Today we present a guest post from R. Scott Davie, President of Davie Real Estate, who has been a leader in the sales and marketing of new high rise and low rise projects around the Greater Toronto Area (GTA) for decades, and has represented many of the GTA’s top Developers. Davie recently wrote a book on the GTA Affordable Home Ownership Crisis.
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There is much uncertainty in the direction of the residential GTA Real Estate market, as we exit the Covid-19 Virus quarantine and the region returns to work. Pre-virus, the region’s real estate sector was booming, being driven by strong immigration, very low interest rates, and a lessening of the Stress Test regulations. A shortage of supply, both in resale real estate listings and in available zoned land to build on, contrasted with the overwhelming demand to buy, put strong upward pressure on prices.
Edge Towers construction site in Mississauga, image by R. Scott Davie
This extreme shortage of inventory motivated the Provincial Government to declare residential construction an essential service. Excavation and concrete work has continued and workers have reported to me that they are actually working faster than normal due to the Covid-19 traffic effect. Dramatically less road traffic means that dump trucks and cement trucks can complete more runs each day.
So, although early construction efficiency increases, finishing construction has dramatically slowed due to social distancing and a portion of workers self quarantining at home.
The result of less finishing work being completed will lead to minor delayed closings on projects that are near completion, and there will be a bottleneck that will need to be overcome in the mid-term before the labour demand can resume to normal. A higher demand for labour will put upward pressure on labour costs which will be passed on to the end consumer.
On April 1st, the Federal Government increased the Carbon Tax by 50%. Since the cost to produce and deliver building materials like concrete, steel, glass, and drywall all require a lot of energy, the cost of materials will also be increasing, and be passed on to the end consumer.
We have seen in the last worldwide financial crisis—the 2008/2009 Banking Crisis—that consumer confidence was severely damaged. This resulted in a dramatic decrease in the volume of Real Estate sales, but due to the fact that supply was more constricted than demand, prices were actually higher year over year at the end of the crisis. So the volume of sales decreased but prices rose.
If the volume of sales slows in the pre-construction market, will Developers lower their prices? Developers must show a healthy Performa to their bank in order to obtain construction financing. It may be surprising to know that Developers profits are at fairly low rate. This is due to the record high cost of zoned land, lot levies, and the cost of labour and materials.
The cost of labour is on the rise due to demand, based on sales of homes and condos from the last two or three years that are now being built, and the cost of materials are on the rise due to the 50% increase to the carbon tax. Developers will have no choice but to wait out slow sales because without construction financing they will not be building. Developers are not in a position where they can lower their prices to inspire consumer confidence.
Consumer confidence has always been the wild card that drives the GTA real estate market, in good times and in bad. Consumer confidence is expected to be impacted for two to six months, as the economy bounces back. The majority of Canadians have continued working, worked from home, are on retirement pensions or social assistance and have been restricted from spending their money. Many business owners have been assisted with the Federal Government’s $40,000 interest free loan ($10,000 forgivable) and many individuals with the $2,000 CERB (Canada Emergency Response Benefit) payments. Without minimizing the seriousness of the devastation that many have experienced, they are the minority of Canadian earners. The wealthy, who have healthy equity in their homes or investment properties, are in a strong position to mitigate their Covid-19 loses with refinancing.
The majority of GTA residents are anxious to return to normal life and normal spending activities. New construction projects have been delayed and most residents are not listing their homes for sale since the quarantine began in March. This further restricts supply throughout the GTA for residents that are ready to buy in the short term.
New pre-construction projects may take a little longer to sell in the mid-term, but due to
healthy immigration
low interest rates, and a lessening of the Stress Test regulations
a shortage of zoned land
and the record high cost of construction labour, materials, and lot levies—
prices are on the rise.
During the Banking Crisis, the stock market dropped by 40% to 60%, while Real Estate prices rose. In good times and bad, real estate is the safest place to invest money. Sales volume will be down in the short to mid-term but prices are rising. There is more of a shortage of available properties than willing buyers.
One thing is certain, in a few years we will not be able to afford to buy the same size property in the same location as we can today. Now is the time to buy.
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MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
