Real estate enters the data age
Mary Teresa Bitti
Proptech is the big buzzword in real estate and for good reason: It’s disrupting just about every aspect of the industry and interest is at a fever pitch. Global investment in proptech companies has grown from US$1B in 2012 to US$18B in 2018, according to the latest numbers by Statista.
So exactly what is proptech? It’s a broad term that includes everything from data, AI, machine learning, mobile apps and robots to flex office space and co-living residences. At the core of any proptech company, information technology is being used to disrupt the way buildings are designed, constructed, managed, used, purchased, leased and sold.
“Proptech is the intersection of technology and real estate to solve real estate issues,” says Fred Cassano, partner and national lead of PwC, Canada’s real estate tax practice. “The level of attention in the space is incredible. In the last four years, we’ve seen the acceleration in deal volume and also dollars being put into the space globally.”
Why now? Cassano says a convergence of events is fuelling real estate, which has been late to the adoption of emerging technologies, to catch up. Namely, the need for affordable housing, the lack of skilled labour, climate change and the global applicability of technology.
“Innovations developed in Europe, for example, can also work in Canada. In the past, real estate solutions were dedicated to local markets,” says Cassano. “As well, providers of innovations that have taken hold in other markets, such as finance and health care, are bringing those solutions into real estate.”
Here’s a brief look at the technologies transforming real estate broken out into three key categories:
This includes technologies such as online platforms, AI, data optimization, machine learning, cloud and blockchain that are being used to list, search, buy and sell homes, facilitate peer-to-peer rentals, co-living and co-working, automate interior design, transfer deeds and broker mortgages electronically.
Looking to the future, Cassano says co-living and co-working are here to stay and real estate as a service is emerging. “If you follow someone’s life, you will see an evolution in the types of space they need. Rather than buying and selling properties, you subscribe to an organization that will find you the space you need where and when you need it,” he says.
As for real estate brokers: “They will need to redefine their role. It may not be about the transaction, but after-care services.”
One area that’s ripe for the taking, according to Cassano: The tokenization of real estate transactions, such as mortgage approvals, for example. “This will be the next big transformation.”
This includes everything that touches the design build aspect of real estate. Again the range of technologies is wide, from software to immersive virtualization, to three-dimensional modelling and printing, to drones.
Many types of robotics are also poised to revolutionize the largely unautomated construction industry. For example, 3D printing and industrial robots recently built a 3D printed bridge in The Netherlands. Demolition robots, machines that can lay bricks, remote-controlled and autonomous vehicles are other examples of construction robots.
Tenant engagement tools
Amenity and tenant experience apps, operations and property management platforms, IoT (Internet of Things) devices and sensors, AI applications — these are examples of real estate technologies being used to meet consumer demands, strengthen relationships between landlord and tenant, optimize the use of space and equipment and improve energy efficiency. For example, IoT sensors are being used to detect the movement of people in a building to optimize when systems are used, to identify malfunctions in equipment and even to monitor wellness.
Recreational homes: What to know about inheriting a cottage – CTV News
With a high number of Canadians expected to retire over the next few years, the trend of younger generations inheriting their family cottages will contribute to “major shifts” in the ownership of recreational homes, according to new research from Re/Max.
But amid rising concerns around the cost of housing, some may be wondering whether they can afford to keep their recreational home in the family.
In its 2023 Cottage Trends Report released April 27, Re/Max says Generation X is already driving the recreational housing market, partly due to the high volume of intergenerational wealth transfers. Additionally, data released by TD Bank Group earlier this year shows nearly 900,000 baby boomers are set to retire within the next three years.
According to Christopher Alexander, president of Re/Max Canada, many more families are likely to pass their cottages down to loved ones in the years to come.
“The torch has kind of been passed from baby boomers to gen-Xers, who are driving market activity right now,” Alexander told CTVNews.ca in a telephone interview on Wednesday. “[Gen Xers] are also buying cottages with the intention to pass it on to their children [and] have it as a family heirloom.”
A Leger survey commissioned on behalf of Re/Max as part of its trends report shows 56 per cent of Canadians either plan to or have already put their recreational property in their beneficiary’s name. Additionally, 74 per cent of those who own recreational properties say they feel confident they will be able to pass down their property to relatives with the proper planning.
While many Canadians appear confident in their ability to do this, a key factor to take into consideration is whether their children can afford to keep the home, said Jamie Golombek, managing director of tax and estate planning with CIBC in Toronto.
Amid a cost-of-living crisis, home affordability remains a concern for many. Canada has the highest level of household debt in the G7, a volume that has been growing “inexorably” because of rising home prices, according to the Canada Mortgage and Housing Corporation.
It’s not uncommon for families to sell a cottage to absolve themselves of ownership, Alexander said. More often than not, this isn’t because relatives have lost interest in owning the home, but because of the hurdles they confront while trying to keep it, said Peter Lillico, a lawyer with Lillico Bazuk Galloway Halka based in Peterborough, Ont.
“Parents make assumptions like, ‘the kids love the cottage and they get along, therefore there’s a cottage succession plan,’ and it’s just not,” he told CTVNews.ca in a telephone interview Thursday. “One of the main reasons that those cottages go up for sale after decades is you’ve got three kids and one of them says, ‘I can’t afford it.’”
Looking specifically at the recreational housing market, average prices remain above pre-pandemic levels today, Alexander said. Combined with elevated interest rates, “the ability to carry two properties has been more challenging in the last year,” he said.
ARE THERE TAXES INVOLVED IN INHERITING A COTTAGE?
In addition to keeping up with property taxes and mortgage costs, families will need to factor in a capital gains tax when transferring ownership of their cottage, said Lillico.
Whether parents are selling their recreational home to their children or giving it as a gift, the transfer is still considered a “disposition” by the Canada Revenue Agency, or a sale at fair market value, Lillico said. This will trigger a capital gains tax, which is a federal levy that accounts for the increase in a home’s value since it was last purchased.
In Canada, 50 per cent of the capital gain from a sale must be added to the seller’s total taxable income. The amount they will pay is based on their tax bracket. If the homeowners die before transferring ownership, this tax can be paid using money from their estate, Lillico said.
A principal residence tax exemption can allow homeowners to avoid paying a capital gains tax on profits made from selling a property if it’s their main residence. But any profit generated up until the home is designated a principal residence is still taxable, said Lillico, who has more than 44 years of experience in cottage succession planning.
“The cottage may qualify as their principal residence from that point forward, but it doesn’t wipe out capital gains [from previous years],” he told CTVNews.ca. “Sometimes that will catch people by surprise.”
One way to temporarily avoid paying capital gains taxes is to place the home in a “sprinkling” cottage trust, Lillico said, a type of asset protection trust. This will allow the next generation to transfer the recreational property to their children without paying a capital gains tax for up to 21 years. Placing the property in this kind of trust will also protect the owners from third-party claims if someone were to get divorced or go bankrupt.
Being mindful of insurance fees and other costs involved in maintaining the home will help families make an informed decision on whether the next generation can afford to keep the property, or if they should sell it, Alexander said.
Golombek also recommends speaking with financial advisers to determine the tax consequences of inheriting a family cottage, as well as whether a person’s income and expenses will allow them to afford to keep it.
FAMILY DYNAMICS ANOTHER IMPORTANT CONSIDERATION: EXPERTS
In addition to finances, it’s important that parents speak with their children about whether they want to inherit the recreational home in the first place, said Golombek.
“Especially if there’s multiple kids … it’s very important to have that discussion,” he told CTVNews.ca in a telephone interview Thursday. “If they don’t all want it, then you can create a lot of issues there by leaving it to them equally.”
Lillico recommends creating a legally enforceable cottage sharing agreement for those who will inherit the property before it is passed down. In writing, family members should lay out terms around access to the property, the sharing of expenses and any restrictions on transferring the home to those outside the family. He also suggests setting money aside, if possible, to cover repair costs down the road.
THE STATE OF CANADA’S RECREATIONAL REAL ESTATE MARKET
Most of Canada has seen a rise in the supply of recreational homes, aside from some outliers in Ontario and British Columbia, where prices are “exorbitant,” Alexander said.
Areas such as Muskoka and Prince Edward County in Ontario have seen property values go through the roof over the last few years, leading many recreational homeowners in these regions to see high capital gains over time, he said. As these markets remain hot, peripheral regions such as those further north in the province have become more attractive as cheaper alternatives.
“Within three hours of a major city, as long as the demand is there … you’re going to see property values increase and then you’ll have higher capital gains,” Alexander said.
CTVNews.ca has put together a list of recreational properties currently on the market across Canada.
(Hayden Simon, Century 21 Creekside Realty)
Location: Harrison Hot Springs, B.C.
Year Built: 2002
Property Size: 189.52 sq. m
Lot Size: 0.33 hectares
Situated on the shores of Harrison Lake, this leasehold property is a two-hour drive from Vancouver. With nearly 190 square metres of living space, it includes five bedrooms and two bathrooms. The home also features a wood stove in the living area and a wood-burning hot tub in the backyard.
(Ryan Sagert, 1.m.A Media / Cathren Dorchester, Royal LePage Parkland Agencies)
Location: Rural Wetaskiwin County, Alta.
Year Built: 1980
Property Size: 78.42 sq. m
Lot Size: 0.08 hectares
This lakefront home has four bedrooms and two bathrooms, in addition to a kitchen, living room and fully finished basement. The lower level comes with heated floors and offers outdoor access. In the backyard is a fire pit, along with a stone walkway that leads to Pigeon Lake.
(Big Bay Media / Erin Monett, Chestnut Park Real Estate)
Location: Muskoka, Ont.
Year Built: 1976
Property Size: 165.55 sq. m
Lot Size: 1.31 hectares
Two separate docks lead the way to this four-bedroom, two-bathroom home in Muskoka, Ont. The property includes nearly 314 metres of shoreline along Green Bay, and 1.31 hectares of land. Large windows in the dining area provide a clear view of the waterfront. In addition to the cottage, a seasonal log cabin is also situated on the property.
(Carol Love, Century 21 Lanthorn Real Estate)
Location: Prince Edward County, Ont.
Year Built: 1981
Property Size: 130.06 sq. m
Lot Size: 1.09 hectares
Located in Prince Edward County, Ont., this waterfront bungalow offers views of Consecon Lake. Inside the home are four bedrooms, two bathrooms, a living room, kitchen and recreation room. In the backyard is a screened porch and deck facing the water, which can be accessed via a private boardwalk. This recreational home is located near Millennium Trail as well as shops, wineries and more.
(Christopher Green / Joel Flewelling, Royal LePage Atlantic)
Location: Annapolis County, N.S.
Year Built: 1882
Property Size: 118.73 sq. m
Lot Size: 0.25 hectares
This two-storey home has two bedrooms, two bathrooms and nearly 120 square metres of living space. On the main floor is a combined living and dining area with a wood-burning stove, as well as a sunroom. On the upper floor, both bedrooms share a full bathroom, which includes a shower.
PRINCE EDWARD ISLAND
(Odyssey Virtual / Jodi Bernard, Century 21 Northumberland Realty)
Location: Queens County, P.E.I.
Year Built: 2019
Property Size: 142.7 sq. m
Lot Size: 0.4 to 1.2 hectares
Situated on top of a hill, this cottage in central P.E.I. offers panoramic views stretching from Sea View to Park Corner. It features two bedrooms and two bathrooms, along with a kitchen and combined living and dining area. At the back of the home is a covered deck that is partially screened-in.
NEWFOUNDLAND AND LABRADOR
(Krista Trask, Century 21 Seller’s Choice)
Location: Whitbourne, N.L.
Year Built: 2020
Property Size: 228.91 sq. m
Lot Size: under 0.4 hectares
Modern finishes can be found throughout this home in Whitbourne, N.L. The open-concept layout of the main floor includes vaulted ceilings and chalet windows. Also on the main level is a gourmet kitchen with an island that can seat three people. The main bedroom has a private patio door with access to the front deck, as well as three-piece ensuite.
Victoria real estate sales up and prices down year-over-year – Times Colonist
Real estate prices picked up slightly in May from April, but remain below levels seen a year ago in the capital region.
The number of properties that changed hands climbed by 22 per cent in May from the previous month, indicating increased consumer confidence, Victoria Real Estate Board chair Graden Sol said Thursday, when monthly data was released.
May saw the highest number of sales since April of last year, he said.
While sale numbers lag below what would typically be expected in a spring market, May was the fourth consecutive month with sales higher than the previous month’s.
A total of 775 properties, valued at $774.9 million, sold through the board last month.
That represents an increase of 1.8 per cent from May 2022 and 21.7 per cent from April of this year, the board said.
The benchmark price for a single-family house in Victoria’s core was $1.297 million last month, a drop from $1.4 million in the same month a year ago.
Last month’s benchmark price was $1.295.8 million.
The benchmark price for condominiums in Victoria’s core slid to $569,300 in May from $619,500 a year earlier, although it was up slightly from April, when it was $564,000.
A total of 2,189 properties were for sale at the end of May, up 7.1 per cent from April, and up 23.3 per cent from the end of May last year.
Calgary home sales reach new May record, new listings down: real estate board – The Globe and Mail
The Calgary Real Estate Board says the market hit a new May record for sales as the number of properties that changed hands reached 3,120 last month.
The Albertan board says the sales amount to an almost two per cent increase from last May, when sales totalled 3,063.
Despite the record, year-to-date sales are still almost 30 per cent behind where they were last May and the board says the market has still not shifted completely away from the declines seen at the start of the year.
The board says it continues to see fewer new listings than last year, with the number of properties listed on the market last month dropping 15 per cent to 3,652.
The market’s benchmark price was up almost three per cent at $557,000, while the average price pushed up roughly six per cent to $551,853.
The board’s chief economist says the numbers reflect a higher interest rate environment and recent rental rate gains, which are driving more people to seek apartment and condo units.
Global BC sponsors Vancouver Art Gallery: Fashion Fictions – GlobalNews Events – Global News
Recreational homes: What to know about inheriting a cottage – CTV News
James Webb Space Telescope finds water in super-hot exoplanet's atmosphere – Space.com
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Search for life on Mars accelerates as new bodies of water found below planet’s surface
Science11 hours ago
Private Astronaut Crew, Including First Arab Woman in Orbit, Returns from Space Station – Voice of America – VOA News
Science7 hours ago
Private astronaut crew, including first Arab woman in orbit, returns from space station – Indiatimes.com
Media10 hours ago
Will Google's AI Plans Destroy the Media? – New York Magazine
Health23 hours ago
Canadian researchers find brain inflammation in patients with long COVID – Winnipeg Free Press – Winnipeg Free Press
Sports10 hours ago
Brad Treliving on the criticism the Maple Leafs’ core players face in the market. "Whether it’s raining or sunny, it seems to be the core four’s fault every day… Quite frankly, I don’t want to hear the [core four] term"
News10 hours ago
Air Canada flight communicator system breaks down, causing widespread delays – CBC.ca
Real eState8 hours ago
Victoria real estate sales up and prices down year-over-year – Times Colonist
News23 hours ago
BMO takeover of Air Miles now official