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The great real estate cool-down has come – National Post

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Sellers turning down offers in hopes of a better one: Be warned. We’ve entered an “adjustment phase”

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During the first week of August, a home seller in Hamilton received a purchase offer amounting to $100,000 above the asking price. But rather than thank the real estate gods for their munificence, the Steeltown homeowner rejected the bid, convinced that a better one was just around the corner. It was the latest instance, says Rob Golfi, the realtor whose office attempted to broker the deal, of how inflated expectations in still-hot-but-cooling Canadian markets such as the GTA are causing home sellers to miss out on otherwise profitable exchanges. As Golfi recalled the Hamilton case in an interview recently, the property in question remained unsold.

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“Many [sellers] are realizing weeks later that they botched a great offer and regret becoming overly confident and unsatisfied with the offers they declined,” says Golfi, whose firm, RE/MAX Escarpment Golfi Realty Inc., is a leading brokerage in the territory stretching from Halton Region to Niagara.

He adds, “It’s difficult for sellers to understand that we are now in an adjustment phase.”

To be sure, the Canadian housing market is still robust, with the average home price reaching a little over $679,000 in June, a year-over-year increase of 25.9 percent, according to the Canadian Real Estate Association (CREA). By that same month, however, the first-quarter buying frenzy that saw record-high sale prices from January to March had markedly dissipated: June’s average price was 5.5 percent lower than the springtime peak of $716,828, while the number of transactions also tumbled more than 20 percent since March.

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“It feels like maybe the theme of this summer is ‘slowly getting back to normal,’ in our own lives and for many housing markets across Canada as well,” Shaun Cathcart, CREA’s senior economist, mused when the June figures were released last month. The trouble, according to some realtors and industry experts, is that many current sellers don’t seem to have gotten the memo.

“Seller expectations are being impacted by how things were in previous months,” Golfi says, adding that many homeowners are resisting the coaching of their agents in favour of unreliable anecdotal evidence. “They’re listening to their friends and family and not listening to the realtor. They’re seeing what their neighbours got for their homes in March and April and they’re saying, ‘I want that. I want more than that. My home is worth what they got if not more.’

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“But those deals,” Golfi continues, “were sealed months ago. And what happened in March and April was far more supercharged than even the spring boom of 2017.”

Home sellers who continue to overreach when it comes to valuations may find themselves reaching too far for their own good.
Home sellers who continue to overreach when it comes to valuations may find themselves reaching too far for their own good. Photo by Getty Images

Peer pressure aside, David Schooley cites another reason for why a seller might reject a good offer for an elusive better one.

“I hate to use the word greed, but that’s what it often comes down to,” says the Kitchener-based broker, who also sits on the board of directors of the Real Estate Council of Ontario. “People paid some pretty ridiculous prices for homes in the spring, as they did in 2017, so that fear of missing out [among sellers now] is a powerful thing to get over.”

In Schooley’s view, sellers will begin to adjust their expectations as prices continue to stabilize, their “overreaching” subsiding as market forces do their thing.

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Golfi agrees, noting that the gradual decline in home prices since the springtime peak has less to do with the typical summer real estate lull than a return to more realistic valuations. But as he also notes, “some sellers are stubborn. Even now, as we’re starting to get back to normal conditions, they’ll insist that we list their houses [at] overpriced [rates]. As those listings just sit there, they’ll eventually have the realization that they’re not going to get the number they want, that they’re throwing away good offers that won’t come again. But they often have to learn it through harsh reality.”

Of course, the reality in the GTA and throughout much of Southern Ontario still amounts to a seller’s market.

“The market is still good,” Golfi says, adding that prices might even spike again if and when the many older Ontarians who postponed downsizing to apartments or retirement facilities because of the pandemic eventually put their properties up for sale.

An injection of new inventory, he points out, would be good news for buyers, although it could also spark competition for the choicest homes.

But that’s all speculative as the summer of 2021 draws to a close. For the time being, Schooley feels, “prices have stabilized and probably levelled off.”

Consequently, anyone selling now would be wise to consider that old saying about a bird in the hand. Those who continue to overreach when it comes to valuations may find themselves reaching too far for their own good.

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Joseph Montanaro pleads guilty after letting someone else complete his real-estate training | CTV News – CTV News Montreal

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MONTREAL —
One of Montreal’s top real-estate agents — one who just handled the sale of the premier’s mansion — is expected to pay a $20,000 fine after pleading guilty to breaching his industry’s ethics code.

Joseph Montanaro entered the guilty plea Tuesday during a disciplinary hearing for the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), the body that governs real-estate brokers in Quebec.

The complaint, filed by OACIQ official Alexandra Tonghioiu, stated that between 2018 and 2019 Montanaro “allowed, permitted or requested a third party to take training courses in his place in order to complete his OACIQ continuing education program training program.”

The offence is in violation of several sections of the Real Estate Brokerage Act. Brokers are required to accumulate “a certain number of continuing education credits” to complete the Mandatory Continuing Education Program (MCEP) every two years in order to maintain their licence and to keep their knowledge of the industry up to date, according to the OACIQ website.

Lawyers for Montanaro and the OACIQ agreed on the $20,000 penalty, which the discipline committee accepted after receiving a joint summary of facts in the case.

It’s believed to be one of the highest fines ever issued for realtors in Quebec.

AGENT SOLD PREMIER LEGAULT’S MANSION

Montanaro, who counts celebrities like Céline Dion and hockey player PK Subban among his previous clients, is one of Montreal’s highest-profile brokers, specializing in the sale of multi-million dollar homes in the city’s wealthiest neighbourgoods. 

Two weeks ago, he sold the 18,000-square-foot mansion of Premier Legault. The Victorian-style home in Outremont was listed for $4,995,000 and has eight bedrooms.

The home sold for less than the listing price, a source confirmed to CTV News.

The complaint against him appears to have been brought on by some bad blood within the real-estate market in Montreal. OACIQ was notified of the violation from Montanaro’s competition, according to his lawyer Alain Mongeau, who attended the hearing on Tuesday.

“It came in from the competition — people that are competing with Mr. Montanaro in the real-estate market,” Mongeau told CTV.

In explaining the nature of the offence, he said an ex-employee of Montanaro did the training on his behalf and claimed that he authorized it, but Montanaro doesn’t recall approving it, Mongeau explained.

“It’s a mistake and he’s sorry for it,” Mongeau said, adding that the whole process was allegedly fueled by Montanaro’s rivals.

“He’s angry that his competition would try to compete in this fashion rather than by providing good services,” he said.

“It’s an actual complaint by competition — why would they do that? It’s to harm his reputation for their own benefit.”

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Novel $10.7 Billion Swedish Deal Reinvents Real Estate Finance – BNN

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(Bloomberg) — A historic shift in how Swedish property firms fund themselves was already underway before a little-known private company revealed a $10.7 billion acquisition that will put the trend firmly on the map.

Heimstaden Bostad AB — owned by Ivar Tollefsen’s Fredensborg AS and pension funds — says it will use debt capital markets to refinance a jumbo bridge facility for the largest ever private property transaction in the Nordic region. 

The deal highlights a shift by real estate companies in the biggest Nordic economy into both bonds and euros. The trend is driven by a quantitative easing-fueled property boom that’s allowing companies to raise more money than is available in the local market.

“The real estate sector has grown so much because companies have replaced secured bank financing with unsecured bond financing,” said Max Berger at DWS Investment GmBH. More broadly, Europe’s property industry has become “the fastest growing in euro investment grade in the last couple of years.” 

Since 2010, the number of real estate issuers in the euro investment grade market has increased to 69 from five, according to Berger, who manages 6 billion euros ($7 billion) of bonds. Euros have now overtaken Swedish krona as the main funding currency for outstanding bonds sold by the country’s property companies.

Heimstaden Bostad’s bridge loan “will clearly be refinanced mainly in euro bonds,” said Anders Holmlund, head of bond origination at Svenska Handelsbanken. The banker adds that the domestic krona market “isn’t a realistic alternative” given the short time frame.

The boom in real estate bonds can be seen in its dominance of the Swedish central bank’s balance sheet, where more than half of the Riksbank’s corporate bond holdings come from property companies.  

The European Central Bank’s bond-buying program is adding further fuel to the market, according to Holmlund.

And the broader buyer base is allowing Swedish property companies to expand massively. Samhallsbyggnadsbolaget i Norden AB, for example, announced a plan recently to nearly triple its property portfolio size to 300 billion kronor ($34.4 billion) by 2026. 

“We will focus more on euro in the future,” Marika Dimming, a spokesperson, said in an interview. “It’s a natural progression for us,” she said, adding that “the trend is also to set up a subsidiary in the euro area so that the bonds can be bought by the ECB in their QE program,” she said. 

But a summer rally in Swedish house prices, warnings of excessive valuations in share prices and concerns about a withdrawal of central bank stimulus have stoked concern among politicians and analysts alike.

Equity analysts at Svenska Handelsbanken said they have “a clear negative tilt towards the sector universe,” citing “disturbances in the increasingly important capital markets” triggered by QE tapering as a possible downside catalyst.

Still, euro bond investors are attracted to Swedish residential firms’ risk-return profile compared with western European office companies, said DWS’s Berger.

“Nordic players have provided us with interesting sub-sectors that have defensive characteristics, but trade in line with the wider sector,” the Frankfurt-based portfolio manager said, adding that sub-sector selection within real estate is key to making profitable investments.

“The pandemic has been a good stress test for real estate companies’ balance sheets,” he said. “Even hotel and retail focused companies have weathered the pandemic.”

©2021 Bloomberg L.P.

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When it comes to cutting carbon emissions, the real estate industry is running out of time – CNN

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Diane Hoskins is co-CEO of Gensler. The opinions expressed in this commentary are her own.

Extreme weather events — including heat waves, droughts and floods — have unfolded all over the world this summer. The grave impact of climate change is upon us and will continue to have a profound impact on human life. But there are still largely untapped actions we can take to reduce the damage.

Achieving global policy ambitions like the ones set in the 2015 Paris Agreement will require leadership from the private sector, but individual companies with strong internal climate commitments can’t go at it alone. They are hamstrung unless other businesses in their ecosystem follow through with similar pledges. To accomplish this, companies need policies that require the cooperation of external stakeholders at every step of the value chain.
For those of us in the real estate sector, the concern always seemed to be less about the cause of our manmade carbon footprint and more about cost. For years, we have seen rising sea levels and extreme weather events happening around us, putting property portfolios at risk. The economic and physical changes have affected insurance industry volatility, impacting construction and long-term investment prospects.
However, many in the industry have yet to admit that buildings are as responsible for carbon as cars. The real estate industry makes up 49% of global carbon emissions when accounting for construction and building performance. Most carbon reduction efforts in the building sector have focused on operational efficiency — energy sources for keeping buildings at an ideal temperature, lighted, ventilated and powered — so that properties consume as little energy as possible. And while these efforts have furthered the industry’s goal of getting buildings closer to net zero operationally, we can no longer ignore that building materials account for half of a building’s total lifetime carbon footprint.
We are out of time. And the real estate industry’s wait-and-see approach is no longer acceptable. Embodied carbon — emissions associated with the manufacturing, transport, construction and disposal of building materials — must become a priority for the entire industry value chain.
With commercial buildings, concrete and steel have traditionally been used for construction, along with other frequently used carbon-intensive materials like foam insulation, plastics and aluminum. However, building with structural wood has increasingly gained traction as an alternative, given that it sequesters more carbon than it emits. Developers are becoming aware of its versatility and sustainability, and if adopted on a global scale, mass timber could challenge steel and cement as the preferred materials for construction. Additionally, structural engineers have already successfully used recycled steel and low-carbon cement consisting of alternative mixtures. This, combined with using more unpolished and salvaged materials, has already proven to lower buildings’ carbon footprints.
And since nearly 75% of all raw materials in the US are used for the construction of buildings, the conscious decisions about the sourcing, construction and finishing of our development projects will have a lasting environmental impact.
At Gensler, a global architecture and design firm, we recently issued letters to our structural engineers, vendors, suppliers, construction and general contracting leaders asking for their partnership in shaping their policy to change the value chain. Together, we are developing an agreed-upon approach for specifying quality products that align with our company’s carbon neutrality promise. In early 2022, Gensler is launching new green specifications that focus on reducing high-carbon materials, using the most efficient structural solutions to reduce material quantities, sourcing materials that are extracted and manufactured locally, and minimizing waste. These specifications will be used on all of our projects. From then on, we will prioritize working with partners who meet those specifications and use materials that significantly reduce construction-related emissions, such as low-carbon concrete, steel, cross-laminated timber and alternative materials that absorb rather than emit carbon. With Gensler’s design impact and its global scale, this change in demand for sustainable materials will have an immediate ripple effect across the building sector.
If all parts of the real estate ecosystem — including architects, owners, developers, investors, constructors and material suppliers — move toward a net zero ambition, together, they could save 10 billion tonnes of CO2 from the atmosphere. This is the equivalent of removing nearly 2.2 billion gas-powered cars from the road for an entire year. There must be global net zero building standards across major market participants, investors, developers, designers and occupiers to drive demand. We must also create policies that demand energy suppliers provide access to low-carbon alternatives.
This era of reducing the embodied carbon in building materials will change construction and real estate development. We have entered a critical period for humanity. Carbon-neutral statements, science-based targets, and promises at international forums like the UN Climate Change conference will not suffice. Tangible and immediate action is the only solution.

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