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Calgary’s commercial real estate market driven by multi-family demand

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Call it a rental boom.

A new report shows that Calgary’s commercial real estate sector is driven by demand for housing, resulting in unprecedented purpose-built rental development in the city.

“We’re seeing more multi-family purpose-built rentals constructed than apartment condominiums,” says Darryl Terrio, broker with Re/Max Complete Realty in Calgary. The Re/Max 2024 Commercial Real Estate Report notes purpose-built rental development starts overtook condominium starts for the first time in 2023.

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Driving that growth has been record migration to the city leading to Canada Mortgage and Housing Corp. reporting that rental vacancy was 1.4 per cent in the fall of last year.

“The influx of interprovincial migration and immigrants is challenging the city’s housing stock, with vacancy rates at the lowest level in a decade,” the report notes.

That led to “more than 3,000 new units” in the city in 2023 “in the Beltline, downtown and the North Hill areas.” Terrio adds that recent changes to zoning bylaws in the city, allowing for higher density housing in typically single-family detached home neighbourhoods, have spurred a boom in small-scale multi-family projects.

“It’s just so much more affordable and feasible now to build multi-family rental,” he says.

A factor in that is CMHC’s MLI Select program allowing builders to get financing with only a five per cent down payment providing the new build, or renovation on an existing building, meet certain affordability, accessibility and climate compatibility metrics.

“Everybody is wanting to build a fourplex or put a suite in their house, but once you’re into five units or more, you can qualify for this CMHC program offering 95 per cent financing,” Terrio says.

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The Re/Max report notes that multi-family development — next to industrial real estate — is not just the hottest sector in Calgary. It’s leading development across Canada due to record high international migration, sparking huge demand for housing that has outpaced supply.

“The big story is how much investment there is in multi-family unit residential affordable housing units,” says Chris Alexander, president of Re/Max Canada.

“For the foreseeable future we will see a lot of that going to purpose-built rentals and affordable multi-family housing.”

The report notes that — besides Calgary — Vancouver, Regina, Winnipeg, London, Ottawa and Halifax had vacancy rates below 1.8 per cent, driven by net international migration of more than 1.2 million people in 2023. Yet Alberta stands out in particular, adding about 202,000 more residents last year, or 4.4 per cent growth, the fastest rate since 1981.

The Re/Max report also highlights Calgary’s success in redeveloping downtown office space into rental and other housing, noting that by next year more than 11,000 people will live in the downtown core.

Alexander adds that Calgary’s multi-family market reminds him of Toronto’s market in the early 2000s.

“There was a lot of new construction development with condo towers and investors looking to rent them out,” he says. “There were a lot of people wanting to move to the city at the time, as well as investing in from across Canada and outside the country.”

That growing demand helped push prices to where they are today, with the average selling price of an apartment condominium in May sitting at nearly $700,000 in Toronto.

Alexander notes those investments 20 years ago were “big time” successful.

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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