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Over 60 per cent of area condos owned by real estate investors



Condominiums are the preferred choice of real estate investors in the Windsor area with 62.5 per cent of those residences being owned for revenue-generating purposes by individuals not living in them.

Lased Friday also found investors owned 12.1 per cent of all housing in the Windsor census metropolitan area. That area also includes Lakeshore, Tecumseh, LaSalle and Amherstburg.

Ontario’s percentage of investor ownership of all properties was 20.2 per cent or one in five residences. The investor ownership rate of condos provincially was 41.9 per cent.

“It confirmed what we have believed has been a trend for the last 10 years,” said economist and Smart Prosperity Institute senior director of policy Mike Moffatt.


“Ontario, in particular, has seen a lack of purpose-built rentals. For years, investors have been buying condos and renting them to students, post-graduates and those who can’t become first-time buyers because of high home prices.

“It’s resulted in double-digit rent increases across Ontario because it’s a supply and demand issue.”


The study was based on data collected in 2020 and from the 2021 Canada Census, but Moffatt said the trend only accelerated during the COVID-19 pandemic.


Detached homes and condominium development off McHugh Street and Lauzon Road, is seen on Wednesday, January 5, 2021.
Detached homes and condominium development off McHugh Street and Lauzon Road, is seen on Wednesday, January 5, 2021. PHOTO BY DAX MELMER /Windsor Star

A growing population, increased immigration and more international students attending Ontario’s post-secondary institutions have added to rising demand.


Also included in the study were Nova Scotia, New Brunswick, Manitoba and British Columbia.


Nova Scotia (31.5 per cent) and New Brunswick (29 per cent) had the highest percentage of investor representation. However, a significant percentage of those investors were for multiple properties that were vacant lots.

When those lots are discounted, Nova Scotia was 24.8 per cent and New Brunswick 21.3 per cent.

Less than two per cent of Ontario investors owned two or more vacant lots in the province.

Investors owned 23.3 per cent of all housing stock in British Columbia and 20.4 per cent in Manitoba.


Condominium development off McHugh Street and Lauzon Road, is seen on Wednesday, January 5, 2021.
Condominium development off McHugh Street and Lauzon Road, is seen on Wednesday, January 5, 2021. PHOTO BY DAX MELMER /Windsor Star

In Southwestern Ontario, London followed a similar pattern to Windsor with 14.1 per cent of all homeowners being investors and 86.5 per cent of condo owners.

By comparison, Toronto’s investor ownership of condos was 36.2 per cent.

“Condos are particularly popular with investors in cities between 300,000 and 400,000 people with a high number of students in university and college,” Moffatt said.

“It makes condos a very attractive investment.”

Given the lack of new construction of purpose-built rentals, Moffatt said investors putting residences on the market has actually prevented greater inflation of rents.

“It’s kept rents from going up higher than they otherwise would have because there would have been even more of a shortage or rentals,” Moffatt said.

“A growing population had to be housed somewhere.”

Condominiums are particularly attractive to investors classified as businesses.


Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, based out of uOttawa.
Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, based out of uOttawa. PHOTO BY ERROL MCGIHON /Postmedia

In Windsor, 45.1 per cent of all condos were owned by businesses while it was 77.9 per cent in London.

“Condos are attractive because they’re the easiest type of investment category to operate in,” said Rhys Trenhaile, CEO of Walkerville Capital investment firm and a realtor with The Vanguard Team that specializes in income-generating properties.

“People who don’t want to worry about the upkeep of a four-plex’s roof or who cuts the grass, invest in condos. They can park their money — rent to a retiree for 10 years — collect their cheques.”

The additional benefits for investors are they get a tax write off as landlords, they historically enjoy real estate appreciation and the tenant pays down their mortgage.

Trenhaile added Windsor’s high percentage of investor-ownership in condos is the result a combination of factors that have built up over the years.

He said it’s common for companies, such as electrical and plumbing contractors wishing to be involved in a project, to purchase a few units in a proposed building to help the developer get enough pre-sales to secure funding to launch construction. Many choose to hold onto those units as investor income.


Rhys Trenhaile is pictured outside 493 University Avenue West, which he owns and is converting into a mix-use with six residential units, on Tuesday, Feb. 7, 2023.
Rhys Trenhaile is pictured outside 493 University Avenue West, which he owns and is converting into a mix-use with six residential units, on Tuesday, Feb. 7, 2023. PHOTO BY DAX MELMER /Windsor Star

Then there are investors who have been attracted by Windsor’s low prices and the chance to generate larger monthly cash flows than they can from condos in the Greater Toronto Area. With no intention of residing in the building, they can wait the two years for the units to be finished.

The third factor is many people in the past who bought a condo as their first home don’t need to get the equity out of it when they’re looking for something bigger. They choose to rent their unit out as a new income stream.

“The whole process of building condos kind of encourages investor interest,” said Trenhaile, who added Greater Toronto has been the main source of outside investment in the local market for 20 years.

“Most of us can’t wait for two years for our home to be finished.”

Trenhaile is currently involved in developing four existing properties in Windsor’s downtown core featuring a mix of commercial and residential use that will add hundreds of bedrooms to downtown.

He expects demand to only grow and admits surprise that only 12.1 per cent of all residences locally are held by investors.

“I think you’ll see that number come up given people are now allowed to create additional dwelling units on their lots,” Trenhaile said.


Construction workers are shown at a condominium project on McHugh Street in Windsor on Thursday, March 10, 2022.
Construction workers are shown at a condominium project on McHugh Street in Windsor on Thursday, March 10, 2022. PHOTO BY DAN JANISSE /Windsor Star

Moffatt said the growth of investors owing slightly more than one in five homes in Canada should be concerning. It’s creating a bottleneck on the property ladder that also impacts the rental market.

“The concentration of investors on the home ownership side is real problematic for first time buyers,” Moffatt said.

“They’re forced to continue to rent because they can’t afford ownership. They aren’t building equity to move up the property ladder.

“There’s less movement in the rental market, more competition, not enough available units and rents go up. They end up competing with more investors who are attracted to the condo market because the shortage creates opportunity.”

Windsor-Essex County Home Builders’ Association vice-president Brent Klundert said speculation in the new home market has also grown locally. Such activity isn’t currently at the level seen during the heights of the COVID pandemic, but Klundert feels smart investors are just trying to time the bottom of the market before jumping back in.

“We did see an influx of out-of-market buyers,” Klundert said.

“During the heights of our market, we saw a lot of builders doing pre-assignment clauses. Agents were looking for contracts with those clauses.

“Investors would invest in a home or townhouse bet the market would increase and they could sell the contract at a higher price before construction even finished.”


Vacant land where a condominium development is proposed is seen on Wyandotte Street East between Isack Drive and Watson Avenue, on Monday, April 4, 2022.
Vacant land where a condominium development is proposed is seen on Wyandotte Street East between Isack Drive and Watson Avenue, on Monday, April 4, 2022. PHOTO BY DAX MELMER /Windsor Star

At one point, homes could increase in value during construction by more than $100,000 over the initially agreed price.

Despite the pause in investor activity, Klundert said interest in the region is still percolating. He noted the positive January numbers for new-builds contracts.

“Windsor prices are still better than the GTA, so they can enter the market easier,” Klundert said.
“The economic outlook is bright. I think there’s still money looking at this area.”

Klundert also expects the local condo construction market to remain strong due to its more attractive price point. It remains the easiest and most affordable option to increase supply.

“Bigger projects are coming fast and furious because of the supply crisis,” Klundert said. “We need to speed up approvals, so we can build more and faster.”

Windsor-Essex County Association of Realtors’ president Mark Lalovich said 2023 will be a transition year, but noted the market is lagging right now compared to 2021 and 2022 for investor interest.


Land where a future condominium development is set to be built, is seen at 1624 Lauzon Rd., on Monday, April 4, 2022.
Land where a future condominium development is set to be built, is seen at 1624 Lauzon Rd., on Monday, April 4, 2022. PHOTO BY DAX MELMER /Windsor Star

Lalovich said purchases in the area handled by out-of-board agents were 20 of 265 sales last month versus 105 out of 676 in November 2021.


“We know we’re not capturing all out-of-town sales, as some are handled by agents in our board, but it shows what we’re seeing right now locally,” Lalovich said.

“Most of the investors we’re seeing are from Ontario — Toronto, Hamilton, Kitchener-Waterloo and London.”

Lalovich added local developers he’s talked to feel we’re 12 to 18 months away from seeing the market become more active and prices begin to spike again.

In Lalovich’s opinion, movement among local homeowners this year will spill into the rental market generating more turnover in both sectors.

“Investors are quiet because of the interest rates and their sensitive to rates of returns,” Lalovich said.

“Most are sitting on the sidelines waiting to see what happens.

“That helps homeowner occupants get into the market. You don’t have competing investor interest.

“It’s better for the buyer because you’re in a more relaxed environment.”


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Bank Crisis Could Cast Pall Over Commercial Real Estate Market – The New York Times



The market hadn’t fully rebounded from the pandemic. Some worry that another slowdown could add to fears of a recession.

The fallout from the recent banking crisis spurred by the collapse of two banks — and concerns about the health of a third — is bubbling up in the market for commercial real estate lending, as borrowers fear that banks will pull back. That could slow down construction activity and increase the likelihood of a recession, analysts and real estate experts said.

Silicon Valley Bank and Signature Bank imploded in the same week. First Republic Bank teetered for days before its shares partly recovered on Tuesday. Both Signature and First Republic are large lenders to builders and managers of office buildings, rental apartments, shopping complexes and other commercial properties.


First Republic has the ninth-largest loan portfolio in that market in the United States, and Signature had the 10th largest before it collapsed, according Trepp, a commercial real estate data firm.

Midsize and regional banks like Signature and First Republic not only provide the bulk of commercial real estate loans to businesses, they are also part of a far bigger market. Banks typically package the loans they make into complex financial products and sell them to investors, allowing the banks to raise more money to make new loans.

That means that a pullback in lending can also alter the behavior of investors. Commercial real estate contributed $2.3 trillion to the nation’s economy last year, according to an industry association. And because the industry hasn’t fully rebounded from the blow dealt by the pandemic, analysts worry about a fresh slowdown.

“It is a perfect storm right now,” said Varuna Bhattacharyya, a real estate lawyer in New York with Bryan Cave Leighton Paisner who mainly represents banks.

Lenders are pulling back from making new loans, said Varuna Bhattacharyya, a lawyer at Bryan Cave Leighton Paisner.Gabby Jones for The New York Times

“We were already in a place with a much lower rate of originations,” Ms. Bhattacharyya said, referring to new loan applications that banks process. “It’s hard not to feel a bit of panic and anxiety.”

Ms. Bhattacharyya said lenders would become even more cautious about writing loans for any new construction projects other than the highest-profile “trophy deals.”

The fear among borrowers is that banks will become more conservative about lending. And although the panic appears to have mostly stabilized for now, the specter of bank failure could haunt the decisions of regional banks for months.

For much of last year, commercial real estate lending had begun rebounding from the depths of the Covid-19 lockdowns, when new loan applications almost came to a standstill in the fourth quarter of 2020. By comparison, the annual rate of commercial real estate loan origination by dollar volume grew 18 percent in the fourth quarter of 2022, according to Trepp.

Even before the Federal Deposit Insurance Corporation stepped in to take over Silicon Valley and Signature, a noticeable slowdown in lending to the commercial real estate industry had begun in January.

On an annual basis, the rate of commercial real estate loan growth this year had already been cut in half compared with last year, said Matthew Anderson, a managing director at Trepp. He said some of the slowdown was the result of interest rate increases by the Federal Reserve, which were starting to take a bite out of commercial real estate activity.

And lending has probably tapered off further since the collapses of Silicon Valley and Signature, Mr. Anderson said. “How long and deep the impact will be remains to be seen,” he said.

A New York branch of First Republic Bank, a big real estate lender whose stock tanked in recent days.Gabby Jones for The New York Times

The universe of commercial real estate includes loans for new construction, mortgages and loans specifically for managing multifamily apartment complexes. The so-called securitized products containing loans that banks make are called commercial mortgage-backed securities — a more than $72 billion market last year. But it’s a different story in 2023, with issuance of those bonds down 78 percent from a year ago.

Daniel Klein, president of Klein Enterprises, a commercial real estate management firm based in Maryland, had been talking to several banks recently about a construction loan for a new project. But just the other day, after the banks collapsed, one of the banks suddenly pulled a term sheet for a loan, he said.

Mr. Klein, whose family-owned business manages about 60 shopping centers, offices and apartment buildings, said that the bank had offered no explanation for its decision, and that he did not know if the trouble in the banking sector had been a cause. He said he expected loan terms from lenders to get more onerous in the coming months, as midsize banks get skittish after the Signature and Silicon Valley Bank collapses.

“Banks in general are being more conservative than they were six or nine months ago,” he said. “But we have been pretty fortunate. We have many long standing community banking relationships.”

Banks have become more conservative in lending, said Daniel Klein, president of Klein Enterprises, a commercial real estate management firm.

Regional banks are a critical part of the commercial real estate ecosystem because their bankers invest a lot of time into forging relationships with real estate developers and managers, said Michael E. Lefkowitz, a real estate lawyer with Rosenberg & Estis in New York. Large banks do not tend to provide that kind of “high-level service” to middle-market real estate firms.

Some of the concerns of real estate lenders eased a bit when the F.D.I.C. announced on Sunday that it had sold substantially all of the remaining deposits at Signature Bank to a subsidiary of a peer, New York Community Bancorp, which is also a major commercial real estate lender. The banking regulator took over Signature on March 12 after business customers — including real estate firms and crypto investors — began pulling money out of the bank.

Before its collapse, Signature was one of the biggest commercial real estate lenders in the New York metropolitan area.

In buying some of Signature’s assets, New York Community Bancorp picked up about $34 billion in customer deposits, down from the $88 billion that Signature had before the bank run, an indication of just how many customers fled the bank before regulators stepped in on March 12 to stem the bleeding.

Even with the sale of banking deposits to New York Community Bancorp, there are worries about whether other banks will fill the void left by the collapse of Signature.

New York Community Bancorp acquired about $12.9 billion in loans from Signature, the F.D.I.C. said, but most were business loans to health care companies and not part of Signature’s large commercial real estate portfolio. That means the F.D.I.C. still needs to find a buyer for Signature’s core commercial real estate loan portfolio.

A spokesman for the F.D.I.C. said that the organization “has not characterize the types of loans left behind” and that they would be “disposed at a later date.”

“I think this means that Signature’s commercial real estate portfolio is still up in the air,” Mr. Anderson of Trepp said.

Construction in Lower Manhattan.Gabby Jones for The New York Times

An indicator that Trepp uses to measure the risk of default to loans held by banks on office complexes found that those facing the most distress were in San Francisco — where First Republic is based.

Banks are likely to cut back on lending to preserve capital in order to strengthen their balance sheets in anticipation of further Federal Reserve interest rate increases and renewed calls for regulators to get more aggressive in monitoring risk taking by banks. Any pullback in new lending could affect the start of commercial developments and push the economy closer to a recession.

As bank regulators work to stabilize the financial system, they will also need to keep an eye on banks holding too many commercial real estate loans in their portfolios — something that can create its own set of problems in a slowing economy.

A report late last year by Moody’s Investors Service, the credit rating agency, found that 27 regional banks already had high concentrations of such loans on their balance sheets. The report said the issue could become problematic for banks if the economy fell into a recession.

A construction site in Manhattan on Monday. The banking crisis could slow down building activity.John Taggart for The New York Times

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Gisele Bundchen Reacts to Reports Linking Her to Jiu-Jitsu Teacher and Billionaire Real Estate Developer – TooFab



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Simcoe County’s real estate market shows signs of recovery



Real estate experts paint a cautiously optimistic outlook after a year of downward market trends across the country.

Trends in Simcoe County show an increase in viewings and buyers re-entering the market after key interest rate hikes from the Bank of Canada warded off many last year.

Lance Chilton, the broker of record at Re/Max Hallmark Chilton Realty, calls the local market “more or less balanced.”

“Inventory conditions are the same as they once were in 2018,” he noted.” From 2020 to 2022, prices rose to about 43 per cent, which was rather rapid.”


Chilton said key interest rate hikes eventually bottomed out the local market by about September – that’s when home prices that peaked at around $1 million dropped to about $730,000.

“Since then, it’s recovered by about five per cent,” Chilton said. “In fact, we actually saw showings increase for the first time in about six months.”

The Barrie and District Association of Realtors (BDAR) confirms that showings have picked up again, with people getting that “spring fever.”

However, the one key issue that remains is low inventory.

“We saw prices dip because of interest rates and people pulling out of the market, but we never saw that supply come back online,” said Luc Woolsey, BDAR president, adding the situation creates multi-offer bids.

“So there’s still a lot of people having to come in firm, waiving conditions and inspections because they’re having to compete.”


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