The real estate sector slowed down a bit in October in Hamilton and Burlington compared to its torrid run over the summer.
The Realtors Association of Hamilton-Burlington (RAHB) says 1,615 homes were sold last month, down 7.6 per cent from September.
However, sales jumped 23.7 per cent last month compared to October 2019.
“The trends this fall are not reminiscent of what we would normally see — with October activity slowing slightly compared to September — and this is due to 2020 not being a typical year,” says RAHB president Kathy Della-Nebbia. “As a result of COVID-19, we experienced a delayed spring market and a surge in record activity over the summer months when the province began to reopen. As a result of this unstable year, active listings at the end of each month are some of the lowest we’ve seen, exacerbating low inventory levels and continuing to drive average price.”
The average sale price of a home last month was $721,523, an increase of 0.02 per cent from September, and up 19.8 per cent from October 2019.
New listings were down 12.8 per cent compared to September but rose 5.5 per cent over last October.
“If demand remains high and the economy doesn’t shut down, we may not experience the slow down we saw with the first wave,” said Della-Nebbia. “The activity more likely to slow down is new listings, which will cause a further problem with supply and demand, and prices will continue to increase. These unprecedented times are where the services of a local RAHB realtor are invaluable. We will continue to work with clients to ensure their housing needs are met and will continue to use virtual technology and sanitary measures to combat COVID-19.”
Real estate market continuing to recover despite pandemic
The number of sales for single-family properties within the entire RAHB market increased in October by 13.3 per cent compared to the same month last year, the number of new listings was down 14.7 per cent over last year, and the average sale price increased by 19.4 per cent to $795,415.
Townhouse sales activity across the entire RAHB market area increased from October 2019 by 18 per cent, new listings were up 9.1 per cent, and the townhouse average sale price increased by 16.6 per cent to $603,229.
Apartment-style property sales increased by 32.8 per cent from October 2019, new listings increased by 78.8 per cent, and the average price increased by 9.7 per cent to $475,945.
© 2020 Global News, a division of Corus Entertainment Inc.
5 Reasons for Tenants to Buy Instead of Renting – An Economic Perspective
If you are presently a Tenant anywhere in North America, before you plan to remain a Tenant, you should read this article. There are several good reasons for ownership to prevail over the tenancy and the real estate profession is littered with extremely clever pointers as to why Tenants should buy – and buy now. But quite aside from all the hype characteristic of real estate sales, there are five solid economic reasons for Tenants to purchase instead of renting. Here they are:
Real estate appreciates over time. This is due to a variety of factors, the most important of which is that bare land does not depreciate. The economic rationale behind this is that bare land cannot depreciate because free, available land diminishes as population increases. You may not notice this immediately if you live right in the middle of the Sahara desert, but in urban environments everywhere there is no question that land is scarce and, in turn, pricey. What depreciates in real estate is the structure, such as the walls, plumbing and electrical circuitry. This is normal functional depreciation due to the constant use – and subsequent wear and tear of the place. But functional depreciation rarely offsets land appreciation, with the result that even if you mistreat your property, you still end up building up equity.
Capital appreciation applies just as well to single-family detached houses as to condominium units. The ‘land’ of a condominium unit is the strata lot, so that if you do happen to live – say – on the twenty-fourth floor of a highrise tower in the downtown like I do, your condo unit still sits on a strata lot. And on the twenty-fourth floor, your strata lot does appreciate while the structure of your condo is subject to functional depreciation.
RENT MATCHES INFLATION
Inflation, as it is widely known, is defined as the loss of purchasing power of money. Inflation is due to a variety of economic factors and political choices. Still, no matter what our governments do – or fail to do – at any given time, it all boils down to increased borrowing and increased monetary supply and availability which, in turn, decreases the purchasing power of money. In layman’s terminology, what this means is that it will cost tomorrow, for the sake of an example, ten cents more to buy a certain good in the economic basket than it does today. You still end up buying the same good, but you pay more for it.
These days inflation is not a problem in North America – at least not the way it used to be. But every year our currencies still lose value, albeit minimally: two per cent in the United States and almost three per cent in Canada on the respective currencies as of last year’s count. Rent typically increase at the rate of inflation, so that a tenant in Vancouver that was paying – say – CAD, $1,000 per month in 2005 can expect to pay CAD 1,030 approximately in 2006. Rent paid is, in essence, the cost of just another service this time offered by a Landlord, and once the rent money is into the Landlord’s pockets, it can never be recovered.
MORTGAGE CAPITAL AND INTEREST PAYMENTS
Naturally, when you go buy a house and contract out a mortgage with a lender, you will have to pay interest because you are using someone else’s money. But every time you make your monthly mortgage payment, you also pay back some of this money. This builds up your equity which then grows over time. Equity growth is typically more evident in the United States where mortgages are amortized in a straight line over the term of the loan. In Canada, lenders are more complicated and apply a process known in the business as compound interest, i.e. interest on the interest. Still at about halfway through over a typical 25-year amortization span, in Canada too principal repayment takes over interest payment, so that equity growth builds up faster.
Capital gains are not to be confused with capital appreciation, although they are a consequence of it. Simply put, there is a realized capital gain when the amount of money you sell your property for minus the price you paid for it is positive. The real estate market may fluctuate, but it is a matter of fact that house prices increase over time. Economic capital gains are adjusted for inflation and expressed in Dollar/Year. For instance, here in Vancouver, a single-family detached home that sold in 1975 for CAD 57,000 in 1975 Dollars may very well sell today for CAD 525,000 in 2005 Dollars.
On a cursory count, CAD 57,000 in 1975 are equivalent to approximately CAD 80,000 in 2005, so that your economic capital gains from the time you bought the house in 1975 to the time you sold it in 2005 are the difference between CAD 525,000 and CAD 80,000 expressed in 2005 Dollars, or a whopping $445,000. You can easily determine from this example how much real estate has appreciated over time in my hometown, with the appreciation already adjusted for inflation.
PRIVACY AND CONTROL
In a Tenancy Agreement, you are entitled to privacy typically for the period you pay rent for, subject to the Landlord’s rights. These rights include the Landlord’s right to inspect the tenanted premises on reasonable notice, the Landlord’s right to sell the tenanted premises, the Landlord’s right to repair and soothe and so forth. In essence, just because you pay rent that does not make you the owner. The rent guarantees your exclusive use of the premises for a certain period, again subject to the Landlord’s rights.
Likewise, in most cases, you as the Tenant have no control over items such as remodeling, repainting and redecorating. It is true that in most jurisdictions, Landlords must rent premises reasonably fit for human habitation. Still, then it is also true that many Landlords do not go one inch over and above the minimum threshold required by law. But from an economist point of view, if you spend money, you should be entitled to reap the rewards – something you entirely miss out in a tenancy situation.
Too many tenants and renters think that owning a property is a farfetched goal. Yet, now more than ever, it is the best time for them to take the plunge and buy real estate. Mortgage rates are still historically low, and the buying process is easier than ever.
COVID as catalyst: How real estate in Ottawa changed in 2020 – Ottawa Citizen
Article content continued
Multiple catalysts were at play, including historically low interest rates (making for relatively inexpensive mortgages), a shortage of listings and, not least, a rush by homeowners for more space in the era of COVID-19 — whether in the form of larger home offices or physical acreage in outlying areas.
The play for more space can be seen in the detailed sales data for greater Ottawa. Year to date realtors have sold about 2,100 residential properties in 15 nearby towns for an average of $450,300. While volumes are just a bit ahead of where they were last year, prices have surged nearly 25 per cent.
This compares with a 19 per cent price gain to nearly $640,000 for residential properties inside the City of Ottawa.
Of the eight towns recording the largest price gains year to date, four were in the west (Pakenham, Braeside-McNab, Mississippi Mills and Arnprior), while two each were east (Russell, Rockland) and south (Kemptville East and Beckwith Township). Residential properties in Pakenham jumped most in price (37 per cent to nearly $500,000). Average sale prices within this group ranged from nearly $400,000 for Arnprior properties to $596,000 for rural properties in Beckwith Township, which is between Carleton Place and Smiths Falls.
The hunt for greater space was also evident within the City of Ottawa, where four of the top five real estate districts ranked by price growth were semi-rural. These included: Bells Corners and area (average price year to date was $586,000 — up 38 per cent); Greely ($704,000 — a gain of 31 per cent); Manotick and area ($866,000 — up 27.5 per cent) and Carp and area ($743,000 — a jump of 25.5 per cent).
Indeed, all rural and semi-rural districts saw house price gains greater than those posted by brokers within the city, with the exception of Dunrobin, where 158 residences were sold for an average $539,000. That represented a relatively modest gain of less than 12 per cent compared to the first 11 months of 2019.
In most other years, of course, that would have been something for sellers to celebrate.
RioCan cuts payouts as COVID-19 challenges outlook for retail real estate – BayToday
TORONTO — RioCan Real Estate Investment Trust says it is cutting its payouts to unitholders by a third as the COVID-19 pandemic creates an uncertain future for shopping centres.
RioCan, which counts Dollarama, Canadian Tire and Costco among its tenants, says that it is slashing its monthly payout to eight cents per unit, down from 12 cents.
The company says the cut will save about $152 million per year, which the company will use for expanding investments in residential real estate, as well as paying down debt and buybacks.
RioCan says the ongoing uncertainty from the pandemic influenced the board’s decision to make the cut, which starts with the February payout for January 2021.
The decision comes after RioCan’s third quarter report said it had collected about 93 per cent of rent billed during the quarter, but that 22 per cent of its tenants were potentially vulnerable to the pandemic, such as movie theatres, gyms and sit-down restaurants.
Chief executive Edward Sonshine says RioCan still has a well-positioned portfolio and solid tenants, and the new baseline for payouts will help the REIT’s transformation, as it plans to move out of malls that house hard-hit fashion retailers.
“As RioCan continues to navigate through the uncertain retail landscape created by the COVID-19 pandemic and faces an unknown length and breadth of closures, the board has taken the prudent action of reducing our distribution,” Sonshine said in a statement.
“A more conservative payout ratio is important in this undeniably challenging environment.”
This report by The Canadian Press was first published Dec. 3, 2020.
Companies in this story: (TSX: REI.UN)
The Canadian Press
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