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The year Canadians learned just how resilient our housing market is – Financial Post

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It’s been a year of ups and downs for Canada’s housing markets, but, for the most part, they gained strength and posted increases in both prices and sales.

Though sales data for December is needed to paint a complete picture, housing market activity up until the end of November offers enough insights to reflect on the past and plan for the future.

If there was one development that defined Canadian real estate in 2019, it was the housing market’s resilience, especially since the slowdown that started in 2018, when the stress test was extended to uninsured mortgages, lasted longer than most had anticipated.

But the market’s turnaround since March has been fuelled by strong demand, despite the absence of regulatory relief, in most of the country, excepting Alberta, British Columbia and Saskatchewan. Perhaps unsurprisingly, the turnaround coincided with the federal budget in March 2019, which provided some clarity on how and when the government would address the housing market decline.

Early discernible signs of strength appeared in Toronto, where monthly sales in March outpaced those recorded a year earlier, and the average house price crossed the $800,000 benchmark for the first time since October 2018.

Year to date as of the end of November, non-seasonally adjusted residential sales in the Greater Toronto Area (GTA) were at 83,824, 12.2 per cent higher than in the same period a year ago, according to Canadian Real Estate Association data. The national figures are influenced by Canada’s largest housing market and reached 461,212 units, 5.6 per cent higher than last year.

Housing sales in the Greater Montreal area were up by 9.1 per cent and approaching almost 48,000 sales, while Ottawa, Hamilton-Burlington and Winnipeg also showed strength.

Out west, the urban housing markets in Greater Vancouver, the Fraser Valley and Edmonton reported fewer year-to-date sales in November than the previous year, while Victoria and Calgary reported modest increases of less than two per cent.

Non-seasonally adjusted housing prices in Canada reported a modest 2.1 per cent increase as of the end of November, with the upsurge in the east countered by a decline in some western markets and the Prairies.

Although sales and prices are climbing, year-to-date listings have declined 2.1 per cent to 790,263. The decline is much more pronounced in the struggling housing markets in Western Canada and the Prairies. For example, listings in Calgary were down 10.3 per cent.

A key metric to watch in the resale housing market is the sales-to-listing (SLR) ratio, which serves as a proxy for supply. A rising SLR indicates that sales are rising faster than new listings, which implies that the amount of available housing stock for purchase is not expanding as fast as the pool of homebuyers.

Such market conditions pitch potential buyers against each other, putting additional pressure on housing prices, which will escalate not just because of higher demand, but constrained supply as well. The year-to-date SLR in the GTA hit 56.2 per cent in November, which is a 7.2 per cent jump from the same period in 2018.

If the current trends persist next year, housing sales and prices are expected to rise across most of Canada, except for the Prairies. But 2020 could end up being a seller’s market if new listings fail to match the growth in sales.

Financial Post

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 www.hmbulletin.com.

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Dramatic revival in Ottawa's industrial real estate sector – Real Estate News EXchange

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IMAGE: A tract of vacant land, owned by the National Capital Commissin in east Ottawa, is being turned into a new industrial business park by local developer Avenue31. (Courtesy Avenue31)

A tract of vacant land, owned by the National Capital Commission in east Ottawa, is being turned into a new industrial business park by local developer Avenue31. (Courtesy Avenue31)

For decades, Ottawa and the National Capital Region were afterthoughts in the industrial real estate market. No more.

A dramatic change in thinking about commerce and supply chains has thrust the city of just over a million people onto the radars of companies which – quite justifiably considering conditions at the time – would barely have given it a passing glance five or 10 years ago.

Though it’s still a relatively small player with an inventory of just over 46 million square feet, Ottawa is becoming a significant distribution hub for e-commerce giant Amazon. Major developers and owners such as Broccolini, PROREIT, Manulife Investment Management, newcomer Avenue31 and others are becoming more and more active.

“While Ottawa certainly isn’t as large as some of the other markets, we are in lockstep with every other market in Canada,” said Warren Wilkinson, the managing director of Colliers’ Ottawa office, while introducing an industrial panel at the recent virtual Ottawa Real Estate Forum.

Availability is at 2.3 per cent and declining. Leasing rates are among the highest in Canada at $11.50 per square foot (up six per cent year-over-year) and rising.

Major new industrial developments

There’s well over three million square feet of new space currently under construction (much of it in a new 2.88-million-square-foot Amazon warehouse) and several other major projects in pre-development. 

Just east of the city, in Casselman, Ford just announced a long-term lease for a 531,000-square-foot distribution centre being built by Montreal’s RoseFellow and Bertone Development Corp. to service Eastern Canada.

All this is occurring in a market which has traditionally been dominated by small- and medium-bay product for firms servicing local clients only. Only 23 per cent of the city’s existing industrial inventory involves spaces larger than 50,000 square feet.

“Quite frankly for groups looking to occupy or purchase space in Ottawa, larger than 50,000 square feet, the opportunity is limited,” Wilkinson noted. Actually, it’s almost non-existent.

So the market is racing to catch up with two suddenly red-hot trends – the e-commerce explosion and the realization that international supply chains are vulnerable to events such as pandemics and other potential disruptions.

Supply chain woes add to industrial demands

“Why is there so much development going on?” Wilkinson asked, then proceeded to answer his own question.

“The one real reason is, I think during the pandemic what we’ve all noticed is what real demand looks like. We also had some champions in the industry step forward and start building new industrial supply.”

Glen D’Silva, managing director, portfolio manager for Manulife Investment Management, took that a step further, noting companies are now facing serious product and raw materials delays.

“If they are supplying a manufacturer, they can’t afford to have delays,” he said. “The just-in-time delivery system has failed us. Everybody is going to want those components closer to home.

“I think you’re going to see a lot more manufacturing of those components within North America so you can have more distribution of those within North America and not from overseas.

“We appeared not to learn from SARS and didn’t have supplies on hand when COVID hit, and I don’t think any government is going to let this happen again. People will remember this very clearly.”

Hidden advantage for Ottawa industrial

Industrial and warehousing expansion is happening across Canada, but Ottawa has one advantage which, perhaps, had not been readily apparent in the past.

“Ottawa has the greatest access to people within one working day,” said Ryan Semple, director of business development for Avenue31.

The Ottawa-base firm has amassed several development sites in the area and is constructing Phase 1 of a new industrial park on land leased from the federal National Capital Commission along Highway 417 in the East End.

It has plans to build almost two million square feet of industrial during the next few years.

Semple cited a 2020 CBRE Ottawa Industrial Update report which examined how many people live within one day’s driving access from major Canadian cities (roughly 400 kilometres in one direction). Ottawa is within one day of about 15 million people – a larger reach than either Montreal or Toronto.

“So businesses that want to provide product to their consumers within one day are now looking at Ottawa as a place to relocate or consolidate,” he said.

IMAGE: Rendering from a concept plan submitted by Broccolini to permit a light industrial property of up to 65,000 square metres, and 30M in height, in a south Ottawa location along Highway 416. (Courtesy Broccolini)

A concept plan submitted by Broccolini calls for a building of up to 700,000 square feet, and almost 100 feet in height, in a south Ottawa location along Highway 416. (Courtesy Broccolini)

Broccolini is currently leading that charge. The Montreal-based firm built a million-square-foot East End distribution centre for Amazon two years ago and is developing the massive five-level Amazon facility in South-End Barrhaven.

Among its other holdings is a plot of land just outside the urban boundary where it plans a 700,000-square-foot distribution centre which would tower almost 100 feet high.

Challenges to find entitled, serviced land

The firm’s vice-president of real estate, James Beach, noted that despite these huge projects there are significant development challenges in the city, both inside and outside the Capital Greenbelt.

“Challenges within the Greenbelt (are) land availability, there is not a lot of it available,” Beach said. “If land is available, use of the entitlement process to render it appropriate for these new-style, e-commerce developments can be onerous and sometimes a very long process.

“Outside the urban boundary? Lots of land, but we kind of come back to the same point, zoning. Does the zoning exist? And even if it does, does the infrastructure exist to support the zoning?”

Yet the demand remains. Both for development and to acquire completed assets. Broccolini sold a 90 per cent interest in the first Amazon distribution centre to Concert.

PROREIT sees strong Ottawa industrial fundamentals

Acquisitions are where PROREIT has been active in the city. As the trust has increased its industrial portfolio weighting, it acquired three additional Ottawa properties comprising 283,000 square feet earlier this year and is looking for more.

“We’ve pivoted recently quite significantly to industrial,” said Mark O’Brien, PROREIT’s managing director of operations. He lauded the region as: “Very stable, good demographics, good household income and good population growth, so certainly it’s a market we want to grow in.”

He also said the tight vacancy is good news for firms holding existing product. The restrictions “just help our assets grow in value. 

“Take a bandwith of between four and 10 per cent annual growth on rental rates. You can close your eyes and run industrial product and get a 20 per cent cash IRR without having to do anything, and you add cap rate compression on top of that.

“I mean, you realize how many people are trying to chase these assets. It’s all to our benefit.”

Relieving these pressures can only come from one source. Semple cited the letters ASWL: “It all starts with land. 

“It all starts with shovel-ready land, It all starts with zoned land. . . . That’s going to be the biggest challenge, shovel-ready zoned land.”

Beach said there is land available, much of it controlled by government, or NGO-type agencies. However, that doesn’t mean it will be easy to build on. The South-End Ottawa airport authority property is one example.

“They have several hundred acres of industrial airside land available and relatively ready to go, however we go back to the discussion about entitlement, you go back to the discussion about servicing, transportation.

“Those lands need a little bit more work and really it will take a catalyst tenant and a large-scale development to warrant a first phase and for those infrastructure dollars to be implemented.” 

He said it will happen. The only question is, when?

EDITOR’S NOTE: This article was updated to indicate that RoseFellow and Bertone are developing the Ford facility in Casselman. RENX apologizes for the error.

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Man making $40k/year bought $32m in Vancouver real estate via CCP-linked offshore accounts – Business in Vancouver

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Man making $40k/year bought $32m in Vancouver real estate via CCP-linked offshore accounts – Economy, Law & Politics | Business in Vancouver


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Capital Region real estate selling fast – The Saratogian

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CAPITAL REGION, N.Y. — Residential real estate is selling fast, according to the most recent report from the Greater Capital Association of Realtors.

Last month, a typical single family in the Capital Region sold just above 100 percent of the original list price in less than a month on market. That’s a reduction of 22 days compared to last September.

A limited supply of housing and increased selling prices are keeping the Capital Region market hot, the report said. Homes are still selling at a brisk pace and listing prices  continue to grow steadily over the previous year.

Active inventory continues to fall short and is down 22 percent from a year ago with just  2,874 units on the market.

“With new listings down 23 percent to 1,453, the uptick in inventory we saw last month seems to have hit the pause button,” Greater Capital Association of Realtors CEO Laura  Burns said in a press release.

Homes are still being quickly snapped up as demand remains elevated. Greater Capital Association of Realtors president Jeffrey Decatur of Re/Max Capital added, “It’s difficult for inventory to grow when shoppers are still actively buying homes and the pace of new sellers is weakening.”

Existing home sales throughout the Capital Region were down in September, falling 14.5 percent.

The decline in existing home sales coincides with rising sales prices, which have continued to soar into fall, with the median sales price of existing homes up 11.6 percent to $270,000.

New construction provided 127 new listings last month, down by 41 percent on the 217 new homes that came to market in September 2020.

This shortage has played a part in the median sale price of new construction rising by seven percent last month to $425,346.

Declining affordability is showing an impact on homebuyers. According to Freddie Mac, though mortgage rates are still historically low, many potential homebuyers are staying on the sidelines due to high home price growth. Rising mortgage rates combined with growing home prices make affordability more challenging for potential homebuyers.

As the Capital Region heads into the cooler weather, the market often cools as well, but if  Covid-19 and the Delta variant concerns don’t make it to the rearview mirror, the report said, the cold weather might not affect the hot market.

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