Select a news topic from the list below, then select a news article to read.
At last some data on foreign investors… Calgary condo sales boom… And students hit by rentals shortage…
Chinese connection to Vancouver housing
A real estate company in Vancouver has provided a snapshot that much of the available data does not. Macdonald Realty says that more than a third of the buyers of single-family detached homes that it sold last year have a connection to mainland China. The company says that those purchasers paid more money for their homes too, paying over $2 million compared to the $1.4m average. Dan Scarrow from the company says that despite the large volumes of buyers and cash from China, he has not seen much evidence of the controversial practice of overseas investors buying, but not residing here. There are many realtors who are already, or are planning to, actively target overseas investors, especially the Chinese. Some have opened offices in China or undertake marketing initiatives to attract buyers from the country. Read the full story.
Condo resales booming in Calgary
Condos are king in Calgary with sales up 20 per cent year over year and no sign of that abating. Linda Lam of Sotherby’s International says that people like the condo lifestyle; the convenience, location, security and amenities. She says that the city is popular and the relative affordability of condos in Calgary compared to some other markets is driving demand. Ann-Marie Lurie CREB says that with the rental market being so tight many are realising that they can afford to buy. Resales and sales of new condos and townhouse condos are trending up and construction in the sector is working hard to keep pace. Read the full story.
Students seek housing solutions
They’re about to head back to school and for many first year university students the accommodation choice is easy; the dorms. For those heading back to college though they are often seeking a bit of independence and that is presenting challenges in many areas. The rental markets are tight in a lot of our major cities and many students are finding that they can’t find anywhere affordable to live. For those who rented last year, the leases may be ending and not being renewed at the same rates. An option for some families is for mom and dad to buy an investment property. Their kids get to use it while studying and in three or four years’ time they can sell or put it on the rental market. Read the full story.
There’s a lot of pressure to get started in those building projects and sometimes things get overlooked. On one Toronto street corner pedestrians have been wondering where the crossing signal and timer has gone. It’s still there actually, but obscured by a construction hoarding for a new condo development. Read the full story.
Limited supply and high prices in key markets is encouraging landlords to embrace the role of small property developer. But are the big profits worth the hard work?
An increasing number of investors are turning their attention to property development in a bid to maximize on the demand for single-family homes.
Speaking to CREW, investor Sahil Jaggi says buying an old building and undertaking a complete rehab is the only way he can get into desirable neighbourhoods at a good price, and opportunity to make a lot of cash.
While admitting that the work is a full-time job with the risk of unexpected costs popping up, Jaggi says joint-ventures are the best way to get into such projects.
“If you have a good plan, good location and a good project lined up you will always find investors,” he says.
“If 20 to 30 per cent of the area is already developed, you know it’s headed towards something and there’s room for growth.”
Paul Shikanai, owner of Regency Property Management and Real Estate in Regina, advises investors to be financially creative when undertaking such projects and do not undertake any unnecessary costs.
“I’ve seen people put a lot of money into it and it’s hard to get that return,” he says. “You don’t need to put in a granite countertop. You don’t need a beautiful tile on the floor.”
***Do you want to learn more about small property development? The September issue of Canadian Real Estate Wealth features a comprehensive step-by-step guide of what is involved in small property development. Investors reveal the secrets to successfully undertaking such projects, while city planners and lawyers offer exclusive advice on how to avoid unnecessary costs and headaches. The magazine will be on newsstands this week or subscribe here to avail of a special deal today.
RBC says interest rate rise would “substantially moderate prices”… Calgary builders set for a bumper year… Vancouver needs more townhouses… And a new report compares Canada’s household net worth with the US over 42 years…
Interest rates would “substantially moderate prices”
A report by RBC Economics says that a rise in interest rates would have a big impact on the housing market but would be a cooling rather than a crash. The bank believes that we could see a rate rise by the end of this year with 2015 seeing a tighter mode by the Bank of Canada. RBC predicts that a rate rise would see the volume of resales fall by just shy of 1 per cent and prices rise by around 1 per cent compared to 4.3 per cent average this year. The report also forecasts a slowdown in the condo market due to high levels of supply. Overall, RBC suggest that next year will see some corrections but it may be 2016 before the full impact of rate rises would take effect. Read the full story.
Calgary builders nearing a record year
A high level of construction in Calgary could see 2014 being the sector’s busiest since 2006. Demand for properties together with a shortage of construction workers means that builders are under pressure; the shortage of labour means projects take slightly longer. Wayne Copeland, president of the Canadian Home Builders Association-Calgary Region says that activity is similar to how it was during the boom in 2006/2007. He says that getting more young people into the industry is important; generally the workforce is getting older. Read the full story.
Vancouver townhouse shortage
As an alternative to a condo or single-family home, townhouses are a great option…if you can find one. In Vancouver there is demand, but not a lot of supply. Realtor Bon Rennie says that they are probably the most undersupplied part the housing market. The issue is zoning; why build a townhouse if you can build a condo development and reap higher yields. Building on land already zoned for townhouses or single-family homes is an option. While townhouses were once seen as an affordable option, the lack of supply is changing that. They are cheaper than a single-family home but the gap is narrowing. Property density though may see a move towards townhouses. With around 5,000 people moving to Vancouver each year there is a focus on better use of the available land. Read the full story.
StatsCan releases comparison between Canadian and US household net worth
Canadian household net worth per capita reached 77 per cent of the United States' level in 2012, according to a new study, "Net Worth in the Household Sector, 1970 to 2012: A Canada–United States Comparison." Over the 42 year period the net worth of Canadian households was at 60 per cent of our US neighbours. Read the full story.
An investor is arguing that despite the increasing number of Realtors in the market, there are not enough good ones to help investors grow their portfolio.
Finding a good Realtor to source the best deals is proving increasingly difficult and especially in prime markets, according to the founder of one of Canada’s biggest investment clubs.
“Getting an investor friendly real estate agent is not as easy as everyone thinks,” says Jarek Bucholc from Canada Real Estate Investors Club (CREIC).
“Obviously, the most important thing for any investor is having a Realtor working hard for them,” he tells CREW. “But finding a Realtor that really understands the needs of an investor is hard. It takes a lot of harder work to get a good investment property and some agents simply don’t want to spend all of their time to doing that. This is especially true in cities like Calgary where there is a limited stock of good investment properties.”
In the wake of Real Estate Council of Alberta imposing a fine on a Calgary man posing as a Realtor and scamming money and property titles from homeowners, Bucholc says investors need to be more careful of who they deal with.
“People like these tend to target the more vulnerable homeowners, like those who face foreclosure but investors, and especially first-time investors, can also come up against this,” he says, referring to the Derek Johnson case.
Johnson faces a $50,000 fine for allegedly acting as a realtor and broker without proper authorization in two separate cases. It was also revealed by the real estate Council that he had been advertising properties for sale without the owners’ knowledge or consent and is now trading under the name John Davis.
“Just as you do your due diligence on a property, buyers need to be active when researching the agents they want to work with,” adds Bucholc.
Canada ranks well in the world’s ‘most livable’ list… Edmonton considers new proposals to boost mature neighbourhoods… Living with builders on your doorstep; not always a good experience… And no income raise for New Brunswick’s low income families…
Canada’s big cities are among the ‘most livable’ in the world
Canada holds three of the top spots in an annual survey on the ‘livability’ of the world’s great cities. The report by The Economist ranks cities based on healthcare, infrastructure, education, culture and environment, and stability. Melbourne tops this year’s list followed by Vienna, but then it’s three-in-a row for Canada with Vancouver, Toronto and Calgary in 3rd, 4th and 5th places. The similarities between the highest-ranking cities include their middling size, in wealthy countries, and relatively low populations. The report says that this allows for recreational activity in an environment with low crime and unburdened infrastructure. Read the full story.
Edmonton looks at increased infill
Changes to the ways that construction is managed in mature neighbourhoods could create housing for 250,000 people in Edmonton. The council is considering options for its infill development plan and has consulted with construction companies, school trustees and those who may be among the new residents. Builders are calling for rezoning to allow ‘skinny’ homes and garage development along with other measures that would create many more homes in around 100 mature neighbourhoods in the city. If the proposals are agreed, it is seen as a plan to add new life to areas of the city where the population is ageing and young families need affordable and desirable options. The council will consider plans early in the New Year. Read the full story.
Living with builders; how construction workers can be unpleasant neighbours
Thousands of new homes are built every year, many more are redeveloped and most of the time we accept the need for construction works and developments proceed with few major issues. However for some living in close proximity to construction is a nightmare. Reports from some residents in Vancouver highlight the problems that can occur; the noise, the mess, the ignoring of the times that construction is allowed. Writing in the Vancouver Sun, Barbara Yaffe suggests that this is not uncommon and that the city should have an ombudsman for construction disputes. Her article cites a number of cases in which residents have been inconvenienced or claim that their property has been damaged by inconsiderate builders. Perhaps the pressure that the industry is under to supply the market is pushing some operators to the limits of what should be acceptable?
New Brunswick workers will not get minimum wage increase
Affording a home is a basic need but for low income families it is a big struggle and in New Brunswick it’s not about to get any easier. With figures for July from the local real estate association showing an increase in average house prices of 3 per cent year-over-year, news that there is to be no increase in the minimum wage will only increase the pain. While some other provinces are adding 20 to 25 per cent to their minimum wage, NB will tie with the Northwest Territories for Canada’s lowest rate. Read the full story.
With an increasing number of events targeting enthusiastic property investors, one landlord warns about the bad advice being offered.
Industry events are a great way to network and tap into the expertise of seasoned players, but not every seminar is so informative and helpful.
Wayne Weum, an Edmonton-based landlord, tells CREW that bad advice from one such seminar almost derailed his initial investment plans.
“Being an impressionable beginner, I rushed out and formed three corporations after the fancy pants guru told me it was the best idea,” explains Weum, adding that he now owns 12 doors.
“While it isn’t necessarily a bad idea, going out and spending all of that money and time before having a plan to operate the companies is overkill.”
Weum solely focuses on investing in his home province of Alberta, adopting a clinical financial strategy to self-manage the properties.
“The surrounding communities of Edmonton have proven to be our sweet spot, with strong economic fundamentals, steady growth, and low vacancies,” says Weum.
**In the September issue of Canadian Real Estate Wealth, Weum and other investors outline how they overcame initial obstacles to build multi-million real estate portfolios. The magazine will be on newsstands this week or subscribe here to avail of a special deal today.
Consumer confidence rises; expectation of higher house prices increases… Toronto sees surge in rental market… Ottawa to restore and increase charge for affordable housing… And commercial real estate sales grow in Calgary…
Consumer expectation rises for real estate price escalation
Canadian consumers were feeling a little better off financially last week, according to the Bloomberg Nanos Canadian Confidence Index. With gasoline prices lower due to a reduced cost of oil, the average Canadian is feeling more confident about their personal finances than they have been since the start of June. The figures show that there is still an expectation of increased house prices over the next six months; 41.5 per cent of those polled think so compared to the 2014 average of 40.4 per cent. Read the full story.
Toronto sees rental market surge
The number of condos on the MLS in Toronto has hit an all-time high according to figures from market researcher Urbanation. The number of units listed during the second quarter of 2014 hit 6,708 marking a 26 per cent increase on a year earlier. New listings were up even more and availability has kept rents lower, rising less than 1 per cent in a year and averaging $2.37 per square foot. The small rent increase continues the trend from the start of the year, compared to last year’s average of 4 per cent. Shaun Hildebrand of Urbanation says that the growth in the rental market suggests a move away from ownership to some extent but is also reflective of more jobs being available allowing the children of baby boomers to move into their own homes. He believes that rent increases will remain low for some time due to high supply levels but is confident that a decline in rents is unlikely. Read the full story.
Ottawa to restore and increase charge for affordable housing
The charge levied by Ottawa city council to fund affordable housing is set to be restored and slightly increased. The $189 charge was added to the development charge for every single and semi-detached home built but the charge was stopped as it wasn’t clear if or how the collected funds were being spent. The new proposal is to restore the fee and increase it to $208 from the start of October. The development fee charges will total $22,173 inside the Greenbelt and $30,362 outside. The $208 fee will likely be passed on to consumers and the collected funds will be used for affordable housing in Longfields next year. Read the full story.
Commercial real estate investment rises in Calgary
The second quarter of 2014 has seen investment sales in commercial real estate in Calgary rise by 13 per cent to $824 million. Figures released this week by RealNet Canada show that 98 of the transactions were for properties priced at over $1 million. Calgary has seen a consistent growth in the commercial market this year, boosted by population growth, low taxes and the improving economic environment. Read the full story.
An increasing number of homebuyers are turning their backs on traditional property hunt methods and getting more creative
Frustrated by the limited quantity of “good” investment properties listed on the MLS system, buyers are focusing more on building relationships with specialist Realtors and companies.
“We are seeing a lot more people move away from the MLS to get good investment deals,” says Corey Young from the Alberta on Fire Investor Team in Edmonton. “With the inventory low in many big markets, buyers have to do a lot more work to get the right properties and at the best price.”
Speaking to CREW, Young says more investors are also switching to turnkey new builds as that is where the deals area.
“We have established relationships with so many builders so we are able to get the deals that buyers just can’t when they walk into a sales centre,” he says. “We are seeing a lot more investors pick up duplexes and triplexes now as well in the Edmonton area. “
Young says single-family home buyers should target properties that have a garage on site, adding that this is now a top priority for renters. “With the harsher winters, more people are looking for large garages for their cars and storage.”
More stats confirm the heat, but a warning from the UK market reminds us of how things can change… Edmonton sees a construction surge, but City Hall struggle to keep up… Big banks set to post healthy profits; good news for mortgage markets …. And a new type of foreign visitor for our biggest cities.
More stats confirm market heat
Friday saw the latest house sales report from the Canadian Real Estate Association which confirmed that the market in most regions is still hot. National home sales jumped 0.8 per cent from June to July of this year and 7.2 per cent year-over-year. The increase was expected with many regional real estate boards having already released figures. Read the full story.
Construction surge in Edmonton
Edmonton’s city hall is struggling to keep up with the high demand for building approvals according to the mayor. The issue surrounds technical information relating to infrastructure changes caused by development projects and Mayor Don Iveson says that there has been an unprecedented level of applications. So far this year technical drawings have been submitted for approval on 235 projects totalling 9,600 units; well above the 7,800 annual average. The delays in approving drawings add additional costs for developers although the timescale has come down in recent years. In 2012 it took an average of 305 days for approval, it’s now 160 and the target is 100 days. Read the full story.
No concern for the big banks
The Royal Bank of Canada will release its earnings report this Friday; the first of the big six lenders to do so with the others following over the next week. Few analysts are predicting anything other than growth, fuelled by investments but also greater lending especially in the mortgage sector. The hot housing market is good news for the banks and their increased stability and profits is also good news for homebuyers as it should mean loans are more available and deals become more competitive. Read the full story.
UK starts to see a market correction
Comparisons have been drawn between Canada and UK housing markets over recent months, in part due to the role of Mark Carney as former governor of the Bank of Canada, now heading the Bank of England. Fears about the high cost of property and lack of availability have been raised in both countries with London posing the biggest risk of a bubble for our UK cousins. While the Canadian market is showing little sign of slowing down, the UK market now is. New figures show a switch from a sellers’ to a buyers’ market as UK wide prices fell 2.9 per cent in the first half of this month; in London it was almost 6 per cent. The news brings a reminder of the dangers of complacency; those high prices and bidding wars can soon turn with sellers forced to offer discounts and facing a longer wait for a sale. Read the full story.
More visitors looking to acquire Canada’s property?
Call it far-fetched but it seems there is much interest from foreign citizens in Canada’s hot housing markets. A Winnipeg UFO group reports that the city along with Toronto, Calgary and Vancouver are ‘hot spots’ for UFO activity with over 16,000 sightings in the last 25 years. The report could provide a unique approach for marketing properties in those cities, although the UFO-spotter niche may be very small.
The Conference Board of Canada is joining the chorus of experts forecasting a soft landing for Canada’s condo market, though the optimism doesn’t extend to some of the more popular cities.
“The apartment condominium market enjoys a reason able outlook; after considerable angst about prospects of a general housing market crash, most analysts, including us, now believe the Canadian market is not a bubble about to burst, but will land softly,” their latest report, commissioned by Genworth Canada states. “There are pockets of higher risk, like potentially overbuilt condominium markets in several eastern cities, notably Toronto, and the possibility that slowing offshore demand could derail market recovery in Vancouver.”
In general, the Conference Board believes employment growth in most cities as well as strong immigration will contribute to an ongoing desire and need for condo housing.
One of Canada’s most hotly debated condo markets, however, is expected to see sluggish growth following years of booming activity in the segment.
“Toronto’s condominium market is poised to slow but not collapse,” the report states. “Low mortgage interest rates establish a national backdrop, while local spurs include persistent economic, population, and employment growth, with prospects of more to come.”
Condo starts are expected to tick up slightly in 2014 to 17,648 – up by 198 – before dropping in 2015 to 17,188.
Meanwhile, prices are expected to jump from an average resale price of $308,729 in 2013 to $316,744 in 2014 and, finally, $321,540.
For its part, Vancouver’s condo market is expected to continue to recover if Chinese investor demand continues.
“Vancouver’s apartment condominium market is recovering along with the overall resale market, although slowing offshore demand poses a potential threat,” the report states. “The condominium market appears decoupled from the local economy."
Much like Toronto’s market, resale prices in Vancouver are expected to jump year-over-year and settl