Is it just me or is life starting to feel a little normal again?
After the American “Great Recession” a lot of people became worried about another financial crisis. They also fretted over what they can afford when purchasing a home, while banks were not as willing to give loans and mortgages to as many people as they once did. In other words, consumer (and lender) confidence became more cautious because they didn’t want to end up drowning in debt, or worse lose their homes.
However, north of the disaster, Canadians did not seem to be as affected by the recession. Instead, as we often do, we seemed to weather the storm, with less unemployment and a stable economy thanks to our natural resources. Although we tend to suffer when it comes to oil production compared to other oil-rich countries, other areas like lumber, fishing and minerals thrive. All of these things work together to help insulate us from recession.
In regards to Canadian housing, when looking at major cities like Toronto and Vancouver, there is a different focus when it comes to the economy. As well for the Canadian GDP, finance, insurance and real estate industry contribute 21% and construction contributes 6%. So, considering the majority of new construction homes are out in the suburbs the economy can fluctuate which in turn affects house prices, while in Toronto’s older neighbourhoods like Rosedale or Leaside homes tend to keep their value. They will at least stay within 10% of their value even as things are going up and down in the construction industry.
Another factor is Canadians are green obsessed. This is a good thing as it will affect demand on the construction of houses. Buyers will seek out eco-friendly houses that also tend to be available at lower home prices regardless of the housing market. Considering that most construction companies and developers rarely focus on eco-friendly options like geothermal heating or solar panels they are still making efforts to ensure the homes they build are energy efficient.
You also have to consider Canada’s renovation industry. Because so many homeowners are striving to save money, many are targeting their gas and electricity bills. As a result, they are looking for ways to make their homes more energy-efficient. So, although we can pretend these people are green obsessed, the only green they are worried about are the $20 bills they can stash in their wallets. This is helping to generate business for the Geothermal industry as it offers a quick and affordable investment that will see some payback. It heats in the winter and cools in the winter, perfect for Canadian weather.
So why does this affect the economy or even the real estate market in Toronto? Well, when looking at the longer term, homes should go up in value thanks to the money people are investing in these types of renovations. As a result, between green renovations and overall home upgrades, people can ask more when selling their newly revamped homes.
High demand areas like Lawrence Park or Davisville Village are prime examples of how renos are contributing to the local economy. Just drive down any street and you’ll see the telltale dump bins and service trucks that show the homeowner is undergoing renovations. They are making improvements that will make their homes more eco-friendly and cheaper to keep comfortable temperature-wise.
Meanwhile, there is a massive spreading of the GTA, with suburban regions getting further and further away from the core of the city. People seem to be putting their commute concerns aside in order to find affordable homeownership options. Not surprisingly, the local infrastructure is struggling to keep up with extensions to public transportation, but they are trying. As it becomes easier to commute, it has a duel effect by making these areas more appealing, which increases home values in these further out locations.
Despite the horrifying traffic jams people sit in every day, people still choose to buy in Toronto’s satellite regions. This means home sales in these areas bring opportunities for economic growth as more retailers can spread their wings to these faraway suburbs.
So, we’ve got a willingness for people to head to the hills, mainly because there is a shortage of homes in downtown Toronto. They are also not affordable. However, there is also an endless column of construction cranes dotting the landscape of the downtown core. These condos are by no means family-friendly, which means builders will have to start looking at features that will appeal to this buyer. The trend for families to remain city-centric is forcing builders to look for new ideas to appeal to this group including the potential for onsite daycare services.
As well, as the City of Toronto attempts to make it easier to get around with all kinds of things from bike lanes to bike-sharing, more people are attracted to the idea of staying in the city. As always, the young professionals and hip set will prefer this and will find it worthwhile to spend the extra dough on a condo when they can walk or bike to work in under 30 minutes. Therefore, the construction business will continue to thrive as old buildings are either renovated into lofts or torn down to make room for condos.
If rumours of the imminent bursting of the proverbial housing bubble aren’t exaggerated, now could be a good time to buy. As sellers start to feel the fear, buyers can jump on opportunities and start low balling offers by as much as 10% to 20%. If the rumours prove to be true, sellers who take buyers up on their offers will sigh with relief when the bubble really does blow, and home prices drop by 20% to 30%.
In the U.S. when the bubble burst house prices dropped by 40 to 50% of their average prices in value. The truth is pricing won’t drop that far in Canada or Toronto as we enjoy a more stable economy. Despite this, we aren’t immune to a Canadian real estate collapse, just better poised to weather it if it happens. So, in answer to the question, if Toronto real estate is insulated from recession, the answer is really it depends as always on location. However, despite the threat of recession over the next couple of years, supply and demand in Toronto should help keep home values relatively stable.
The Vatican owns more than 5,000 church and investment properties around the world, a central office at the Catholic Church revealed for the first time Saturday, according to several news outlets — but the church is struggling with a budget deficit, plus years of alleged mismanagement tied to its investment strategy.
Most of the Vatican’s real estate holdings (4,051) are in Italy, the majority of which are used by church-affiliated groups or rented out at reduced prices instead of getting leased at market rate, according to a report from the church-run Administration of the Patrimony of the Holy See (APSA) obtained by Reuters, Catholic News Service and other outlets.
APSA also reportedly holds over 1,000 properties in London, Geneva, Paris and other cities outside Italy, including a London real estate investment the Vatican controversially sank more than $400 million into nearly a decade ago.
Forbes has reached out to the Vatican for comment.
The Roman Curia — the Catholic Church’s central administrative body — ran a $76.3 million operating deficit in 2020, down from a $93.2 million deficit in 2019, according to a budget statement obtained Saturday by the Jesuit America magazine. In an interview with the church-run Vatican News, church official Father Juan Antonio Guerrero Alves called the Curia’s 2020 performance “better than what we expected,” partly because the church slashed expenses during the coronavirus pandemic. The church reported a larger overall deficit in 2020 than 2019, however, largely due to a drop in unrealized financial gains.
The Vatican’s financial practices — and particularly its real estate holdings — have drawn scandal and scrutiny for years. Pope Francis reorganized how the church’s real estate investments are overseen last year, following years of sometimes fraught attempts to reform the Curia amid claims of embezzlement and endemic financial mismanagement. Several people are on trial for allegedly scamming the church out of millions of dollars in connection with its London real estate investment nearly a decade ago.
Is it just me or is life starting to feel a little normal again?
Summer is in full swing, restaurants are open for business, and vaccines are now pretty easy to come by.
The pandemic is far from over, but still there’s a subtle ease to life again that feels good.
Perhaps it was this week’s announcement that the federal government would be moving forward with reopening the Canada-US border in early-August.
Or the news that Ontario’s colleges and universities would be returning to in-person classes this fall.
Things are inching back to a pre-pandemic status quo.
The Toronto real estate market, having boomed for the better part of the pandemic, is finally taking a rest. Things are quiet. It’s lovely.
Which begs the question: what comes next?
While most experts agree that it was a combination of low interest rates, pent-up demand, and changing buyer priorities that joined forces to drive sales to record levels, even through multiple stay-at-home orders, the undercurrent of it all has been something entirely more structural.
A healthy balanced market is when, simply put, there is an equal level of buyers and sellers.
When there are more sellers than buyers, you have a “buyer’s market.”
When you have more buyers than sellers, you have a “seller’s market.”
Broadly speaking, with the exception of a few blips along the way, Toronto has been a seller’s market for as long as I have been in the business.
In the neighbourhoods popular with upsizing young families, bidding wars are simply the norm.
And why is that? Some might say that it’s because of the widely adopted practice of underpricing as a means of driving multiple offers.
And while, yes, that certainly brings more buyers to the table and thus adds an overt layer of competition, that’s not it. It’s just a symptom of the broader issue.
And this issue is this: if we had sufficient supply in the city of Toronto to meet demand, our current market conditions would be vastly different.
They wouldn’t be spilling out into the secondary markets around us.
The pandemic just shone a light on what has been a mounting reality: our population has grown faster than our housing supply and our government has failed to address it.
At 1.8 million homes behind the G7 average, Canada falls dead last in the number of housing units per 1,000 residents.
Frustratingly, the top-down solutions to this impending crisis have been interruptions to the demand cycle: playing with interest rates, tightening lending qualifications, introducing non-resident speculation and vacancy taxes.
These are Band-Aids. At best they are tools to be used to slow things down while the real solutions come down the pike. We need density. We need intensification. We need thoughtful, strategic building policies that marry environmental responsibility with pragmatic solutions to sprawl.
Instead, the most recent federal budget promised an additional $2.5B over five years to address affordable housing via their Rapid Housing Initiative.
This is a drop in the bucket.
We need expedience not hand wringing.
If government flipped a switch tomorrow it would still take four to five years to see the housing units come to market. The time was yesterday.
So, for those wondering what comes next in our real estate market, it’s a safe bet that once people have enjoyed their summer of reprieve from the strange pandemic reality we find ourselves in, the market will reawaken.
It will simply have to in order to meet the return of students and the backlog of immigration produced by almost 18 months of closed borders. The demand-driven rental and condo sectors that have “softened” and “balanced” these past months will surely surge.
And it was predictable. Market forces, while undeniably complicated and nuanced, have a few inescapable fundamentals – until we prioritize sufficient supply to meet demand, housing unaffordability will be the norm. That part isn’t rocket science.
On Twitter: @brynnlackie
Welcome back to the Real Estate newsletter, which arrives on the heels of a mystery being solved.
Reporters and readers alike have been trying to figure out who paid $25 million for San Marino’s famed USC presidential mansion, and records finally revealed that the buyer was Chinese billionaire Tianqiao Chen. It makes a lot of sense, as the philanthropist recently donated $115 million to Caltech for neuroscience research, and the university dedicated a new 150,000-square-foot facility to him that opened earlier this year just a mile away from the home.
It’s still a great time to sell, and this week saw a few celebrities test their luck in the high-risk, high-reward real estate market. “Charlie’s Angels” star Shelley Hack did about as well as one can do, selling her Santa Monica Craftsman for $11.43 million — or $2.58 million more than her asking price.
Actress Helen Mirren and director Taylor Hackford are hoping for similar success in Hollywood Hills, where their colossal compound on 6.5 acres is on the market for $18.5 million. If the power couple get their price, it’ll be one of the priciest sales the ritzy neighborhood has seen so far this year.
If you don’t believe me regarding the seller’s market, believe the data. The numbers are in for June, and Southern California’s median home price soared to $680,000 last month. That’s an all-time high, shattering a record that stood for all of … 31 days.
Some news on what may come ahead: UC Berkeley researchers published a new report on a California Legislature bill that would allow denser home building in single-family zones. The study says the bill, which passed the state Senate, would produce an uptick in the state’s housing supply, but it likely wouldn’t cause the mass redevelopment that skeptics fear.
While catching up on the latest, visit and like our Facebook page, where you can find real estate stories and updates throughout the week.
When USC’s presidential mansion set a San Marino record by selling for $25 million in early July, it was initially unclear who the buyer was. Real estate records now show it was purchased by Tianqiao Chen, a Chinese billionaire with deep philanthropic ties to the community.
It was pure circumstance how he first came to the area. While watching the news, he and his wife, Chrissy, saw a story of a Caltech scientist helping a quadriplegic man use his thoughts to control a robotic arm and grab a beer.
Shortly after, the couple flew to Pasadena to meet the scientist — a trip that led Chen to give Caltech $115 million for neuroscience research, one of the largest gifts the university had ever received. In 2016, he founded the Tianqiao and Chrissy Chen Institute for Neuroscience at Caltech complete with a three-story, 150,000-square-foot facility on campus that was dedicated to the couple earlier this year.
He’ll have a short commute if he ever visits it, because his home sits about a mile away from the facility.
Hack and her husband, director Harry Winer, are walking away with a huge profit. Not only did they haul in significantly more than their original asking price of $8.5 million, but they also paid just $1.6 million for the property in 1988.
The secluded compound sits about a mile from the ocean in Santa Monica’s North of Montana neighborhood. Across half an acre, there’s a 99-year-old main home, one-bedroom guesthouse, rustic barn and manicured backyard with a deck and pool surrounded by gardens and fruit trees.
Space is at a premium in Hollywood Hills, but not on the sprawling hillside compound of actress Helen Mirren and director Taylor Hackford. The power couple’s longtime property, which spans 6.5 acres at the foot of Runyon Canyon Park, listed for sale at $18.5 million.
If you’re eyeing a shorter stay, it’s also available to be leased at $45,000 per month.
At 6.5 acres, it’s the second-largest property currently available in Hollywood Hills. To put its relative size into perspective, only three estates on the market in the star-studded neighborhood claim more than 3 acres.
According to the listing, there have only been four owners — all famous — since the home was built more than a century ago: “The Squaw Man” actor Dustin Farnum, writer Mark Hellinger, “Perry Mason” producer Gail Patrick, and Mirren and Hackford, who acquired the estate in the 1980s.
Southern California’s real estate market hit another historic peak in June, with home prices soaring to yet another all-time high, though analysts see the extreme bidding wars of the last year beginning to ease.
June’s median home price of $680,000 tops the previous record of $667,000, set in May, according to data released Tuesday by data firm DQNews. It represents a 22.5% increase from June 2020, when the market in the six-county region slowed significantly as sellers pulled homes off the market because of COVID-19 stay-at-home orders.
Since then, a dramatic rebound has seen 11 straight months of double-digit median home price rises.
Experts credit multiple factors: the fast-expanding buyer market of millennials, more demand for space as more people work from home, and ultra-low mortgage rates, which are attracting wealthy investors who compete with the middle class for limited housing stock.
A bill advancing through the California Legislature to allow for denser home building in single-family zones would be likely to produce an uptick in the state’s housing supply, but the so-called upzoning probably won’t cause mass redevelopment, according to a report published Wednesday.
Andrew Khouri and Ari Plachta write that the study by the Terner Center for Housing Innovation at UC Berkeley offers the most detailed analysis yet of the potential effect of Senate Bill 9, designed to allow up to four homes on most single-family lots and spur the construction of badly needed new housing.
Because of the way unit development would pencil out, the study found that “the vast amount of single-family parcels across the state would not see any new development,” said David Garcia, policy director at the Terner Center, which supports the bill written by Senate President Pro Tem Toni Atkins (D-San Diego).
SB 9 passed the state Senate and is expected to be taken up in the Assembly Appropriations Committee by Aug. 27. If approved, it would go to a final vote in the Assembly and then to Gov. Gavin Newsom’s desk. The Terner Center study found that under the bill, a total of 714,000 new homes would make financial sense to build, and it would take years to build them — if they ever are, since not all homeowners would want to sell or develop their own property.
USC is on a selling spree. After unloading its presidential mansion, the school is offering up another home it owns in the Hollywood Hills for $4.25 million, according to House Beautiful. Designed by Frank Lloyd Wright, the stunning abode is listed on the National Register of Historic Places.
If you’re bidding for a home, there’s an increasing chance that the other contenders aren’t trying to live there. They could be an investor, a house flipper, or even a hedge fund, according to NBC News, who reported that investment groups are scooping up homes across the country thanks to their unmatchable financial firepower.
This Week in Apps: Clubhouse opens up, Twitter talks bitcoin, Snap sees record quarter – Yahoo News Canada
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August PlayStation Plus Games Leaked By Sony – TechRaptor
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Biden Faces Fresh Challenges on Covid-19, Economy – The Wall Street Journal