Here’s what to expect in the market this summer

The GTA real estate market has been on fire for about a year now, but latent cooling signs that have emerged in the last couple of months should last through summer.

“I don’t think we’re going to see a repeat of last year and part of that is because of the frantic pace we’ve seen since 2020,” said John Lusink, president of Right at Home Realty. “Some of the excess demand has probably been take out of the market, and from what I can see from our Right at Home stats, which I track daily, I see a decline of new incoming deals, which is very gradual but it’s there, and it signals a combination of what you see in the media about buyer fatigue and the new stress test. As people look forward to being able to do stuff, I think you’ll see a more moderate pace throughout the summer, not a repeat of last year.”

The typically busy spring real estate market was muted in 2020, deferring to summer, but, as COVID-19 inoculation continues spiking and stringent lockdown measures ease, this summer should be routine. A telling sign is that listings are creeping up again, suggesting that demand has waned from its peak a few months ago when homes were scooped up almost as quickly as they were listed.

Rescinding pandemic-induced restrictions isn’t the only reason for the apparent deceleration of homebuying activity, though, says Lusink.

“We’re seeing affordability still being an issue with prices still appreciating, but we’ll probably see more of what you and I thought was a typical summer with people doing stuff outdoors, and it will be a little bit calmer as we head through the summer,” he said. “The issue of prices going up will continue squeezing buyers on the margins of qualifying, and if mortgage rates increase it will have an impact as well.”

Rates aren’t likely to increase, however, and the dip in demand is only temporary because the resumption of mass immigration almost certainly will cause demand to supersede what it was even before the pandemic. Moreover, even with sales declining the last two months, they’re still at record levels.

“If we see immigration starting to come back—and included in that are foreign students—we’re going to see increased (transactions),” said Lusink. “I’m not sure how quickly we will see that happen, but it should be into the fourth quarter, assuming borders open up, and we don’t have the same worries about COVID-19 variants.”

The surging vaccination rate is, arguably, having the biggest impact on the GTA’s real estate market, says Davelle Morrison, because people are travelling again.

“I feel like the market in the summer is going to be slower. A lot of people can take vacations and they’re getting double-vaxxed and they’re ready to spread their wings again. In the housing market, people who are looking for houses usually have cottages. Condos will chug along but the pace won’t pick up. Again, people are so excited to be double-vaxxed to go on vacation,” said Morrison.

“I think everybody is waiting for borders to open in the fall for the market to go crazy again, and until that happens, the market will maintain its slower pace.”

2021-06-29 15:00:18

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Victoria estate sells for record $14 million

A 67-acre oceanfront residential property in Victoria was just sold for $14.1 million, marking the highest sale price in the British Columbian city’s history.

The property, which sold in May, was in part driven by a 43-year low in inventory levels, according to the Victoria Real Estate Board’s MLS.

“Unsurprisingly, this property drew steady interest from prospective Canadian and international buyers alike. It’s an innovative retreat and a stunning backdrop for some of Vancouver Island’s most distinctive highlights, including the panoramic shoreline and Olympic Mountain range views. With multiple private beaches and an attached boathouse with a mechanical launch providing direct access to the Salish Sea, the property is an expertly designed beachfront escape,” said Logan Wilson, listing agent with Sotheby’s International Realty Canada. “Victoria’s luxury real estate market has experienced a surge in interest and activity in recent months. The diversity of interest we saw in this property reflects the fact that Victoria is not only increasingly desirable amongst Canadian home and recreational property buyers, but also a coveted destination on the global real estate stage.”

Wilson, who has been involved with several luxury listings in Victoria ranging from $7.9 million to $9 million, represented the seller while Sotheby’s International Realty Canada agent Philip DuMoulin represented the buyer.

The record-sale estate, which includes the 10,700 sq ft main residence, is defined by its contemporary lines and sustainable building components, and it’s cantilevered on top of a concrete armature, which averted critical tree root zones. From an optical perspective, the property designed by acclaimed architect Marko Simcic looks like it’s incorporated its natural surroundings. In fact, it even received the Canadian Architect Award in 2003 and a Lieutenant-Governor’s Award in 2008.

Victoria’s real estate market, including the luxury segment, has become popular both domestically and internationally. According to Sotheby’s President and CEO Don Kottick, the city is gaining world-class status.

“This landmark sale reflects strong local and global demand for luxury suburban, recreational and vacation real estate in B.C., and Victoria’s growing world-class reputation as a safe, beautiful, and welcoming island community,” said Kottick. “Canadian real estate is one of the most desirable assets on the global market right now, and consumer demand has revealed the lifestyle and investment benefits of regions like Greater Victoria, Vancouver Island, and the Gulf Islands to a new audience of Canadian and international buyers. With its vast natural beauty, access to the great outdoors, urban conveniences, and security being sought-after by luxury buyers, there is no doubt that the region’s real estate is uniquely positioned to continue to appeal to this demand.”

2021-06-28 14:53:52

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66% of Canadians concerned about housing prices: poll

A new poll conducted by Ipsos on behalf of Zillow Group found that 66% of Canadians are disquieted by housing prices and a third of respondents stated they’re incapable of buying the homes they want.

Fifty-seven percent of renters also said they’re forced to live lease by lease because they cannot afford to buy homes.

“For many, large down payments are an important deterrent,” said an Ipsos news release. “Coming up with a down payment remains the top barrier to owning a home, with two in three Canadians (64%, down two points from 2019) citing it as such. Down payments are just as prohibitive for owners (65%) as for renters (64%), suggesting their barriers include qualifying for a mortgage.”

In fact, 54% of respondents said they’re struggling with mortgage qualification, while 50% can’t qualify because of debt—although that’s down 6% from 2019, which is unsurprising because Canadians have been saving and paying down non-mortgage debt during the COVID-19 pandemic—and 44% cannot because they fear for their job security. Forty-three percent of respondents cited property taxes as an obstacle to homeownership, while 22% said there aren’t enough homes available to purchase.

The poll results aren’t surprising to mortgage broker Laura Martin, who noted that the top-five reasons people typically don’t qualify for mortgages is because their incomes are too low, they don’t have enough money saved for a down payment, they have bad credit, they’re too junior in their jobs, or banks don’t find the property type desirable.

“Down payment is the biggest,” said Martin, COO of Matrix Mortgage Global in Toronto. “Who has $40,000-50,000 lying around when you also have $50,000 in student debt? For people who need parental help to get into the market, even if they’re Gen Xers, what they really need help with is the down payment because living expenses are so high.”

Martin added that the Office of the Superintendent of Financial Institutions’ recent B-20 amendment, which raised the stress test qualification to 5.25% from 4.79%, has effectively thrown another spanner into the works, albeit one that pales in comparison to runaway housing prices.

“The stress test hasn’t had an effect the way housing prices have,” she said. “There’s been an increase of interested new buyers, thinking they better get into the game before they’re priced out, so I am hopeful that some of the people who got declined in the last year will be in the position to purchase in a few years.”

2021-06-28 14:58:22

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Land development firm helping staff buy their first homes

A company headquartered in Collingwood is giving its employees up to $20,000 towards the purchase of their first homes.

Crozier & Associates, a land development firm that also has offices in Toronto, Milton and Bradford, quietly launched the program in February for its staff, which just hit 200, after the company’s president listened to story upon story from employees about being priced out of the housing market.

“The idea came during water cooler conversations going back to last fall with a few of my employees, who talked about how crazy the market is. They were all having trouble finding a house in this market that’s affordable and where they’re not constantly in bidding wars with 20 other people,” said Nick Mocan. “That was the impetus for this whole thing. I was in their position at one point in my life, except my first home was $170,000, not $870,000.”

Mocan noted that Crozier’s employees are highly skilled, and given runaway housing prices that are pushing homebuyers further away from urban centres, the company sought a way to help them. After Mocan presented the idea to the company’s accountants and lawyers, the program was born. To date, 12 employees have already used the program and Mocan says at least another dozen more have expressed interest.

“We couldn’t implement this soon enough,” he said. “It launched quietly in February to test it out because we’ve never heard of something of this nature, and the reaction was a bit overwhelming, so we decided to roll it out to all staff.”

The program provides a fixed amount of money with the rest determined by employees’ duration at the company, although there isn’t a wide fluctuation. Moreover, the money provided is tax-free and paid as a bonus that’s put into employees’ RRSP accounts, which they can withdraw and use on their down payments without any penalties. However, because the funds must stay in the account for 90 days (and are subject to CPP payments), Mocan advised employees who are seriously considering a home purchase in the next six months to have the money in their accounts before tendering offers.

One employee who took advantage of Crozier’s first-time homebuyer program is engineer-in-training Ian Blechta, 30, who, with his girlfriend, bought a single-detached house in a new subdivision in Stayner. He says that, because his girlfriend was new in her job at the time, the bank from which they tried securing a mortgage demanded a 20% down payment, but thanks to Crozier’s program, they made the numbers work.

“The program helped a lot because, for the pre-build we bought, we have to pay $10,000 every 45 days, so that’s up to $60,000 and most people don’t have that much cash just sitting there, but we got almost $20,000 from Crozier, which helped us with the second and third payments to keep the contract of the house,” said Blechta.

The young couple will be moving into their Stayner home in September, and Blechta says it’s a good thing the couple purchased when they did.

“At the time we signed the contract, the house was $500,000, and we just checked the price of that same house in the same subdivision and it’s going for $650,000,” he said. “In the last six months we signed, it went up that much.”

2021-06-28 15:01:46

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53-year-old Ottawa building attains LEED Platinum

A 53-year-old commercial building in Ottawa recently attained LEED Platinum certification, no small feat considering the building’s age, say representatives from the investment management company that owns it.

The downtown building, located at 275 Slater St. just south of Parliament Hill at the corner of Kent St., is home to mostly private businesses in the law, insurance and HR sectors, as well as some federal government agencies. According to Sam Barbieri, SVP of portfolio management and deputy fund manager of LaSalle Investment Management, which has over 1,400 properties globally, including 12 million sq ft in Canada, the 230,000 sq ft Slater St. building received new HVAC and lighting systems, and upgraded elevator controls, to attain LEED Platinum. But given the building’s age and the fact that it maintained 88% tenancy throughout the COVID-19 pandemic, the upgrades required meticulous planning.

“You couldn’t do an upgrade like this all at once, especially with an occupied building, so it was planned over a number of years,” he said. “If you replace the HVAC system, there are a number of sub-components like supply fans for corridors you would replace. Some of the other major building systems, like elevator controls, were also done car by car.”

The upgrades gave 275 Slater St. an energy score of 87%, and while it aimed for Gold certification, Barbieri says LaSalle overachieved, which, for a building that’s over five decades old, isn’t easy to do. The lighting system replacement program, which began a few years ago, brought in LED lighting on some floors and T8 tube lighting, while the water closet has been made more efficient.

“You always have engineering challenges with older buildings, space confinement challenges,” said Barbieri.

Arguably the building’s biggest achievement is maintaining 88% occupancy during the pandemic, and much like other large REITs, LaSalle is going to implement WELL health standards in response to the pandemic.

“This is one of the properties in which we’re pursuing WELL health certification,” said Elena Alschuler, LaSalle’s Americas head of sustainability. “We’re rolling out an initiative throughout our North American and multifamily properties and it validates a lot of great practices we put in place during COVID.”

2021-06-28 15:05:17

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Spirit of Squamish captured at new six-acre development

Getting Squamish’s town council to permit a large-scale housing project was an arduous process, according to the developer of Redbridge, a sprawling master-planned community, but the development had one big thing going for it.

“We’re telling the story of a new environment. The intent was to create a community where people could live, work and play, and for many people Squamish is a weekend destination but now, all of a sudden, you can tell a story about where you live rather than where you’re travelling to,” said Lorne Segal, president of Kingswood Properties, Redbridge’s developer. “Squamish is an emerging market and maybe the last frontier, if you look at Vancouver and all of its suburbs where everything has been developed, but Squamish has been so protective of itself, wanting to control growth and manage itself carefully. Redbridge will bring another 1,000 people to Squamish, and I’m excited about the fact that those people will be setting up businesses and things of that nature. Instead of opening a business in Vancouver, where you compete with other similar businesses, why not be the first in Squamish?”

The master-planned community will be composed of 435 condo and townhouse units and it already has 7,000 registrants, bespeaking the robust interest that Squamish elicits in the region. The fact it’s a development that absorbs nature into a placid, healthy lifestyle can’t hurt either, says Segal. The units feature spa-inspired bathrooms, lots of natural light and plush open space, and the amenities span more than 20,000 sq ft. In fact, the amenity package is a microcosm of the master-planned community at large.

“Base camp, our amenity package, caters to the mind, body and soul,” said Segal. “Redbridge is not just a home, it’s a lifestyle; it’s not just about living, it’s about living well. It appeals to the young person who’s into recreation—Squamish has the best hiking, windsurfing, rock climbing and everything involving the outdoors—and to another group of people who are approaching, or are in, their retirement years and who want to start a new chapter of their lives. A healthier one.”

Margarita Zimin and her husband just purchased a unit at Redbridge in large part because her elderly parents will be living with them. That many of her parents’ favourite activities can be enjoyed at Redbridge tilted them towards purchasing a unit.

“I want my parents to live in a good, quality apartment. We brought my parents to the sales centre and they were so excited, with my mom talking about how she can see her future home,” said Zimin, currently a resident of nearby Britannia Beach. “The other reason I’m excited about Redbridge is we need doctors, teachers, technicians and other professionals in Squamish. We’ve had a lack of those professionals and Redbridge will bring in 1,000 people. It will be a win-win situation with the professional services and business owners moving there.”

The condominium section of the master-planned community is intentionally designed to be car-free and rich in (planted) native flora. Its tree-lined residential trail captures the bucolic essence of the development, including on the waterfront walkway, with British Columbia’s regal mountains aloft, perhaps serving as the perfect backdrop to the six-acre site.

“It comes back to telling a story—it’s one thing to do buildings and another to provide the rest of what should come with that so that when you get here, it will feel like you live at the Four Seasons 365 days a year. It’s like resort-style living, but it’s yours.”

2021-06-28 12:50:45

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