Month: March 2021

Homebuyers should always try to maximize their buying power, however, in today’s scorching real estate market that isn’t always easy.

Join Ryan Coyle, founder and owner of Connect.ca Realty, Joanna Lang, mortgage agent and managing partner of Outline Financial, and Peter Edrey, founder and head accountant at Accounting Plus, as they discuss how home purchasers can stretch every last dollar in a bid to find their dream home.

“In today’s market, there isn’t much wiggle room, but it does exist and we’re going to discuss how to access it,” said Coyle of the March 30 webinar.

In addition to exploring different ways buyers can optimize buying power, the panellists will also explore various lending options, holding corporations, tax implications, smart mortgage planning, and Capital Divided Accounts—that is, how to make 50% of the corporation’s gain tax-free.

To register for the webinar, click here.

Toronto’s Annex neighbourhood is far from replete with many new builds, but the Oscar Residences, slated for fall 2024 occupancy, will bring much-needed new units to one of the city’s most desirable neighbourhoods.

The nine-storey, 155-unit boutique condominium from Lifetime Developments will doubtless attract attention of University of Toronto and George Brown Casa Loma Campus students looking for short commutes to school—Oscar Residences is nestled between two subway stations that ensure a short jaunt—as well as young professionals and families who have long been enamoured with the area.

With a healthy variety of suites ranging one-, two-, and three-bedroom units, as well as bachelors, which investors can easily tenant with students, Oscar Residences screams come one, come all.

“Oscar Residences is great for all types of buyers—we didn’t necessarily conceptualize the building and suite offerings based on a single demographic, rather we ensured it was all-inclusive,” said Brian Brown, Lifetime Developments’ principal. “The Annex is one of Toronto’s most sought-after neighbourhoods. It is a very affluent and beautiful neighbourhood and it has had very little, new development in the last few decades. Oscar Residences, being a boutique condo development, will bring a new offering to the neighbourhood, making The Annex a viable option for those that may not have considered it previously as their next home or investment.”

Investors covet Annex properties, but there are fewer of them than, say, downtown with its myriad sprawling towers, and while not directly in the city core, the neighbourhood has amenities that rival downtown’s. Moreover, with Dupont Station a mere 800 metres away—it abets easy access to the Yonge-University line—and Bathurst Station a three-minute drive away, not to mention various bus and streetcar lines minutes away, Oscar Residences will receive no shortage of rental demand.

It’s for those reasons Oscar Residences received a 90 walk score.

“It’s definitely a factor that affects rental prices—renters are always looking for transit and walkability scores to be high when looking at their next place to call home,” said Brown.

“I believe both buyers and renters flock to The Annex for all these reasons discussed, in addition to the close proximity to great local shops and restaurants, and its true neighbourhood feel. Living in an established and stable community has many benefits—opportunities to build new homes in this neighbourhood is a rarity making Oscar a tremendous opportunity.”

Canada’s overheated housing market could destabilize the country’s economy if a housing correction occurs and policymakers should intervene by introducing measures to increase supply, asserts RBC Economics.

“First off, policymakers should redouble efforts to address supply issues that existed before the pandemic,” wrote RBC’s Robert Hogue. “These include lightening the regulatory burden for new housing approvals to quicken supply response; adjusting municipal zoning to allow more medium-density, family-friendly housing in large urban areas (the so-called ‘missing middle’); growing Canada’s stock of affordable housing significantly; and removing disincentives to build (market) rental apartments—or better yet, tipping the scale in their favour. The need for affordable rental options for ordinary Canadians is greater than ever.”

Canada’s housing market has become feverish because demand has vastly outpaced inventory and property values have grown beyond historical norms. The Toronto and Vancouver markets used to induce anxiety, but today prices are growing fastest in the country’s smaller markets from Mission, British Columbia, to Moncton, New Brunswick.

Hogue attributes the scorching nationwide housing market to robust labour markets, rock bottom interest rates, evolving housing needs and surging household savings, all of which have conspired to create vigorous demand and push housing prices skyward. And as prices continue climbing, Canadians afraid of being priced out of the market are buying in a frenzy.

In addition to recommending supply side policies to curb runaway housing prices, Hogue expressed support for rescinding the principal residence exemption from capital gains tax, although he concedes it would be an unpopular policy. Still, with interest rates slated to remain low for some time to come, such a measure would still be palatable.

“Further tightening of mortgage-lending rules could be necessary if signs of household debt stress emerge. Historic government aid and financial institutions’ debt payment deferral programs have distorted the household debt picture since the pandemic—debt ratios, and delinquency and bankruptcy trends look surprisingly benign. There could be issues brewing beneath the surface, however. Policy options include a stricter stress test, raising the minimum down payment and lowering the cap on refinancing.”

Hogue also noted that New Zealand recently phased out mortgage interest expense tax-deductibility for investors, and he believes a similar policy in Canada could discourage speculation. Additionally, Hogue’s report contained policy warnings: do not tax transactions and avoid measures that impede labour mobility or Canadians’ abilities to move into homes that better suit their needs.

“They should also resist providing more help for first-time homebuyers. Without corresponding measures to boost supply, any measures that ultimately heat up demand further—while probably helpful to the first people who take advantage of them—increase the odds of perpetuating problematic price trends and household debt issues.”

Spring buying season, the busiest time of the year in real estate, is upon us and large cities like Toronto and Vancouver are hotter than they’ve ever been. Unfortunately, that means swaths of home purchasers are likely waiving their right to home inspections.

Although that’s been standard practice in the aforementioned cities for years now, it is still not without its risks. Issues with a home’s foundation, electrical wiring, plumbing and roof are costly fixes.

“The risk is far higher if you’re looking at an old home that’s never been renovated,” said Justin Thouin, LowestRates.ca’s founder and CEO. “There could be risk of asbestos, knob and tube wiring, and as a result you could find yourself in a home with massive costs that you didn’t anticipate.”

Consequently, the buyer could be denied home insurance or charged a much higher rate until the problematic items are fixed. Thouin says up to 95% of deals in Toronto include forgone home inspections because of the competition, and offers that include inspections are typically declined outright.

“Realistically, this is not a huge issue, thankfully, right now because most times the selling side actually undertakes the home inspection before the home is put on the market, and usually these home inspections from the seller’s side can be trusted as long as they use a recognized, reputable source,” said Thouin.

He added that inspections aren’t necessary for condos and homes that were built recently. However, Davelle Morrison takes issue with the idea that a seller’s home inspection is trustworthy.

“That home inspector is working for the seller, not the buyer,” said Morrison, a broker with Bosley Real Estate. “People have been waiving home inspections for years now, so it’s not anything big, but I usually tell my clients that if they want to put an offer on the home, they should do a home inspection before making that offer.”

Morrison admits, though, that in scorching markets like Toronto’s, it can be difficult nailing down an appointment with a home inspector before the offer date.

If homebuyers interested in a property cannot secure the services of a home inspector before the date on which their offers are due, Thouin says other things can be done, if only for peace of mind.

“We hear all the time about people who bring their friend who’s a contractor to a viewing to walk around the home,” he said. “The contractor obviously can’t see everything, but they know what to look for and it gives peace of mind to the prospective buyer.”

Morrison added that a lot of buyers spend money on home inspections, but after missing out on a couple of houses, their resolve to keep hiring them wanes. She advises not to let that happen.

“Home inspection costs around $600, and people are spending $1 million to $2 million on houses, so it would be good to know what you’re getting yourself into by paying the $600 for a home inspection,” she said. “It’s just that people do it a couple of times, lose out on the house and they get tired of paying it, but it’s money well spent.”

The Canada Mortgage and Housing Corporation has declared the Greater Toronto Area highly vulnerable in its latest report.

The crown corporation’s Housing Market Assessment determined Canada’s largest metropolitan area, which it previously rated moderately vulnerable, is showing signs of surplus inventory and high rental vacancies. There was, however, low evidence of overvaluation in the GTA in the fourth quarter of last year.

“The average overvaluation gap moved lower, compared to the previous quarter, and was below its critical threshold,” said the portion of the report prepared by CMHC’s Dana Senagama. “The pandemic resulted in job losses in lower paying services-producing industries, while other higher paying industries were left relatively intact. Therefore, while observed real house prices increased relative to the previous quarter, their level was below that of prices supported by economic and demographic fundamentals such as low income and population growth.”

The GTA’s housing market had a sales-to-new-listings ratio of 64.1% in Q4-2020, leading the agency to conclude that there’s little evidence of overheating in the region’s housing market. Despite the second wave of COVID-19 infections sparking another lockdown through autumn and winter, higher household savings, low borrowing rates and pent up demand conspired to push adjusted sales up 1.2% and new listings down 3.2%.

Metro Vancouver still has a moderate degree of vulnerability, with CMHC detecting neither overheating nor overvaluation, and the sales-to-new-listings ratio sitting below the critical threshold.

“While there was considerable price growth in the fourth quarter of 2020, fundamentals predicted a stronger increase than what was observed,” wrote Eric Bond. “Household incomes increase in Vancouver, even after accounting for net government transfers. Factoring in the decline in mortgage rates means that buyer households enjoyed stronger budgets.”

Both the GTA and Metro Vancouver had elevated rental vacancy rates as a result of fewer immigrants and international students.

“In addition, regulatory changes restricting short-term rentals in the City of Toronto resulted in an increase in new listings of condominium apartments on the resale market.”

Construction in the GTA might come to a standstill—and the timing couldn’t be worse since it will come amid a housing boom not seen in years.

Local 183 of the Labourers International Union of North America is ignoring a ruling from the Ontario Labour Relations Board (OLRB) against the former’s attempt to prevent its bricklayers from working, and in doing so it’s drawn the ire of the Residential Construction Council of Ontario (RESCON), which contends that it’s intentionally stymieing the construction of crucially important housing deliveries to organize or interfere with stucco/EIFS contractors represented by a rival union.

“This is happening at a time when the industry has been declared an essential service by the government and we are struggling to keep pace with the demand for new housing in the face of COVID-19-related challenges,” said Richard Lyall, RESCON’s president. “As a result of the union’s illegal actions, thousands of homes will not be completed on time.”

Local 183 did not respond to CREW’s requests for comment before time of publication.

Construction was deemed an essential service when the COVID-19 pandemic struck, and since then, the industry has been busier than ever because low-interest rates have catalyzed another housing rush—one believed to be more frenetic than in 2016.

RESCON data suggests that Ontario’s housing shortage has grown to such heights that 75,000 new housing deliveries per annum are needed over the next 24 years just to meet demand; the annual shortage, however, numbers somewhere around 12,000 units.

“This has resulted in essential workers not being able to go to work to support their families,” said Gary Campacci, president and co-owner of DuROCK Alfacing International Ltd. “After months of litigation, there are many builders still not able to complete their homes, resulting in closing delays.”

According to Ron Johnson, executive director of the Interior Systems Contractors Association, homebuyers will ultimately bear the brunt of Local 183’s actions.

“The actions of Local 183 are very disturbing and selfish, given the negative impact on homebuyers and workers within the residential construction industry,” he said. “Local 183’s continued actions contravene the OLRB’s order and continue to negatively affect homebuyers.”