TORONTO — Canada’s housing market shattered records in July despite the economic uncertainty surrounding the COVID-19 pandemic — and with the usually busy fall real estate season drawing near, experts are divided about whether the boom will continue.
Last month marked the highest monthly sales figure on record, the Canadian Real Estate Association reported, while the national average sales price jumped to a record $571,500.
Part of the fuel behind rising prices has been driven by a change in the real estate cycle, RBC senior economist Robert Hogue said during an RBC podcast earlier this month.
Traditionally, many homebuyers and sellers wait until spring to make deals as snowfall hampers curb appeal. This year, all of the usual spring homebuying fever was pushed into the usually slow summer months as people emerged from lockdown.
Under normal circumstances, real estate agents expect a busy period in early fall as people try to finish their move before winter.
Rachel Gagnon, an Ottawa-based real estate broker at Ian Charlebois & Associates Real Estate & Mortgages, said the demand for housing has stemmed from “stay at home” orders, which left people wishing for more space and amenities.
“Unless a major, and I mean very major, shift was to happen, which would create an influx of properties on the market, things will continue to move as they have over the last few months,” she said.
“As we move forward through August and September, people work through the new school rules, I think we’ll see a fairly large uptick in activity. Unless a second wave shifts things dramatically, I think we’re going to have a very busy fall market that won’t slow down until the Christmas season.”
But Gagnon also said that she has seen the pressure placed on first-time homebuyers, who are trying to get into the market now while they can afford a mortgage, even if it maxes out their borrowing power.
And COVID-19 related travel restrictions have led to slowing immigration and less demand from property buyers seeking rental properties for tourists or students.
The uncertainty means a fall slowdown is possible, said Bethany King, a team leader at Century 21 Millennium Inc. Brokerage in Brampton, Ont.
While some lenders are offering cash back, lending expectations have also changed, said King. For example, some lenders consider essential workers to have better job security should a second COVID-19 wave come.
Fear about a “second wave” in the fall has parents planning to save money, in case children are sent home and parents need to cut back hours and income to focus on caregiving, she said.
“Those are the things that have investors who are regular people — not millionaires that have tons and tons of properties, and are cashing out — preparing for the worst,” King said.
Kean Birch, an associate professor at York University, said he will be watching for the extension or end of mortgage payment deferrals.
“I find it worrying that housing prices are continuing to rise. The reason being that we don’t know what’s going to happen once the mortgage payment deferral ends, and the consequences actually could be dramatic across the board. And it could be highly inequitable as well,” said Birch, who studies economic geography.
Evan Siddall, chief executive of Canada Mortgage and Housing Corp., wrote a letter earlier this month that said he expects house prices to fall, “even in the face of recent activity, which appears to be the result of very low interest rates and a sharp reduction in new listings.”
“Our projections always anticipated a delayed impact: weakening in late 2020 and 2021 once government income supports unwind,” read the letter.
However, Sherry Cooper, chief economist at Dominion Lending Centres, called CMHC’s forecast is “overly pessimistic.”
“Here we are in the second half of 2020, and the national average sales price has risen 14.3 per cent year-over-year,” she said.
“The good news is that the housing market is contributing to the recovery in economic activity.”
This report by The Canadian Press was first published Aug. 20, 2020.
LACKIE: Real estate market going through 'recalibration' of supply, demand – Toronto Sun
Article content continued
Buyer confidence is always the wild card. We have seen this time and time again, but most recently in the early days of the pandemic: the market ground to a halt and the buyers brave enough to venture out were looking for deals.
That momentary seize up was a blip, it turned out. Once people realized that the pandemic discounts weren’t holding, the market fired back up again.
If you look at the actual TRREB data, as Ackerley did, you will see that in spite of new listings more than doubling since Sept. 1, the number of sales once averaged out to account for the wild summer has stayed relatively consistent.
So, the main thing to watch now is what happens with the inventory balance on the condo market. We need to see how long it takes for this surge of new listings to slow and eventually absorb.
“It’s true the landscape is different, but rest assured, this market is very strong for many reasons, increased population, diverse economy, stable political system, etc. The market is going to rebound. This sort of thing has happened so many times in the past where something causes the market to stall, the media scares everyone, then there’s a period of adjustment, and by the time the masses figure it out, prices are [on the rise] again.”
Only time will tell, clearly, but I think we’d all do well to take a beat before declaring impending calamity on the real estate front.
In the meantime, you may have questions and if our chat is any indication, Rob Ackerley surely has answers. Shoot him a note at firstname.lastname@example.org – I know I will be.
Brynn Lackie is a sales representative at Chestnut Park Real Estate Ltd.
Boeing Prepares Deeper Cuts From Executive Ranks to Real Estate – BNN
(Bloomberg) — Boeing Co. is thinning its corps of vice presidents and winnowing real estate holdings, including a splashy outpost near the Massachusetts Institute of Technology, as the planemaker works furiously to counter plunging aircraft sales and mounting costs for the grounded 737 Max.
About 170 midlevel executives, 70 of them based at Boeing’s commercial airplane division, are taking a buyout offer that includes a year’s salary, according to people familiar with the matter. The first of the vice presidents and senior managers to accept the terms will leave the company Oct. 2, followed by a second wave later in the year.
The cuts go deeper and wider than the 19,000 jobs pared earlier this year when the coronavirus pandemic sent air travel into an unprecedented collapse. Stemming the cash outflow has become a paramount concern for Boeing, and the company is also wringing savings from investments in futuristic technology as well as its businesses and organizational structure.
Boeing is shedding assets “like King Midas in reverse,” said Richard Aboulafia, an aerospace analyst with Teal Group.
The biggest and most controversial of the cost-saving measures mulled by Boeing would be to build the 787 Dreamliner at a single site, most likely its South Carolina factory, and close a second final-assembly line in Everett, Washington.
The decision on production amid a steep plunge in wide-body jet deliveries is expected to be announced as soon next month, according to two of the people, who asked not to be named because they weren’t authorized to speak publicly.
Au Revoir Chateau
Boeing also is jettisoning holdovers from the days when it was flush with cash. One example: a lavish executive retreat, modeled after a French chateau, in the countryside near St. Louis. The Boeing Leadership Center is closing indefinitely, with 81 workers from chefs to waiters losing their jobs, according to a WARN report.
Chief Executive Officer Dave Calhoun and Chief Financial Officer Greg Smith warned in July that the company faced a shrinking market that’s likely to remain depressed for years. The Chicago-based company could see a staggering $23.3 billion cash outflow this year, according to an estimate by Melius Research analyst Carter Copeland, before the resumption of Max deliveries starts to fill the company’s coffers in 2021.
Smith, who’s orchestrating the shakeup, said in August that Boeing needs to be “clear-eyed about the market” and how to mitigate its risks.
Boeing signaled last month that a new voluntary exit offer would take workforce reductions well beyond the 10% it initially targeted. The package was aimed at the commercial aircraft and services businesses, the most damaged by the pandemic, as well as the corporate operation, which employed 37,862 people at the start of the year. Fewer employees in the company’s defense, space and government business were eligible for the buyouts.
Boeing is trimming research and development spending in part by phasing out Boeing NeXt, a two-year-old unit focused on futuristic concepts from flying cars to a supersonic business jet.
Aurora Flight Sciences, among the highest profile of the ventures, remains a wholly-owned subsidiary with work proceeding “full steam ahead,” a Boeing representative said.
But the company has tapped the brakes on the Autonomous Flight Research Center it had planned to open this year in MIT’s Kendall Square Initiative in Cambridge, Massachusetts, near the university’s campus.
Boeing is trying to sublease about half of the 100,000 square-feet space it had secured, said Peter Conway, director of research for Boston-based Lincoln Property Co., which doesn’t represent Boeing or the landlord. Aurora no longer plans to move its Cambridge-based team to the building, Boeing said.
The company plans to decide by year-end whether to maintain or monetize its stakes in three ventures:
- Aerion, which is developing a supersonic business jet
- SkyGrid, which is making an air-traffic management system for drones
- Wisk, a joint venture with Kitty Hawk Corp., an autonomous flight venture backed by Google founder Larry Page.
“It’s a different world now,” said Stephen Perry, an investment banker who specializes in aerospace and defense deals at Janes Capital Partners. “They’re all cash-draining businesses in the short run, with an uncertain future.”
Boeing, Perry said, needs to focus on its core businesses because it’s “in a fight for survival.”
©2020 Bloomberg L.P.
Montreal startup uses AI to set real-estate prices – Montreal Gazette
The pandemic has been devastating for so many businesses, but it has also provided opportunities for other entrepreneurs. Take the case of Montreal brothers Mark and Jordan Owen. Both saw their lives significantly altered by the COVID-19 crisis.
Mark, 28, was working for a local real-estate development firm and business had ground to a halt in the spring. Jordan, 26, was in a master’s program in real-estate development and city planning at the Massachusetts Institute of Technology (MIT) and had come back to Montreal in March because all in-person classes had been cancelled.
That’s when they had the idea of starting up a company to produce reusable masks. They founded Bien Aller, named in honour of the Quebec COVID catchphrase “Ça va bien aller.” They created the firm with a friend, Sean Tassé, who had been laid off from his job at a construction-management firm because of the pandemic.
Six months later, they’ve sold about 300,000 masks and they’re still producing them at facilities in Montreal and South Korea. Then the Owen brothers, Tassé and another friend, Benoit Thibeault, had a notion for a more unusual startup. The Owens’ background in Montreal real estate had them thinking that what developers and brokers could really use is a more reliable way to set prices for houses and condos that are going on the sales or rental markets.
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