Connect with us

Real eState

Sellers test the Toronto real estate market – The Globe and Mail

Published

 on


Broker Andre Kutyan plans to list the house at 394 Old Orchard Grove with an aggressively low asking price of $1.295-million and hold back offers.

Harvey Kalles Real Estate Ltd.

The Toronto-area real estate market is moving into the fall in fits and starts.

Sales dropped 18 per cent in September from the same month last year, while new listings contracted by a sharper 34 per cent in the same period, according to the Toronto Regional Real Estate Board.

Meanwhile, buyers pushed the average price in the Greater Toronto Area up 18.3 per cent in September from the same month last year to stand at $1,136,280.

The combination of scant supply and peak prices is tempting some investors to test the market.

But sellers who think that every property sells quickly for an eye-watering price often confront a different reality.

Many agents tweak their strategy for every listing they have.

Andre Kutyan, a broker with Harvey Kalles Real Estate Ltd., says some investors who purchased a property believing they would hold it for the long term are rethinking that plan now.

Areas such as Willowdale, Bedford Park and the streets around Bayview and York Mills have attracted lots of investors – both domestic and foreign – in years past, he says.

Now he’s seeing houses appearing for sale after they were purchased during the frothy days of 2016 and 2017. He first noticed the trend, he says, when he began recognizing the listing photos from properties he has shown in the past.

Often he can deduce the seller is an investor if the property has been up for lease in recent years or it’s currently vacant, he says.

Sometimes the listing photos provide a clue that the property has been listed in the recent past: Mr. Kutyan points to one northern Toronto house that sold in 2016 for $2.251-million. In the spring of 2017, it was put up for lease.

Now it’s back on the market with an asking price around the $3.5-million mark.

“There’s snow in the photograph,” Mr. Kutyan says incredulously.

Mr. Kutyan adds that some of his own clients have decided to sell after the dramatic run-up in the market in 2020 and 2021.

One pair of investors is planning to see how much buyers are willing to bring for the one-bedroom condo unit they bought in 2017 in the city’s upscale Yorkville neighbourhood.

A couple decided to sell their condo at 40 Scollard after a few units in the building recently received big money.

Harvey Kalles Real Estate Ltd.

The couple purchased the 645-square-foot unit at 40 Scollard St. with plans to rent it out in the short term and possibly pass it on to a family member in the long term.

But the carrying costs have been higher than the amount they are earning in rent. During the pandemic, rental rates downtown dropped sharply and tenants asked for reductions.

Mr. Kutyan says the couple has decided to sell after a couple of units in the building received big money recently.

Mr. Kutyan plans to list unit 1504 with the attention-getting asking price of $475,000, then hold back offers until a scheduled date.

“I’m not about to fix the price – let’s see what the market’s going to do.”

Another set of investors is planning to list a bungalow they bought in April, 2017 for $1.318-million.

Mr. Kutyan plans to list the house at 394 Old Orchard Grove with an aggressively low asking price of $1.295-million and hold back offers.

He is already anticipating calls from agents asking why the asking price is less than the couple paid for the property in 2017 and how much he really hopes to fetch for it.

“I’ll say, ‘You tell me what’s happened to the market in the past four years.’”

Elli Davis, a real estate agent with Sotheby’s International Realty Canada, says setting a low asking price with an offer date can be an effective way to draw multiple offers. But she cautions that it can also be a risky strategy because the agent is in a bind if the house doesn’t sell on that date.

“If it backfires, then you’re in trouble. Your seller still thinks that it’s under-priced and should go over.”

Some agents will then raise the price to the level they were hoping for to begin with.

“I would not be in favour of that because the first two weeks usually tells the story,” Ms. Davis says.

She has also noticed lots of price cuts recently on listings that have been sitting because the asking price was too high to start. Now that more inventory is trickling out, sellers are motivated to reduce their asking price.

She’s not in favour of setting a price that is so high that the property languishes or so low that it sparks a frenzy.

Ms. Davis plans to set asking prices in line with market value as she launches two mid-town properties – offers welcome any time in the coming days.

Buyers who come to the table are likely to be serious if the asking price is realistic, she says, and the property is more likely to sell quickly.

The penthouse suite in a boutique building at 5 Rosehill Ave. has an attractive layout but it needs some updating, she says, so she is listing it with an asking price of $1.395-million.

A three-bedroom semi-detached house at 31 Oriole Rd. in Deer Park will have an asking price of $2.895-million.

The owners of both properties have lived in them for many years, Ms. Davis says, and they are serious about selling so that they can move on to a new stage of their lives.

The sellers who are intent on getting a very lofty price are often just being opportunistic and they’re willing to let a house sit, in her opinion.

A three-bedroom semi-detached house at 31 Oriole Rd. in Deer Park will have an asking price of $2.895-million.

Sotheby’s International Realty Canada

Listings like that can be costly to an agent in terms of time and expense, she adds.

“I’m not interested in people who are just testing the market.”

Ms. Davis says one investor who purchased a pre-construction condo in 2017 recently contacted her to say he is thinking about selling the two-bedroom unit, which will be completed this year.

The owner paid $600,000 for the unit, which measures less than 700 square feet, in the Yonge Street and Eglinton Avenue area.

The problem he has now, she says, is that many projects that were launched around that time are coming onstream this year. Most of the people who bought in his building are investors, she says, adding that she advised him to hold off for a while.

“I looked at the sales in the area and I don’t think he’ll make anything. I think he’ll break even,” she says, adding that he will have to pay brokerage fees and other costs. “It never changes – it’s always supply and demand.”

Robin Pope, broker with Pope Real Estate Ltd., has noticed a recent uptick in an unusual tactic: agents set a low asking price for a property but they do not set an offer date.

Typically agents who want to spark a bidding war set an offer date in order to create a sense of urgency at the deadline.

Mr. Pope says that these agents seem to hope that buyers will end up competing anyway. But what happens in reality is they get lots of calls and no offers.

“By virtue of the fact the price is so attractive, they get lots of activity,” he says. “It’s a really stupid strategy because it doesn’t always work.”

He points to a condo near the waterfront which was listed with an attractive asking price of $688,000, but three weeks later it is still on the market. The listing agent said the seller is looking for more than $800,000.

Mr. Pope again believes the listing agent is only confounding buyers by keeping the unit sitting for three weeks at a price far below what the seller is hoping to fetch.

“I’ve experienced it more often than I should,” he says of the strategy. “I shouldn’t ever experience it at all.”

Mr. Pope says one buyer feels she benefitted from an agent’s misstep. When a two-bedroom condo unit with an asking price of $999,000 and no offer date arrived on the market in the River City area, she was willing to offer slightly more than the asking price.

When Mr. Pope informed the listing agent, he replied “no way – we want more”.

Mr. Pope’s client sweetened her bid to $1.045-million. The unit should have been listed north of $1.1-million, says Mr. Pope, who believes the agent’s misfire gave the client an edge because the seller didn’t get a bidding war.

“It was a lovely apartment and she got it for an excellent price,” he says.

Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.

Adblock test (Why?)



Source link

Continue Reading

Real eState

Could New Zealand's radical new housing law help Canada curb its skyrocketing real estate prices? – National Post

Published

 on


New Zealand is currently plagued by a real estate market that is even more unaffordable than Canada’s

Article content

A radical new law intended to reduce New Zealand’s infamous housing crunch could well be a model for how Canada could curb its ever-skyrocketing real estate prices, according to experts contacted by the National Post.

Advertisement

Article content

This week, in a rare bipartisan action, the New Zealand government introduced measures to quash “overly restrictive planning rules” that hinder development in urban cores.

New Zealanders may now develop up to 50 per cent of their land — and build up to three storeys — without requiring consent from municipal authorities. The reforms also unleash landowners to build up to three homes per lot in areas that previously restricted those lots to one or two homes.

Advertisement

Article content

While the measures do not mandate development of existing homes, they mean that New Zealanders now have much more freedom to build on their land without butting up against municipal planning laws. A similar law applied to Vancouver and Toronto, for instance, would automatically free builders from the need to seek local approval for a laneway house.

A government-commissioned analysis by Pricewaterhouse Coopers has estimated that the new measures will spur a building boom expected to add between 48,200 and 105,500 new units of housing in New Zealand by the end of the decade.

“I think reforms like this would likely help increase Canadian housing stock quite a bit,” Nathanael Lauster, a housing density researcher at the University of British Columbia, told the Post.

Advertisement

Article content

Lauster helped created the Metro Vancouver Zoning Project , an effort to meticulously document zoning laws in Canada’s third largest city. What the project has revealed is that the vast majority of land in Vancouver is zoned for single family homes, effectively making densification illegal in much of Canada’s most unaffordable real estate market.

A screenshot of the Metro Vancouver Zoning Project. Every patch of yellow indicates where it’s illegal to build anything except a detached home or duplex.
A screenshot of the Metro Vancouver Zoning Project. Every patch of yellow indicates where it’s illegal to build anything except a detached home or duplex. Photo by Metro Vancouver Housing Project

In an extensive analysis of New Zealand’s new housing reforms, Lauster called them a “welcome new model” for stripping “exclusionary” powers from the hands of local governments, which disproportionately favour the interests of existing homeowners. “It’s relatively easy for municipal politics to become captured by those most resistant to change and greater inclusion,” he wrote.

Advertisement

Article content

New Zealand’s new measures were supported both by its Labour Party government and its conservative National Party opposition. Tellingly, the policy’s official launch was attended by National Party Leader Judith Collins.

“National supports this policy because it focuses on supply. Rather than making life harder for property owners, this policy tells them that you have the right to build,” Collins told a Tuesday press conference .

The National Party leader also struck out at Kiwis who opposed the law on the grounds that it would strip communities of their “character.” “Our communities lose their character when people can’t afford to own their own home,” she said.

New Zealand is currently plagued by a real estate market that is even more unaffordable than Canada’s. The gap between New Zealand’s average incomes and its average real estate cost is currently among the highest in the OECD .

Advertisement

Article content

Notably, the problem continues to grow despite the fact that New Zealand maintains strict controls on foreign ownership. In 2018, the country banned non-residents from purchasing pre-existing New Zealand real estate, although foreigners are given limited reign to purchase new builds.

We apologize, but this video has failed to load.

Advertisement

Article content

Canada’s already overheated real estate market is on a fast track to match New Zealand for unaffordability. In just the last year, average Canadian home prices soared by an incredible 21.4 per cent .

The singular reason for this is lack of supply. Canada has the lowest number of housing units per capita than any other country in the G7, a ratio that is only getting worse as lacklustre housing development is met with massive population growth.

In Canada, any law to defang municipal zoning laws would need to come from the provinces. With New Zealand having a population of only five million, its national government often makes decisions that would be considered regional issues in Canada.

However, there is strong precedent to show that Canadian provinces have relatively free reign to steamroll municipal laws whenever they want to.

Advertisement

Article content

One of the starkest recent examples was when the province of Ontario abruptly cut the size of Toronto City Council in half.

While the City of Toronto took the issue to court framing it as an undemocratic coup, just this month the Supreme Court of Canada ruled that Ontario acted constitutionally.

In the recent Canadian federal election, all three major parties debuted housing plans that mostly skirted around the issue of municipal barriers to development. The Conservatives proposed tying federal transit funding to a city’s willingness to densify, but there were no blunt New Zealand-style promises to override onerous local zoning laws

“If there was a blanket up-zoning of land in Canadian metropolitan areas, it would lead to an increase in the housing stock,” said Steve Lafleur, an analyst specializing in housing affordability at the Fraser Institute.

The libertarian-minded Fraser Institute isn’t one to advocate stricter government control of an economic sector, and Lafleur said that provincial “micromanaging” of local zoning would not be ideal. Nevertheless, he said, “given immense demand for housing, it is impossible to believe that there would not be a boom … if denser housing were allowed.”

We apologize, but this video has failed to load.

Advertisement

  1. Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)



Source link

Continue Reading

Real eState

Office real estate may be struggling, but there are bright spots in commercial real estate – Financial Post

Published

 on


Industrial real estate has emerged as an unexpected saviour, with leasing volumes rising across Canada

Article content

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.

Advertisement

Article content

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.

Advertisement

Article content

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.

Advertisement

Article content

  1. The higher number of housing starts this year has only reached the same level observed decades ago when Canada’s population was nearly half of what it is today.

    Supply is the only cause and solution to Canada’s housing woes — it’s time to be bold

  2. Home prices have been rising at over 10 per cent per year as of late.

    How a little mortgage math helps swing the own/rent debate in favour of buying a house

  3. None

    Housing crisis? What crisis? Canada has struggled to house people for decades

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.

Advertisement

Article content

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.

Advertisement

Article content

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.

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)



Source link

Continue Reading

Real eState

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

Published

 on


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. 

Adblock test (Why?)



Source link

Continue Reading

Trending