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For some real estate agents, 2021 has been very, very good – The Globe and Mail

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The dirty secret of the real estate year is that when Canada’s market is as red hot as it has been in 2021, the agents and sales reps make a lot of money.

Nationwide the total dollar volume of residential home transactions hit $308.2-billion in August, up 77 per cent from 2020′s figure in the same period according to data provided by the Canadian Real Estate Association. The comparison to 2020 is a little misleading, given there were several months of shutdowns that stopped most real estate activity, but the industry is still on pace for a record year. And while there’s no nationwide standard commission for a home sale, it’s reasonable to presume that between 3 and 5 per cent of that dollar volume was shared with real estate agents. That means billions of dollars are flowing into realtor pockets, with business not far from double that of 2020.

The question of what to do with all that cash is not a trivial matter. All of the realtors who spoke with The Globe for this story had some of their best years ever, even if not all of them were comfortable saying what they spent it on.

“I know when people run into quick money their first impulse is finally to splurge on everything they’ve wanted to get; they immediately think of the luxuries they couldn’t afford before,” said Nasma Ali, founder of the One Group sales team with Re/Max Hallmark Realty Ltd. “Some agents think this is what it’s going to be like every year … they are the ones more likely to buy the expensive car.”

Veteran agents warn that flashing success may be tempting, but the glory can be temporary.

“It’s no secret agents make more money than ever before, and there are some really egotistical agents that don’t understand the public doesn’t want to know how much money you make,” said David Fleming, a broker of record for Bosley Toronto Realty Group Inc. who writes in TorontoRealtyBlog.com about industry foibles every week. “I look at the younger generation and some of them have a real YOLO [you only live once] mentality; they take trips to the U.S. Open or Cannes. … I’ve never done any of that. For me, personally, I do very well and I make a great living. But I’m the king of self-deprecation in my blogs. What if I was driving a gold plated Cadillac and taking photos of bills? It’s gross! A very small percentage of the population is attracted to that.”

Mr. Fleming does admit one vice: vintage hockey-card collecting.

Mike Turner, owner of Royal LePage Turner Realty in Gander, N.L., is one of Royal LePage’s top performing agents in Canada in 2021, and his approach has been to plow most of the gains back into his business.

“[2021] was our best year,” he said. “Last year the company did 168 deals, this year it’s 231 to date.” In consequence, he opened his third office, he’s gotten some new software, hired some new agents and worked 12- to 14-hour days to keep up. “We haven’t had the crazy, $100,000 more than list-price sales, but we’ve sold for list price overnight, and we had a big oversupply going into this. We got to take this for what it is; a once in a lifetime thing.”

Jennifer Jones and her sales team at Exp Realty Brokerage in Barrie, Ont., also had their best year ever, in part because even though fewer homes were sold, the prices are so much higher. With mainly digital showings and online customer generation, her 30-person sales team has managed to double their production and have expanded their reach into Ontario cottage country. Along with all that new business comes advice about what to do with it.

“For our team, we do a lot of investment seminars, because we believe in purchasing property. The question should be when you go out to list a property: ‘Is this something you should be listing or purchasing?’ ” said Ms. Jones. “It’s about how to purchase that first property; how to build more equity and move onto a second. And then buying a property, duplexing or a home improvement mortgage. It’s how to plant an orchard worth of investment properties.”

The switch to digital was uneven though, and not all agents blew through their annual sales targets by the middle of the year.

“For people attempting to rely on that ‘belly-to-belly’ business and door knocking, those realtors have struggled,” Ms. Jones said.

“It’s feast or famine,” said Andre Kutyan, a broker with Harvey Kalles Real Estate Ltd. in Toronto. “As hot as the market is there are well-known agents in areas of the city who used to do good business, but are doing nothing now. A lot of the older-school agents have not adjusted very well.”

“The push toward digital brokerage transactions was really challenging for a subset of the older population; it did accelerate retirements,” said Phil Soper, president and chief executive of Royal LePage, the country’s largest realtor network. “The real take-away from the pandemic is to look at what made you successful and hang on to some of those things: if you’re able to do virtual showings, and it took one quarter the time, that’s a massive savings in costs.”

Another big change for Ontario realtors is the ability, as of 2020, to form a personal real estate corporation (PREC), a tax vehicle that until now had been available to other professionals and realtors in other provinces.

“The decision comes down to different factors but the main driver is, ‘Does the individual need all the money they earn to live off?’ If they don’t, they can benefit from that tax deferral,” said Joseph Pagliaroli, tax partner with KPMG in Canada who has done education sessions with the Ontario Real Estate Association.

As Mr. Pagliaroli puts it, if the top income tax rate is 54 per cent for those making $220,000 and a PREC only pays 12.2 per cent in corporate tax, sheltering real estate income in a PREC can allow you to defer the tax hit on money you don’t need right now over multiple years, or even use the corporation to hold investment assets for retirement.

The only downside is you needed to plan ahead: “This is a go-forward solution. If you’ve earned the income up to now, you can’t do anything about that; it can’t be done retroactively,” he said.

Not all veteran agents struggled. Josie Stern, who runs the eponymous Stern sales team with Sutton Group-Associates Realty Inc. in midtown Toronto, has been in the game 35 years through many ups and downs. Her main advice for agents flush with success is simple: share the wealth.

“It’s time to give back. Agents with a lot of business and extra income can save for a rainy day or improve their marketing materials or technical systems. Or they sponsor community events and get your name out like that and promote yourself as someone who’s interested in giving back,” said Ms. Stern. It’s advice other agents mentioned as well; Ms. Jones’s team has sponsored women’s shelters and food banks.

But Ms. Stern, too, has seen agents, either new to the industry or without a strong network of existing clients, struggle this year, particularly with the inability to help out with things like open houses to meet new clients.

“Experienced agents are stronger than they’ve ever been before; they have the connections and experience and staff. So it’s become more than ever an industry for highly successful, busy agents,” she said.

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FORT MAC LRA Approves Interim Plan for TD JAKES Real Estate Ventures Group – KPVI News 6

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FORT MAC LRA Approves Interim Plan for TD JAKES Real Estate Ventures Group  KPVI News 6



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Could New Zealand's radical new housing law help Canada curb its skyrocketing real estate prices? – National Post

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New Zealand is currently plagued by a real estate market that is even more unaffordable than Canada’s

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A radical new law intended to reduce New Zealand’s infamous housing crunch could well be a model for how Canada could curb its ever-skyrocketing real estate prices, according to experts contacted by the National Post.

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This week, in a rare bipartisan action, the New Zealand government introduced measures to quash “overly restrictive planning rules” that hinder development in urban cores.

New Zealanders may now develop up to 50 per cent of their land — and build up to three storeys — without requiring consent from municipal authorities. The reforms also unleash landowners to build up to three homes per lot in areas that previously restricted those lots to one or two homes.

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While the measures do not mandate development of existing homes, they mean that New Zealanders now have much more freedom to build on their land without butting up against municipal planning laws. A similar law applied to Vancouver and Toronto, for instance, would automatically free builders from the need to seek local approval for a laneway house.

A government-commissioned analysis by Pricewaterhouse Coopers has estimated that the new measures will spur a building boom expected to add between 48,200 and 105,500 new units of housing in New Zealand by the end of the decade.

“I think reforms like this would likely help increase Canadian housing stock quite a bit,” Nathanael Lauster, a housing density researcher at the University of British Columbia, told the Post.

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Lauster helped created the Metro Vancouver Zoning Project , an effort to meticulously document zoning laws in Canada’s third largest city. What the project has revealed is that the vast majority of land in Vancouver is zoned for single family homes, effectively making densification illegal in much of Canada’s most unaffordable real estate market.

A screenshot of the Metro Vancouver Zoning Project. Every patch of yellow indicates where it’s illegal to build anything except a detached home or duplex.
A screenshot of the Metro Vancouver Zoning Project. Every patch of yellow indicates where it’s illegal to build anything except a detached home or duplex. Photo by Metro Vancouver Housing Project

In an extensive analysis of New Zealand’s new housing reforms, Lauster called them a “welcome new model” for stripping “exclusionary” powers from the hands of local governments, which disproportionately favour the interests of existing homeowners. “It’s relatively easy for municipal politics to become captured by those most resistant to change and greater inclusion,” he wrote.

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New Zealand’s new measures were supported both by its Labour Party government and its conservative National Party opposition. Tellingly, the policy’s official launch was attended by National Party Leader Judith Collins.

“National supports this policy because it focuses on supply. Rather than making life harder for property owners, this policy tells them that you have the right to build,” Collins told a Tuesday press conference .

The National Party leader also struck out at Kiwis who opposed the law on the grounds that it would strip communities of their “character.” “Our communities lose their character when people can’t afford to own their own home,” she said.

New Zealand is currently plagued by a real estate market that is even more unaffordable than Canada’s. The gap between New Zealand’s average incomes and its average real estate cost is currently among the highest in the OECD .

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Notably, the problem continues to grow despite the fact that New Zealand maintains strict controls on foreign ownership. In 2018, the country banned non-residents from purchasing pre-existing New Zealand real estate, although foreigners are given limited reign to purchase new builds.

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Canada’s already overheated real estate market is on a fast track to match New Zealand for unaffordability. In just the last year, average Canadian home prices soared by an incredible 21.4 per cent .

The singular reason for this is lack of supply. Canada has the lowest number of housing units per capita than any other country in the G7, a ratio that is only getting worse as lacklustre housing development is met with massive population growth.

In Canada, any law to defang municipal zoning laws would need to come from the provinces. With New Zealand having a population of only five million, its national government often makes decisions that would be considered regional issues in Canada.

However, there is strong precedent to show that Canadian provinces have relatively free reign to steamroll municipal laws whenever they want to.

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One of the starkest recent examples was when the province of Ontario abruptly cut the size of Toronto City Council in half.

While the City of Toronto took the issue to court framing it as an undemocratic coup, just this month the Supreme Court of Canada ruled that Ontario acted constitutionally.

In the recent Canadian federal election, all three major parties debuted housing plans that mostly skirted around the issue of municipal barriers to development. The Conservatives proposed tying federal transit funding to a city’s willingness to densify, but there were no blunt New Zealand-style promises to override onerous local zoning laws

“If there was a blanket up-zoning of land in Canadian metropolitan areas, it would lead to an increase in the housing stock,” said Steve Lafleur, an analyst specializing in housing affordability at the Fraser Institute.

The libertarian-minded Fraser Institute isn’t one to advocate stricter government control of an economic sector, and Lafleur said that provincial “micromanaging” of local zoning would not be ideal. Nevertheless, he said, “given immense demand for housing, it is impossible to believe that there would not be a boom … if denser housing were allowed.”

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Office real estate may be struggling, but there are bright spots in commercial real estate – Financial Post

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Industrial real estate has emerged as an unexpected saviour, with leasing volumes rising across Canada

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The suburbs made a remarkable comeback during COVID-19, as residential prices, rents and sales escalated faster than those in the urban core, while commercial real estate data depict a similar picture of strength and resilience in the areas outside the downtown areas.

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Indeed, the real estate story during COVID-19 is a tale of not one, but several markets. One is that the roaring housing market defied all predictions of doom and gloom, with unprecedented increases in demand coupled with lacklustre supply pushing housing prices upwards.

Another is focused on commercial real estate markets, which are further differentiated by geography and type. Often concentrated in the urban core, office real estate continues to struggle with growing vacancy rates and softening of rents. The short-term forecasts for office markets spell even more trouble, with vacancy rates projected to rise further.

But not all is lost in commercial real estate. Industrial real estate, especially suburban warehousing space, has emerged as an unexpected saviour, with leasing volumes rising across Canada. And if you thought COVID-19 had taken the retail sector down, think again. The on-again, off-again restrictions have certainly hurt retail real estate as has the shift to e-commerce. But retail leasing volumes started to recover after the second quarter of 2020, and retail vacancy rates are forecasted to stay steady.

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Recent data from CoStar Group, which tracks and analyzes activity in commercial real estate markets, demonstrates the diversity in market trends. For example, office leasing, like residential real estate sales, declined in the first quarter of 2020. But office leasing has since struggled to fully recover, while residential sales sprang back almost immediately.

The decline in office leasing is most pronounced in Toronto, where CoStar Group data show leasing volume in the third quarter of 2021 was 47 per cent lower than the average for the same quarter from 2018 to 2020. Other major markets, including Calgary and Edmonton, which were struggling even before the pandemic, showed similar declines.

The office market in Vancouver, though, showed resilience. Leasing volume there was up by 33 per cent in the third quarter of 2021 compared to the average for the same quarter from 2018 to 2020. Why is Vancouver bucking the trend? Carl Gomez, chief economist and head of market analytics at CoStar Group Canada, believes it’s because of the number of small- to medium-sized tech companies located there.

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  1. The higher number of housing starts this year has only reached the same level observed decades ago when Canada’s population was nearly half of what it is today.

    Supply is the only cause and solution to Canada’s housing woes — it’s time to be bold

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    Housing crisis? What crisis? Canada has struggled to house people for decades

Toronto’s urban core is dominated by firms specializing in banking, finance, law, and insurance. The shift to working from home has been more pronounced in those sectors, according to Statistics Canada. The decline in office space leasing was, therefore, expected given the declining demand.

Suburban office markets, however, have managed to stay in the black. The net absorption of office space has been negative in downtown Toronto since the second quarter of 2020. But the suburban Greater Toronto Area (GTA) has fared much better, with positive net absorption quarter after quarter.

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The urban-suburban divide also persists in Vancouver. The net absorption of office space has been negative downtown, at least since the first quarter of 2020. The suburban office markets, on the other hand, have reported positive net absorption. Even in the second quarter of 2020, soon after COVID-19 was declared a pandemic, suburban Vancouver reported almost one million square feet in net absorption.

The suburban markets are also conducive to the growth in industrial real estate. By the fourth quarter of 2020, industrial leasing had topped pre-pandemic leasing levels in Canada. Furthermore, an additional 16 million square feet of industrial real estate is in the pipeline for Toronto and almost eight million for Vancouver.

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The better-performing suburban commercial real estate markets in Toronto and Vancouver suggest a slight shift in location preferences that the pandemic has accelerated. However, one should not be quick to write-off downtown areas just yet. With offices and educational institutions resuming face-to-face operations by early next year, downtown spaces are expected to be back in demand, which might require vacancy forecasts to be revised downwards.

Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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