Toronto Condo and Real Estate Blog

Fearing OMB-approved projects will drive away artists, councillors consider court challenge, provincial intervention

Excerpt from an article by Paul Moloney - Toronto Star
with files from Kerry Gillespie

A developer will fight city council’s attempt to scuttle a condo plan that was approved by the Ontario Municipal Board for the Queen West triangle.

In a 31-11 vote yesterday, council decided to attack developers’ plans on three fronts:

* Going to court.

* Asking the OMB to reconsider its approval.

* Asking the province to set aside the OMB’s ruling.

The city fears condo plans along Queen St. west of Dovercourt Rd., will drive away artists who live and work in the 6.5-hectare formerly industrial neighbourhood.

The three projects approved by the OMB occupy 40% of the triangle.

One of the developers, Verdiroc Development Corp., wants to tear down an industrial building at 48 Abell St. that is now home to artists.

But Verdiroc says its project will provide 190 units of affordable housing, artists’ studios and workshops as well as condos.

“It’s a socially progressive, mixed-use development,” said Verdiroc lawyer David Bronskill.

The city wants Ontario Municipal Affairs and Housing Minister John Gerretsen to issue a ministerial zoning order that would set aside the OMB ruling on the basis that the province needs to protect cultural jobs in the area.

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The new year got off to a fast start, with 5,173 sales of existing homes in January, Toronto Real Estate Board President Dorothy Mason announced today. “This figure is up 13% over last January, and up 6% over the 4,869 sales recorded in January of 2002, which was the previous record for the month.”

Meanwhile, average prices climbed in January to $353,724, up 5% over December and up 6% over the $332,687 recorded in January 2006. “While one shouldn’t read too much into a single month’s result,” the President said. “January’s record breaking performance is an encouraging sign for the year ahead.”

Breaking down the total, 1,975 sales were reported in the Toronto Real Estate Board’s 28 West districts and averaged $335,116; 878 sales were reported in the 14 Central districts and averaged $462,211; 1,082 sales were reported in the 23 North districts and averaged $383,806; and 1,238 sales were reported in the Toronto Real Estate Board’s 21 East districts and averaged $280,178.

Strong start for 2007 Toronto real estate

The January resale housing market was the best January ever, registering 13% more transactions than a year ago, Toronto Real Estate Board President Dorothy Mason announced today. The 5,173 sales in the month were 6% above the previous record set in January 2002.

“Sales have been very solid to start the year,” Mrs. Mason said. “It’s a very good sign for the market to see a healthy level of activity carrying over from last year’s strong finish.”

Scarborough’s Birchmount Park / Cliffside area (E06) saw 55% more overall sales compared to last January, with detached homes accounting for nearly all transactions.

In the Islington / Kingsway area of Etobicoke, a jump in condominium transactions helped to push overall sales 42% higher than January 2006.

An increase in sales of condominiums and semi-detached homes helped lift Forest Hill to an overall increase of 56% over January of last year.

North of the city, in Markham West / Langstaff (N01), 50% more homes changed hands in January than during the same month a year ago.

Ted Tsiakopoulos, CMHC’s Ontario regional economist, noted that Toronto’s housing market has been a very stable sector of the economy.

“The market remains resilient despite slower job growth, high energy prices, and a loss of migrants to western Canada,” Mr. Tsiakopoulos said. “Historically low interest rates, strong income growth and healthy consumer confidence are important factors keeping January home sales buoyant across the GTA.”

The Toronto Real Estate Board’s President added that while the results are preliminary, they should instill confidence in consumers.

“The housing market is healthy and continues to be well supported by strong economic fundamentals,” Mrs. Mason said. “These are ideal conditions, and consumers can feel confident making a switch to another home or realizing their dream of home ownership for the first time.”

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By Jason Mercer - National Post

As it is still early in 2007, I thought this would be a good time to review new home construction over the past year in the greater Toronto area. Also, drawing from Canada Mortgage and Housing Corp.’s 2006 Rental Market Survey, I will point to some interesting trends in the condominium apartment market, both from the perspective of the owner-occupant and the investor.

Construction started on a total of 37,080 new homes last year in the Toronto Census Metropolitan Area (CMA), representing an 11% decline when compared with 2005, a continuation of the downward trend in housing starts that began about 2003.

Beginning in 2003, annual growth in existing home listings started to outstrip growth in sales, which meant home buyers had more choice and so, many purchased a resale home. Interest in certain segments of the new-home market waned, especially in relation to the more expensive ground oriented, or low-rise, homes.

The cost of land, materials and labour required to build a new home increased substantially after 2003 (see chart below). These higher costs were passed on to buyers over time in the form of higher home prices. This has prompted many buyers to purchase less expensive housing types, including condominium apartments.

Last year, the number of condominium apartment starts reached the second- highest level on record, down 6% compared to the record 14,376 in 2005. Correspondingly, developers of condominium apartments enjoyed record and near- record pre-construction sales over the past two years.

When I tell people the Toronto CMA experienced record and near-record condominium apartment starts over the past two years, I often get looks of concern. That reaction is most likely attributable to events leading up to the housing market downturn a decade and a half ago.

At that time, speculators would often purchase one or more condominium apartments at the pre-construction stage of development and later sell their units, sometimes before completion, to take advantage of the double-digit price increases experienced in the late 1980s. This resulted in overbuilding and a flood of units in the marketplace, which helped set the stage for the period of price declines in the Toronto area in the early 1990s.

Fortunately for condo owners, the current situation does not appear to be analogous to the early 1990s. CMHC surveys the condominium apartment market as part of its annual rental market survey. In 2006, approximately 20.5% of registered condominium apartments were rental units held by investors - up from 18.5% in 2005. The increased rental share was attributable to a greater proportion of investor ownership in new registered stock entering the survey. So, although the rental share edged up last year, the number is still much lower than the one-third recorded in the mid-1990s.

Almost 80% of registered condominium apartments are owned by owner-occupiers. This means that while we are experiencing condominium apartment construction levels above that of the late 1980s and early 1990s, the demand for these apartments is not being driven by speculators.

Consumers have been attracted increasingly to condominium apartments because they provide a less expensive home ownership alternative, particularly for first-time buyers. Condominium apartments have also become popular with older homeowners who are interested in an alternative to the usual low-rise housing.

Prospects for purchasing a condominium apartment with the intention of renting it out look positive. For example, the average vacancy rate for rented condominium apartments, at 0.4%, is substantially lower than the average for purpose-built rental apartments in the metropolitan area. The comparatively low vacancy rate suggests that strong demand exists for this type of rental accommodation.

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