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LACKIE: Toronto real estate demand on the rise again after months of declining sales – Toronto Sun

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But the 5% sales increase in September would have been higher if there were enough houses to meet the demand

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At this point, when thinking about a fresh take on the Toronto housing market, the well has run dry.

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It’s like we’re hamsters on a wheel. With each passing month, the market that the pandemic abruptly seized-up only to astonish us all and light on fire has somehow settled into a ho-hum new-normal.

We’ve gotten so used to being shocked by it all that it’s like we’ve stopped registering the astonishment.

It’s almost as if we’ve entered the grim acceptance phase.

Nonetheless, now that we’re safely into October, the Toronto Regional Real Estate Board’s September market stats are in and they’re ripe for analysis.

The third strongest September on record, 9,046 homes traded in the first month of our traditional seasonal fall real estate market, up almost a full 5% from August. This is welcome news as it marks the first month since March that we have not seen a month-over-month decline in sales.

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Simply put, our inventory crisis is the story. If we had enough houses to meet the demand of buyers keen to take advantage of the rock-bottom interest rates, the stats would be telling a different tale.

With fewer houses available to change hands — and September saw 34% fewer listings come to market than the same month last year — there is a built-in cap on the sales that can take place. So when looking at the number of transactions, the big tell that our numbers aren’t capturing the number of active buyers out there is the increase in average sale price.

Anecdotally, if you speak to agents, they will tell you that houses with 7, 10, 14 offers are now the norm.

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TRREB President Kevin Crigger summed it up perfectly: “Demand has remained incredibly robust throughout September with many qualified buyers who would buy a home tomorrow provided they could find a suitable property. With new listings in September down by one-third compared to last year, purchasing a home for many is easier said than done. The lack of housing supply and choice has reached a critical juncture.”

In the months ahead as immigration opens back up, office towers continue to fill with people returning to work, and life starts to look like old normal once more, the structural aspects of our real estate market will only tighten. We have long been saying that this upward trajectory will slow when prices eventually hurtle out of reach, but so far the prices have continued to rise and yet the buyers remain.

As long as we have people willing to participate, these market conditions will continue to drive prices.

October will be more of the same — you can bet on that.

@brynnlackie

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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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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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Calgary housing market sees best Q3 since 2014, says real estate board – CBC.ca

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Calgary had its strongest third quarter for housing sales since the price of oil plummeted in 2014, according to the latest report by the Calgary Real Estate Board (CREB).

There were 6,628 sales in the third quarter of this year, a sign that even as the pandemic is continuing to dampen the local economy, Calgary’s housing market remains resilient, says CREB’s quarterly update report released on Wednesday.

The report says much of the growth in demand has been driven by the low interest rates and the fact that many buyers’ incomes were not impacted by the pandemic and in fact saw their savings grow.

Overall, residential prices in Calgary rose by one per cent over the previous quarter and are about nine per cent higher than prices recorded in the third quarter of last year, the report said. 

CREB’s chief economist, Ann-Marie Lurie, says much of the upswing in activity was driven by detached and semi-detached home sales. And she said while supply has risen, it’s still somewhat of a seller’s market in Calgary. 

“Supply-demand balances improved for buyers compared to what we saw in the spring, but the market continued to favour the seller in the third quarter,” she said.

The report says the benchmark price is $538,700 for detached homes. That’s up 10.5 per cent from last year.

In the semi-detached market, the benchmark price is $427,767. That’s up 9.3 per cent from 2020.

For row housing, the benchmark price is $299,933 — 8.5 per cent higher than last year.

And in the apartment-condo market, demand rose in the third quarter, but to a lesser extent, the report says.

“The condominium market never entered sellers’ market conditions like other property types, but at five months of supply, this market is considered relatively balanced,” the report said.

The benchmark price in this sector is $253,533. That’s up by roughly 2.5 per cent year over year.

CREB also notes that, aside from strong resale figures, the newly built side of the market is also doing well, with housing starts up by more than 70 per cent in Calgary. 

CREB says in its report that the boost in the local housing market activity is contributing to an economic recovery that’s also being driven by the uptick in oil and gas prices. 

“This has contributed to employment growth in not only the finance, insurance and real estate sectors, but also the construction industry,” the report said. 

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Why people are paying real money for virtual real estate in the metaverse – Financial Post

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These virtual properties could be vacant parcels for creators to build on, or structures that reflect real-life properties and completely original creations

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Location, location, location. That’s the common phrase for success in the real estate market, and it’s no different when these properties are listed in an alternative virtual reality, called a metaverse.

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The metaverse is a growing topic in tech and some crypto circles, describing a virtual reality space into which users can log in and interact with one another using avatars to represent their real selves. It has been growing particularly in the gaming space with titles like Fortnite, Animal Crossing: New Horizons, Roblox, and many others fostering a metaverse community for players. Social media websites such as Facebook are also pushing into the space with Horizon Worlds and is planning to hire 10,000 people in the European Union over the next five years to help build their vision of a metaverse.

It’s no coincidence that this concept has sci-fi vibes to it, the term “metaverse” was originally coined in science fiction writer Neal Stephenson’s book “Snow Crash” in 1992 to describe a virtual world that people would plug into using their own virtual avatars. Online games like Second Life, which launched in 2003, were a pioneers for metaverse economies, allowing users to trade goods and services using their in-game Linden dollars — including virtual real estate.

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It is also taking off among the decentralized finance crowd with platforms like Decentraland, an online metaverse space that calls itself the first fully decentralized virtual world owned by its users where they create, explore and trade virtual goods using smart contracts on the Decentraland marketplace. Along with virtual clothes and accessories you can purchase using the platform’s native MANA crypto, you can also secure virtual land parcels and estates.

These virtual properties could be vacant parcels for creators to build on, or structures that reflect real-life properties and completely original creations. They are represented by co-ordinates on the metaverse platform where users can meet up using their avatars to socialize and decorate their own spaces with collectibles.

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The possibilities are endless

Andrew Kiguel

Monetizing this space is starting to give rise to metaverse real estate companies, the first being Metaverse Property. Being a nascent industry, the company works to secure a wealth of land assets in the virtual real estate space. It focuses on buying and selling, managing business properties, offering rentals in the metaverse, virtual land development, as well as consultation and marketing. Metaverse Property currently operates on platforms including Decentraland, The Sanbox, Somnium Space, Cryptovoxels, and Upland.

Beyond being virtual landlords and developers, Metaverse Property also says it is creating what it’s calling the first “metaverse real estate investment trust (REIT)”, which will trade through a non-fungible token (NFT) that is backed by the company’s virtual land portfolio.

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With a bullish bet on metaverse real estate, crypto and decentralized financial services company Tokens.com Corp purchased a 50 per cent stake in Metaverse Group this week valued at about $1.7 million, reportedly a record equity investment in a metaverse real estate company.

Andrew Kiguel, the chief executive officer at Tokens.com, explained that the company’s goal is to secure as many virtual real estate land parcels as possible to rent them out to clients.

On platforms like Decentraland, which has seen more than $50 million in virtual sales for goods like real estate, clothes, accessories, usernames and avatars, an outlying parcel in an area less travelled could run a user around $5,000 MANA, or roughly over $4,600 Canadian dollars as of mid-October. These prices can jump up quickly in larger built-out properties in popular zones, with the highest-selling virtual plot of land recorded on the platform being a $1.3 million MANA property in June, equal to about US$900,000 at the time.

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Skeptics might find it bizarre to spend any amount of money on a property that they themselves cannot live in, though Kiguel told the Financial Post that there are valid uses for these virtual properties.

“Really, it’s the foot traffic,” Kiguel said. “So, you might want to build a house to invite friends over, you can decorate the walls with your NFTs, it’s a way of socializing…. COVID drove a lot of this: when the world shut down, people turned to their computers as a means of interacting with people, and so the foot traffic in the metaverse continues to grow at a very high rate.”

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Kiguel added that celebrities like Snoop Dogg are getting into the metaverse as well. In late September, Snoop Dogg partnered with The Sandbox to reconstruct his real-life mansion on the platform’s NFT metaverse. Paris Hilton signed a partnership with Decentraland as one of the headline celebrities being featured on the platform’s first-ever Metaverse Festival slated for October 21 to the 24th. Hilton will be using a Genies avatar, which are animated avatars that can speak using the celebrity’s voice.

With this growing adoption and promotion among brands and celebrities, Kiguel expects that more users will flock to the metaverse space.

“The possibilities are endless. There’s museums and galleries, if you want to go in and see some of the most expensive NFTs sold in the world … you can go to Decentraland,” Kiguel said. “So, the possibilities are really endless, here’s all the different things you could do to attract people here.”

• Email: shughes@postmedia.com | Twitter:
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