby expanding the pool of first-time home buyers.

Finally, according to CMHC’s most recent Rental Market Report, the average vacancy rate for purpose-built housing was unchanged at 1.6% in late 2014 and the average condominium-apartment vacancy rate in the GTA declined from 1.8% in 2013 to 1.3% in the fall of 2014. This suggests that overall demand for rental accommodation in the GTA is quite strong and that owners of vacant condo units will have little difficulty in renting them if they feel it is necessary.

Comment: Which continues to fuel the condo market.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.

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Home prices are cooling everywhere but red-hot Vancouver, Toronto

JamieSturgeon – Global News

National home prices continue to post bigger-than-expected gains as the still-red hot markets of Vancouver and Toronto skew averages higher, the country’s real estate association said Friday.

Comment: Don’t you mean that the falling markets in Alberta and Saskatchewan are skewing the prices lower?

Most everywhere else, price momentum is slowing and in the case of some markets, has fallen into negative territory.

Comment: Only the oil patch is really dropping. Quebec and the Maritimes are flat, as always. And BC and Ontario are strong, as always.

Total sales of existing homes trading hands last month moved higher by 1%, the Canadian Real Estate Association, which represents agents across the country, said.

The rise was in line with expectations as activity remains brisk in some bigger markets and cools in others, like Calgary where a deep dive in oil prices has taken considerable steam out of real estate demand.

Vancouver
Fueled by buyers tapping ultra-low interest rates that have drifted lower this year, the average benchmark price for a home in Canada however continued to rise at a surprisingly strong pace last month, climbing 6.3%, to $431,812.

Comment: Imagine if you took Calgary out of the mix, how high would the price rise be then?

Bank of Montreal economists suggested before the release prices would rise by about 5%. “Benchmark prices up could rise 5%, led by, you guessed it, Vancouver and Toronto,” BMO economist Sal Guatieri said.

CREA acknowledged that continued strength in the country’s two most expensive real estate markets is driving national averages higher, while regionally, price growth is slowing across wide swaths of the country.

Comment: And the converse is true, where the falling markets in Calgary, Edmonton and Regina are driving national averages lower.

“The national average home price remains skewed by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s most active and expensive housing markets,” the association said.

Comment: Why do we ALWAYS have to talk about strong markets skewing the numbers, when the weak markets affect it just as much, in the other direction.

Cooling off

Comment: Nothing is really cooling off, not sure where that subhead comes from.

Excluding those two markets, the average price gain last month would come in at a much tamer 1.5%, to an average price of $326,910.

Comment: And what would it be if we excluded every market with negative sales and price growth?

Calgary, formerly the hottest housing market in the country as higher oil prices bolstered an active market, still saw average prices climb nearly 6% last month, according to CREA. But “the increase was far smaller than gains posted last year and the smallest since December 2012,” the association said.

“In other markets from West to East, prices were up compared to year-ago levels by between 2% and 2-1/2% in the Fraser Valley, Victoria, and Vancouver Island, while holding steady in Saskatoon, Ottawa, and Greater Montreal, and falling in Regina and Greater Moncton,” CREA said.

Comment: So remove the falling markets and let’s see what the numbers are.

In contrast, demand for homes in Vancouver and Toronto remains red hot amid historically low borrowing rates, particularly for detached homes which have seen prices surge well ahead of other housing types in recent years.

“While demand has cooled across much of the country, buyers in these two cities continue to outbid each other for coveted detached homes,” BMO’s Guatieri said.

Comment: Because that is where immigrants move to, where internal national migration heads, where economies are strong.

Home prices rose 7.8% in the greater Toronto area, and were 6.4% higher in Vancouver last month compared to February 2014.

“Is it a bubble? It’s hard to say given that demand reflects more strong fundamentals than rampant speculation. But something’s not right. For most goods, high prices discourage demand. But in these two cities, first-time buyers are fearful of getting shut out of the market. So they keep buying despite worsening affordability, a trend last seen in the late 1980s,” the economist said.

Comment: There you go. It is not a bubble because demand reflects strong fundamentals. Simple. And the late 1980s say people buying on spec, hoping to resell later as prices rose. And with much higher interest rates then – in the 11-14% range – there was a lot more pressure to sell when things went south. I remember the house across from my father’s house. It hit $750,000 in the early 1990s. It took 15 years for the same house to hit a similar value after the fall. So a $750,000 house at 12.5% would have been around $12,750 a month in inflation-adjusted mortgage payments. Let that sink in for a second. Over $150,000 a year just in mortgage payments. Today, that same house would cost $3,325 a month with a 2.59% mortgage rate.

“And that did not end well.”

Comment: But it is different today, you know that as well as I do.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.

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The Changing Landscape of Toronto’s Purpose-Built Rental Market

Demographics and economics may be swinging the development pendulum back towards rental units, analysts say.

Leah Jensen – Torontoist.com

With plans for 1,000 purpose-built rental units, the recently released Honest Ed’s proposal defies Toronto’s typical development narrative of condos, condos, condos. But real estate analysts say that narrative could be changing, as a shift to rental accommodations may indicate broader trends for young professionals entering Toronto’s real estate market and for the economics of Toronto development in 2015.

Comment: Mayhaps Toronto is finally growing up and seeing other development avenues as potentials.

With the average cost of a single-family house in Toronto at $606,700 and property values rising faster than income, home ownership is increasingly out of reach for many young adults. Condo prices are on the rise too, with a monthly mortgage payment becoming more consistent with what it might cost to rent. That’s without factoring in condo fees, which can cost an additional $500.

Comment: Um, no. Average PROPERTY (condos and houses and everything) price is $620,106 as of mid-March. Single-family homes, detached homes, are a couple bucks under $1.1-million now.

New rental buildings
“In the last couple years, especially 2014, we’re seeing pockets in the city where purpose-built rentals are being built, with amenities that are more comparable to the condo market. We’re seeing more luxury rentals, where prices are higher,” says Dana Senagama, principal of market analysis for the GTA at the Canadian Mortgage and Housing Corporation (CMHC).

Comment: It is time, we do need more rentals. Having private people supply all the new stock for decades is not the right way to go. It turns condos into private REITs, in a way… benefiting the investors, but not necessarily the owner-occupiers.

In the last 15-20 years, the city hasn’t seen much construction of purpose-built rentals, but that doesn’t mean people aren’t renting. “If you’re looking for a rental unit that was completed over the last few years, you’ll more likely be looking at investor-owned condominiums or apartments,” explains Jason Mercer, director of market analysis at the Toronto Real Estate Board.

With new purpose-built rental apartments, like those proposed for the Honest Ed’s site, young professionals or millennials are able to live close to downtown, in comparable conditions to a condo, without having to commit to monthly mortgage payments or long-term time commitments.

Comment: And that is good for the city.

High job turnover plays a factor in this lack of commitment, as there’s an increasing need for temporary housing types among young professionals. “Millennials don’t stick around in the same job for 20 years – they job hop and move around,” notes Senagama.

A CMHC report shows that as of last September, the number of rental units under construction was 2,212 – nearly double the amount that were built the previous year.

At the end of last year, the condo vacancy rate was 1.3%, and it has been consistently low for the past five years. But the economics could be adjusting with the demographics. Pre-construction sales for condominiums used to be around 70% before developers could secure construction financing, but now it’s closer to a more prohibitive 80%.

Comment: That isn’t all that prohibitive, not looking at all the cranes out there. Or thinking about the historical 98.1% purchase rate at registration of condos for the past 10 years. Even with the rash of completions of late, the sold rate is still 96.7%.

Long-standing condo developers, like Rockport Group, are transitioning into the purpose-built rental market, an example being their new 27-storey apartment building going up at Yonge and Eglinton.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.

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