A report from the Canada Mortgage and Housing Corporation forecasts lower housing starts, sales and prices for the country’s major markets – and a slower rebound in Vancouver than in some other cities.
The latest outlook, released Tuesday morning, looks at the impacts of the COVID-19 pandemic so far, and estimates when things may return to normal. Scroll down to read through the full report, including information on other markets.
Senior analysts Braden Batch and Eric Bond wrote that housing starts in B.C.’s most populous city are expected to “contract significantly in the immediate future.”
While B.C.’s approach to the novel coronavirus pandemic has allowed for construction, new builds will be challenged by reduced migration from Canada and aboard, the Vancouver market forecast says.
Additional factors impacting housing starts are increased unemployment and uncertainty regarding long-term economic impacts of COVID-19.
Prior to the pandemic, the report says, the construction industry had been operating at or near capacity. Still, the CMHC said, there was a decline in construction activity even before the pandemic.
The corporation expects things to pick up again toward the end of the year.
Sales and price recovery
CMHC expects a contraction of the resale market, but forecasts a recovery period starting next year.
Resale activity was “largely suspended” early on in the pandemic, and listings declined at that time as well.
Sales had slowed down in 2018-19, but were starting to pick up again before the pandemic. COVID-19 is expected to delay the recovery, the CMHC report says.
And those who are looking to sell may be getting less for their homes for the time being.
“A price decline will occur, but it will take place more gradually over the next two years before showing some recovery in late 2022,” the report says.
The CMHC report forecasts average house prices declining due to residents’ reduced incomes.
There’s been an uneven impact on buyers of condos and detached houses, the corporaration says, so there’s “additional uncertainty for the path of the average price decline.”
While most markets are expected to see homes selling for less, CMHC says prices may return to normal earlier in Toronto, Montreal and Ottawa. Vancouver, Edmonton and Calgary should expect a slower rise back to pre-pandemic prices, it says.
While owners may be worried about the impact of the pandemic, those in the rental market have been more directly impacted so far.
CMHC says the rise in unemployment and sudden, lengthy border closures are hitting the more sensitive rental market harder.
Buyers tend to be older than renters, and less likely to have lost their jobs, the report says.
Last week, B.C. Finance Minister Carole James said those most impacted have been the province’s lowest earners: young people and women.
Women are 25 per cent more likely to have lost their job than men, and the youth unemployment rate reached 29 per cent, according to the latest data.
Young people are less likely to have accumulated enough savings to buy in Vancouver, and the rental market is “largely driven by the influx of young migrants,” the report says. Many of these migrants are immigrants to Canada.
The border closure was expected to have a direct impact on the demand for rentals.
The report includes information on other major Canadian markets. Read through the full 18 pages below.
Firm Capital announces its Special Situation Finance Group | RENX – Real Estate News EXchange
Firm Capital Corporation, a leading non-bank lender since 1988, is pleased to announce its Special Situation Finance Group that will provide “tailor made” structuring to real estate companies impacted by COVID-19. The program will provide liquidity, restructuring of existing loans, bridge financing and debtor-in-possession funding (DIP).
See below for more details.
Special Situation Finance Group
The Special Situation Finance Group was created to focus on structured real estate finance across Canada, for unique transactions that require “tailor made” structuring for; debt purchases; debtor-in-possession or DIP lending; margin loans secured by stock ownership; re-capitalization of special situation transactions and all other non-traditional real estate lending situations.
Firm Capital offers fast execution on:
* Performing and non-performing debt purchases;
* DIP lending;
* Restructuring finance;
* Lending against partial ownership interests;
* Re-capitalization of balance sheet & special situation transactions;
* Margin loans secured by stock ownership;
* Bridge financing for leveraged buyouts;
* All other non-traditional real estate lending situations;
– Bridge and transitional lending solutions: In a tightening financing environment, Firm Capital will assist borrowers on new acquisitions and refinancing, offering a mix of senior, mezzanine and junior loans;
– Acquisition and restructuring of loans: Working with lenders facing impaired performing and non-performing loans and securities to purchase and restructure; and
– Flexible liquidity solutions for sponsors: Firm Capital will use preferred equity to help recapitalize and stabilize balance sheets where existing debt or equity is constrained.
About Firm Capital’s mortgage operations:
As part of the Firm Capital Organization, Firm Capital Corporation, a leading non-bank lender since 1988, provides creative and innovative solutions to real estate finance. Firm Capital is the mortgage banker for various capital pools, including Firm Capital Mortgage Investment Corporation (TSX: FC), Firm Capital Mortgage Investors Corporation (a private mortgage fund since 1994), Firm Capital Private Mortgage Trust and Firm Capital Private Partners Inc.
Tailored mortgage engineering by Firm Capital®
To learn more, contact Michael today:
Vice President, Mortgage Investments
Tel.: (416) 635-0221 x 245
Ontario Mortgage Brokerage, Lenders and Administrators Act License #10164, Administrators License #11442
Toronto's real estate market is rebounding fast as pandemic restrictions lift – blogTO
Home sales are surging in Toronto once again this summer after a brief yet steep drop due to COVID-19, and prices are following suit despite holding steady (if not increasing in most parts of the city) amid the pandemic.
The Toronto Regional Real Estate Board (TRREB)’s latest Market Watch Report, released on Tuesday, indicates that GTA realtors made 8,701 residential sales in June of 2020 — a whopping 89 per cent jump from the previous month’s figures.
“This result represented a very substantial increase over the May 2020 sales result, both on an actual (+89 per cent) and seasonally adjusted basis (+84 per cent), and was only down by 1.4 per cent compared to June 2019,” the report reads.
Considering that sales were down 53.7 per cent year over year in May, and 69 per cent in April, that’s not a bad data point at all.
Some GTA market segments and regions even saw growth in June, most notably detached homes and townhouses in parts of the GTA “surrounding the City of Toronto.”
Detached and townhouse sales were up 10.4 per cent and 7.8 per cent respectively in the 905, according to TRREB. Home prices were up across the board for all market segments and parts of the GTA.
“The average selling price for all home types combined was $930,869 – up by 11.9 per cent compared to June 2019,” reads the report. “The actual and seasonally-adjusted average selling price was also up substantially compared to May 2020, by 7.8 per cent and 9.8 per cent respectively.”
New listings are up slightly, year over year, by 2.1 per cent, but TRREB reports that “active listings” are down by about 28.8 per cent.
“It will be important to closely monitor housing market conditions as economic recovery continues in the second half of 2020 and into 2021,” said TRREB CEO John DiMichele.
“The persistent lack of listing inventory in the GTA understandably took a back seat to COVID-related issues in the short term, but supply should once again be top-of-mind once the recovery takes hold, in order to ensure long-term affordability in the GTA.”
Hey, at least rent prices are down.
Zara Founder Unveils $17.2 Billion Global Real Estate Empire – Financial Post
(Bloomberg) — After making a fortune in clothing, Amancio Ortega turned his attention to real estate.
The Spanish billionaire’s property holdings have soared to 15.2 billion euros ($17.2 billion), his firm revealed Tuesday for the first time, giving him the largest real estate portfolio among Europe’s super-rich.
Ortega, 84, the founder and owner of fashion label Zara, invested 2.1 billion euros in real estate last year through various subsidiaries of his holding company Pontegadea, according to an emailed statement. Pontegadea, which owns 59.3% of Zara parent Inditex SA, had a net income of 1.8 billion euros for 2019, including 1.64 billion euros in Inditex dividends and 621 million euros from real estate assets.
Ortega, Spain’s richest man, has diversified his fashion fortune to preserve his sizable wealth, investing more than $3 billion in U.S. real estate in recent years.
Acquisitions include landmark properties like Manhattan’s historic Haughwout Building and Miami’s tallest office tower. Last year, his investment firm completed a $72.5 million deal for a downtown Chicago hotel, which followed purchases of a building in Washington’s central business district and two Seattle office buildings.
As well as being landlord to tech giants such as Amazon.com Inc and Facebook Inc, Pontegadea also counts Inditex rivals Hennes & Mauritz AB and The Gap Inc as tenants.
The son of a railroad worker, Ortega has a net worth of $58.5 billion, according to the Bloomberg Billionaires Index, the bulk of which comes from his majority stake in Inditex. His fortune has slumped more than a fifth this year in the wake of the coronavirus pandemic, which has forced Inditex to close stores. The company’s shares have fallen 22% this year.
Aside from real estate, Ortega has also invested in energy and telecommunications, buying a 5% stake in Enagas last year. In 2018, Pontegadea bought a 9.99% stake in Telefonica SA’s tower unit for 378.8 million euros.
Pontegadea said it expects to receive 646 million euros in dividends from Inditex in 2020.
©2020 Bloomberg L.P.
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