Justin Trudeau has abruptly switched into the role of housing-affordability radical.
Justin Trudeau has abruptly switched into the role of housing-affordability radical.
But it remains to be seen how many Canadians will buy the Liberals’ brazen new wave of promises — including a ban on foreign purchases, a tax on property flipping and restrictions on exploitive real-estate agents — since there is much cause for skepticism.
Weighing the party’s credibility is crucial since polls are suddenly showing housing affordability (not COVID) is one of the electorates’ top concerns. That’s like the B.C. election in 2017, which saw provincial Liberal leader Christy Clark, who relied heavily on developer donations, turfed in favour of the NDP.
All federal parties’ housing platforms require scrutiny, but here are five reasons voters are justified in feeling suspicious about the prime minister’s sudden conversion to housing activist, a persona he adopted last week to profess: “You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change.”
Housing prices across the country have jumped more than 50 per cent cent on average under Trudeau’s watch.
This glaring reality was captured in a recent devastating sound bite, when a heckler at a Trudeau rally in Ontario bellowed: “You had six years to do something. You’ve done nothing. These houses are worth $1.5 million. Are you going to help us pay $1.5 million? Are you, buddy?”
While in power, Liberal promises to address soaring prices have added up to zero. Take, for instance, the commitment Trudeau made in B.C. during the 2019 campaign, to bring in a one-per-cent tax on purchases by “non-resident, non-Canadians.” Nothing happened.
Similar vacuous pledges came to mind last week when the Trudeau stole the Conservatives’ idea to place a two-year ban on all foreign property purchases. Only two months earlier, the Liberals had voted against a Conservative opposition-day motion to do just that.
Many Liberals, federal and provincial, have long claimed it’s xenophobic to restrict foreign buyers in Canada. They’re only now toning down their race-baiting.
The Liberals have long failed to address foreign capital flooding into real estate — as revealed, yet again, this week. A South China Morning Post article by Ian Young showed Ottawa spent five years covering up an old Canada Revenue report detailing how “rich migrants made more than 90 per cent of luxury purchases” in Burnaby and Coquitlam “while declaring refugee-level incomes.”
It also became even harder in the past few days to accept Trudeau’s authenticity on taxing house flipping when it was uncovered the Liberals’ star candidate in Vancouver-Granville had flipped 21 properties. Liberals’ coziness with real-estate insiders runs deep (as it does for many politicians).
It was more than odd when Trudeau came to Vancouver in August and said “you’ll forgive me if I don’t think about monetary policy … You’ll understand that I think about families.”
It’s impossible to believe the prime minister doesn’t comprehend that monetary policy — in the form of extremely low interest rates and his government’s rapid printing of money in response to the pandemic — have helped jack up prices.
While the Liberals are joining the Conservatives and NDP in making big pledges to increase the construction of housing, many analysts are shocked that some promises Trudeau is making will further inflate prices.
Trudeau’s talk about tax-free housing accounts for first-time buyers, along with other credits, will super-charge demand even more, particularly among young people who can’t afford to stretch further. The size of new mortgages in Canada are soaring far into the danger zone.
It looks, however, like many millennials aren’t buying the new Liberal rhetoric; Leger polling has found the party has been losing support among young adults.
Prominent housing analyst Stephen Punwasi says former Vancouver Sun reporter Sam Cooper’s book, Wilful Blindness: How A Network of Narcos, Tycoons and CCP Agents Infiltrated The West, is “the most important book on Canadian real estate you’ll read this year.”
Wilful Blindness describes how transnational multi-millionaires and criminals, rooted in China, Mexico and elsewhere, have exploited the country’s real estate, which is “Canada’s soft spot for economic infiltration.” Cooper’s book describes many egregious examples of how “dirty” offshore money has been transformed into “clean” money through Canadian housing, especially via property flipping.
What have the Liberals done to crack down on money laundering in urban real estate? Though the Liberals said they would gradually direct $69 million into strengthening RCMP investigation of money laundering, B.C. Attorney General David Eby and others have urged Ottawa to go much further — and institute U.S.-style racketeering laws, which are credited with dismantling Mafia families.
Economists — from banks, universities and developers’ organizations — have in recent years acknowledged one of the biggest factors affecting Canadian housing and prices is population growth through immigration.
Despite, or because of, this, Trudeau has steadily increased Canada’s immigration target since being elected in 2015, hiking it from 250,000 to 400,000 a year, with B.C. an especially popular destination.
UBC geographer Dan Hiebert has found the typical value of a detached Metro Vancouver home owned by a new immigrant in 2017 was $2.3 million, $800,000 higher than a dwelling owned by a Canadian-born person.
An SFU study found “hidden foreign ownership,” particularly through satellite families in which breadwinners make their money offshore, is a significant reason prices have no connection to local wages. It all adds up to help cut into the hopes of both domestic Canadians and newcomers with modest resources.
In light of the prime minister showing almost no interest in protecting the young from soaring prices, it was more than perplexing to last week see him act like a white knight taking on an out-of-control real-estate system.
Who knows if the identity switch will get votes? But Trudeau’s latest self-image echoes that of the Liberals’ talkative housing secretary, Adam Vaughan, who in April let slip that Canada is “a very safe market for foreign investment, but not a great market for Canadians looking for choices around housing.”
While Vaughan revealed the Liberals’ strategy has been to support “a very good system of foreign investment creating a lot of new housing in Canada as we add immigrants and grow the population,” he cautioned it would be terrible to bring in any policy that could cause homeowners to see “10 per cent of the equity in their home suddenly disappear overnight.”
There it is. Two months ago the Liberals were firmly on the side of homeowners wanting to profit. Last week Trudeau suddenly became a champion of those frozen out of ownership.
You’re forgiven for thinking you are witnessing pure electoral posturing.
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Just when you thought you could catch a break from pandemic-fuelled housing madness, experts are predicting the reopening of the U.S.-Canada border, and Canada’s commitment to boost immigration, could fuel even higher levels of demand. All those new arrivals, students and family members rejoining loved ones will need places to live. And Canada’s housing supply is tight.
“If you think it’s expensive now, just wait,” says Tom Storey, a real estate agent with Royal LePage in Toronto. “The numbers tell us that prices should go up because there’s a lot of people coming here and we’re not building enough new properties.”
Exactly when new arrivals will impact housing markets is vague. Border entry is limited to those who can show they’re fully vaccinated.
But, once the pandemic’s threat has largely passed, the U.S. and Canadian governments have both expressed hopes that border traffic will return to normal.
Likewise, while Canada’s immigration goals call for 401,000 new permanent residents this year (reaching 1.2 million by 2023), dates aren’t specific and COVID-19 will continue to delay things in the short term.
Canada’s borders have been closed to most immigrants for much of the pandemic. But as the country’s population ages, economic immigration from workers and employers who ultimately become permanent residents has become more important.
“The key to both short-term economic recovery and long-term prosperity is immigration,” Marco Mendicino, Canada’s Minister of Immigration, Refugees and Citizenship, said at a news conference where he revealed the country’s goals through 2023.
The newcomers will put pressure on housing — either as homebuyers or renters.
In addition to new permanent residents, the number of international students in Canada is also rebounding. Those numbers were rising sharply before the pandemic, growing to 402,500 in 2019 — a 15 per cent increase from 2018, according government data.
Those with temporary work permits will also grow the population. Almost 70,000 more people were issued work permits in 2019 (a total of 404,000) and 63,020 people with temporary work permits were granted permanent residency.
Home prices were rising pre-COVID-19, due to a lack of housing supply combined with low mortgage rates and strong consumer demand.
Amid the new immigration policies, a growing student population and a proposed childcare system that’s expected to give families room to save more of their income, demand for housing will only grow, according to a recent report from Scotiabank.
Yet, home construction hasn’t kept up with demand for several years.
This year, as fewer newcomers have entered the country, the ratio of home completions to population has improved slightly. That’s likely to worsen as the government meets its immigration targets, the report says.
To avoid a continued rapid acceleration in home prices, experts argue immigration targets should align with housing policies that help meet the demand.
“Our federal government’s decision to raise immigration targets today without making the corresponding supply-side housing policy changes needed to increase supply is a decision to inflate home prices out of reach of most Canadians tomorrow — including many of our newest fellow citizens,” John Pasalis, the president of Toronto-based Realosophy Realty, says in a recent market report.
While Canada’s major cities have seen double-digit home price growth in recent years, the market overall appears to be calming.
July sales slipped 3.5 per cent on a month-over-month basis, according to the Canadian Real Estate Association, and sales are down a cumulative 28 per cent from a March 2021 peak.
Home sales in Canada fell a significant 14 per cent year over year in August, the Canadian Real Estate Association (CREA) said Sept. 15. Still, the association says, home sales in this country remain historically strong. And a lack of supply of homes for sale is pushing prices to record levels in Canada’s most populous cities.
The rental market, too, has been down from its high — in part due to restrictions on Airbnb units, which released bundles of short-term rentals into the traditional leasing market.
“When the borders open and [people] go back to university, you’re going to see an increase in the rental market,” Storey says. “Then it will flood into the sale market.”
But analysts say the property market is facing headwinds — namely inflation and the specter of rising interest rates.
And many of the Canadians who wanted to buy a home in order to get more space amid the pandemic, or even downsize, have already done so, says Adil Dinani of the Dinani Group for Royal LePage West in Vancouver. That may help cool off prices in the months to come.
Building more housing also will help.
“Supply is the common denominator in most of these major markets,” Dinani says. “There’s a shortage of quality inventory.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Freed Corp. will pay $210 million to acquire Ontario’s Deerhurst Resort, Horseshoe Valley Resort and development lands at Blue Mountain Resort from Skyline Investments Inc., the firms announced Monday morning.
The transaction involves the creation of a new subsidiary by Toronto-based Freed, to be called Resort Communities LP. Skyline will take a 29 per cent equity stake in Resort LP, which represents about $33 million of the purchase price.
The transaction is expected to close on or about Oct. 31.
“This is a milestone for Skyline that provides significant new liquidity to capitalize on our stated strategy to redeploy our investment and operational focus from resorts and development lands into hotels,” Skyline CEO Blake Lyon said in the announcement.
“This transaction represents one of the largest resort sales in Canada in the last 15 years, according to Beechwood Real Estate Advisors who advised Skyline on the transaction, and we are excited to be a 29 per cent partner in Resort LP along with Freed, who will now own an expanded portfolio of premier, drive-to resorts in Ontario, Canada.”
The properties are among the best-known resorts in Ontario, all located in prime vacation regions; Blue Mountain is at Collingwood; Deerhurst in Huntsville; and Horseshoe Valley is just outside Barrie.
“This transaction allows us to realize the full net asset value of our Canadian resorts, while still participating in the value creation that Freed’s proven development team can produce,” Lyon said in the release.
“Skyline’s investment partner in Blue Mountain, Serruya Private Equity, also expressed their satisfaction and support for this transaction.”
As part of the transaction, Freed will roll its existing interest in Muskoka Bay resort into Resort LP, at a $90 million valuation.
Muskoka Bay is an 869-acre four-season luxury resort community in Gravenhurst, between Horseshoe and Deerhurst. Muskoka Bay has 65 hotel rooms and villas owned or managed by Freed and one of Canada’s top-10 golf courses, as ranked by ScoreGolf.
“The acquisition of these iconic resort properties will allow us to execute our strategy of modernizing the traditional resort community market to the highest and best use through design-driven development and benefits of world-class amenities with all season access,” said Freed’s founder and CEO, Peter Freed, in the release.
“In addition, the acquisition of these resorts further stimulates the growth in the hotel and resort sectors for Freed.”
Other financial details of the transaction involve several components in addition to the equity stake in Resort Communities LP.
Upon closing, Skyline will receive a cash payment of approximately $109 million, and after debt and bond repayments, taxes and minority interest payouts, is expected to have approximately $30-$35 million.
A further $80 million in payments (including approximately $12 million in interest) is expected to follow over the ensuing 24 to 48 months. Net income before tax relating to the transaction on closing is expected to be $35-$45 million.
After tax, net income is expected to be $25-$35 million and the net impact on the company’s equity is expected to be $15-$25 million.
The deal also includes options for Resort LP to acquire Skyline’s 29 per cent interest in December 2022, and put and call options for Skyline and Freed at the end of years four and five following the transaction.
Skyline will host an investor call to discuss the transaction on Sept. 30 at 9:30 a.m. (Israel time).
Skyline is a Canadian company that specializes in hospitality real estate investments in the U.S. and Canada. It owns 18 income-producing assets with 3,266 hotel rooms and 85,238 square feet of commercial space and development lands with rights for approximately 2,315 residential units located in three main areas north of Toronto.
The company is traded on the Tel Aviv Stock Exchange (SKLN) and is a reporting issuer in Canada.
Freed Developments was founded over 25 years ago and has grown to become one of the largest private developers operating in the City of Toronto.
Freed has completed over 30 projects and has expanded to include vertical operating divisions in construction management, real estate and Freed Hospitality, a lifestyle-experience hotel, resort, restaurant and nightlife portfolio.
Serruya Private Equity is a global private equity firm in a broad range of asset classes with an emphasis on retail and consumer packaged goods.
SPE’s principals have developed brands including Weight Watchers, Tropicana, Godiva Ice Cream, Cold Stone Creamery, Round Table Pizza, Great American Cookies, Marble Slab Creamery, Hot Dog on a Stick, Taco Time, Blimpie Subs, and Pretzelmaker.
SPE’s platform currently includes global brands Yogen Früz, Pinkberry and Swensens with over 1,300 stores across 40 countries.
In what was one of the less pleasant summers we’ve had here in British Columbia — full of heat waves, moths and forest fires like we’ve never seen before — one part of the province fuelled plenty of interest from home seekers.
From top to bottom, Vancouver Island saw a major uptick in real estate searches on REW.ca this summer, as month-over-month queries continue to rise quickly.
Interest in property on Vancouver Island isn’t contained to home seekers on the island itself. Many Greater Vancouver residents are showing interest in cities like Nanaimo and Victoria as well.
After a summer full of fires in the Interior, Vancouver Island is looking more attractive than ever for Lower Mainland residents looking for vacation properties and second homes.
While interest and prices may be rising, one of the most notable trends taking place on Vancouver Island is the limited supply of housing.
There were 51% fewer homes on the market in August 2021 on Vancouver Island than in the year prior, with major cities like Victoria having 57.8% less inventory.
According to the British Columbia Real Estate Association, sales are returning to normal, while supply is hitting record lows. This is a trend taking shape right across Canada, with all of the major political parties running for office promising to take on the lack of supply.
To those who already live on Vancouver Island, the recent uptick in search activity should come as no surprise. Vancouver Island is less busy, less densely populated, and arguably every bit as stunning as Vancouver.
Residential home prices also continue to be more affordable on Vancouver Island compared to Greater Vancouver. Last month, the average residential price of a home in Greater Vancouver was $1,174,176, compared to $695,085 on Vancouver Island in general and $875,711 in Victoria.
Though the average residential price of a home on Vancouver Island in general and Victoria specifically are both under the provincial average in British Columbia, prices are still rising steadily.
Over the last 12 months, no region in B.C. has seen a larger percentage increase in home prices than Vancouver Island, with prices on residential homes jumping 29.5% year over year. Outside of Vancouver Island, Kamloops and Chilliwack are the only other areas that have seen price growth of over 20%.
What might be most surprising to investors and home seekers is the increase in interest for Vancouver Island’s less populated cities. One might expect to see Nanaimo and Victoria draw more queries on REW, but there’s an equal amount of search growth in smaller markets like Parksville, Ladysmith and Sooke. Of the top 10 largest cities on Vancouver Island, all 10 have seen an increase in search queries on REW this summer.
An unprecedented start to 2021 still has B.C. on track to set all kinds of records this year, and though sales have slowed, an increased interest in areas like Vancouver Island could be an indication that demand is still trending upward. With limited supply and interest rates remaining depressed, we could see prices continue to rise on Vancouver Island in the months to come.
In a recent interview with the Vancouver Real Estate Podcast, REW president Simon Bray highlighted three markets other than Vancouver Island that have been standouts on the home search platform, garnering significant interest from home seekers across the province.
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