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Toronto real estate prices went up 24 per cent in August – NOW Toronto

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Experts are not counting on September to end the hot Toronto real estate market’s record breaking streak


Toronto real estate prices hit yet an all time high for the third consecutive month.

The average GTA house price rose to $951,404 in August, according to the Toronto Regional Real Estate Board (TRREB). That is a 20.1 per cent increase year-over-year. The average house price in August for the city of Toronto was $1,012,506, which is up from 24 per cent year-over-year.

“Competition between buyers was especially strong for low-rise home types,” says TRREB’s Chief Market Analyst Jason Mercer in a statement. He adds those homes are largely responsible for the price growth.

The average price for detached homes in the city are up to $1,505,100, a 21.4 per cent increase year-over-year. Semi-detached grew even more, rising 21.9 per cent to $1,166,226. Condos prices rose 8.7 per cent to $673,174.

Sales in August were up by 40.3 per cent year-over-year. The unusually high number of transactions – 10,775 – is the result of pent up demand after the COVID-19 pandemic stalled the market in spring.

WE Realty broker Odeen Eccleston adds that the ability to host open houses again added to the August frenzy. She explains that demand for properties under $1 million is particularly intense, since buyers don’t need to fork over a 20 per cent deposit for those purchases.

Toronto Real Estate decline?

Market watchers have anticipated a potential price decline in Toronto real estate beginning September.

The Canada Mortgage Housing Corporation’s spring forecast estimated that the average price for Toronto homes could fall beginning this month. The reasons include the lack of immigration, COVID-19’s impact on the economy and an end to aid programs like CERB.

Toronto real estate brokers also expected more home listings flooding the market because mortgage deferrals come due in September. Now, they aren’t so sure the decline will come.

“Inventory is still in check,” says Meray Mansour, a realtor with Re/Max Hallmark Realty. “Demand is still there.”

Mansour isn’t counting out the possibility of a decline because there’s still so many variables at play. She says we can’t measure how many people are strapped or have businesses that have gone under. Nor can we measure how many people have safety nets like rental income from basement apartments that help weather any COVID-19 impact.

Both Eccleston and Mansour believe the Toronto real estate market in particular can weather the worst expectations. Eccleston imagines a dramatic scenario where 10 per cent of Canadian mortgage holders can no longer defer and list their houses.

“The fact is in city of Toronto and the surrounding neigbourhoods, we could use 10 per cent more inventory,” says Eccleston. “Perhaps that will temper the bidding wars a bit. I just don’t see prices driven dramatically down. The bottom line is these real estate investments mean so much to our populace. And no one is trying to settle for less unless they absolutely need to.”

Human behaviour

Mansour notes that the condo market is flooding with inventory. She acknowledges that the downward pressure on condo prices could eventually affect low-rise house prices. That would only occur if large volumes of buyers priced out of houses start settling for condos. Such behaviour has caused fluctuations in the past. But Mansour adds that trying to predict that kind of human behaviour is futile. Real estate buyers don’t necessarily follow logic.

“When prices fall, buyers don’t tend to jump on it,” says Mansour. “They tend to sit back. It’s a good time to buy, but they’re scared because the market dropped. But whenever the market is crazy, buyers are like, ‘Oh my god. Lets buy something before there’s nothing left!’ It’s a weird psychological thing we have as humans.”

Realtors have also noticed that working from home conditions due to the COVID-19 pandemic have inspired an exodus.

People are headed to the suburbs or leaving the GTA altogether for more affordable, greener and spacious homes.

Eccleston is warning clients to be careful with those decisions, since we don’t know when social behaviour will trend towards the city again. She suggests trying a short-term rental in the country first. Especially because if someone leaves the city, there’s a good chance they won’t be able to afford coming back a couple years from now.

 “You don’t want to be stuck with post-pandemic real estate regret.”

@justsayrad


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CMHC: Nearly Half of Canadian Real Estate Markets Have “Moderate” Vulnerability – Better Dwelling

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More Canadian real estate markets are seeing increased levels of vulnerability. Canada Mortgage and Housing Corporation (CMHC) released the September edition of the Housing Market Assessment (HMA). The assessment shows almost half of Canada’s major real estate markets have moderate levels of risk now. Many markets are also benefiting from government pandemic supports. That means they may be worse off than they appear on paper.

CMHC Housing Market Assessment

The CMHC Housing Market Assessment (HMA) is a straight-forward market look, with a color coded summary. The colors are based on a fool-proof stop light-like system. High levels of vulnerability are marked red. Those with moderate levels of are yellow. Those with no obvious signs of vulnerability are marked green.

There are a few details to keep in mind regarding timelines and sub-ratings. The overall assessment includes the past six quarters of data, but the chart only shows two. That’s why sometimes you’ll see all green for sub-ratings, but a moderate overall assessment. A market that is no longer considered overvalued, can still see a correction to prior levels. 

Speaking of overvaluation, this indicator is pretty much useless during the pandemic. Since the Q2 data uses disposable income, which surged during the pandemic, it’s higher than usual. This is due to government supports, which unpredictably, boosted that number. Since this is temporary, the agency notes overvaluations are “likely underestimated.”

Almost Half of Canadian Real Estate Markets Are Moderately Vulnerable

Canadian real estate has a moderate level of vulnerability. There are now 7 major markets displaying a moderate level of vulnerability. This is up from 5 during the February report. New markets to join these ranks are Moncton, Halifax, and Ottawa. The only market to see the rating lower back to a “low” degree of vulnerability is Regina.

Source: CMHC.

Toronto Real Estate Vulnerability Is “Moderate”

Toronto real estate is a low level of risk for all indicators, except the overall assessment. That may seem somewhat contrary to the Spring price forecast from the CMHC, showing falling prices. However, the report notes the gap between fundamentals continued to worsen. It just failed to hit the threshold line for overvaluation, due to the rise in disposable income.

Vancouver Real Estate Vulnerability Is “Moderate”

Vancouver real estate shows few signs of vulnerability, but is overall “moderate.” The report notes a widening gap between fundamentals and observed prices. They also mention government supports made the gap smaller than it would have been without them. As these supports fade, the gap between prices and fundamentals should widen further.

Montreal Real Estate Vulnerability Is “Low”

Montreal real estate saw two indicators hit moderate, but overall was still “low.” Price acceleration and overheating both reached moderate levels of vulnerability. Overvaluation approached the threshold due to a larger gap between prices and fundamentals, but didn’t breach it. The report notes this gap would be wider without government supports.

The September HMA is a little wonky, and the insights are hidden. The takeaway is less about the indicators, and more about what prevented deterioration. Like the debt-to-income ratio’s sharp decline, the positive note is somewhat deceptive. Until government supports are removed, it’s not entirely clear where the market sits. However, from today’s notes, it’s likely to get worse before it gets better.

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Forum Equity Partners announces new real estate activities – Canada NewsWire

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TORONTO, Sept. 22, 2020 /CNW/ – Forum Equity Partners (“Forum”) is excited to announce that Aly Damji joined the company as a Partner in May 2020, to grow and to lead Forum’s real estate business. Forum is a developer, private capital investor and alternative asset manager with a focus on real estate and private equity. Forum began its principal investment business in 2002 and oversees approx. $1.3B CAD in AUM. Forum has been active in several large-scale projects including a multi-phase student housing project at York University, a rental housing project on the CAMH lands in Downtown Toronto and the Toronto City Airport Pedestrian Tunnel.

Prior to joining Forum, Aly was EVP, Investments & Asset Management for Hullmark, a private urban real estate investor/developer in Downtown Toronto. Aly co-led direct acquisitions and led the firm’s asset management and operations functions. In his 7 years at Hullmark, Aly drove significant growth for the company, helping to increase AUM 15x to just under $1B, and co-led the development of partnerships with large scale institutional partners including a REIT, a Toronto-based university and one of Canada’s largest life insurance companies. Prior to Hullmark, Aly was involved with the acquisition and asset management of hotel assets across North America, and over the course of his career has been involved with principal investments valued at more than $3 billion, arranged debt financings of more than $500 million, and secured over 300 leases resulting in NOI of $40 million.

Complimenting Aly is Hoa Nguyen, who joined the real estate team as an Associate in June 2020. Hoa spent over two years at TD Securities where she was involved with over $2B of real estate transactions. Hoa holds an AACI designation.

Forum is also proud to announce successful closing of a 180,000 SF value-add multi-family project in Ottawa on September 1, 2020. The project is the first acquisition in a new co-led platform in millennial focused housing.

Forum is seeking opportunistic and value-add urban investment opportunities in all asset classes across Canada.

SOURCE Forum Equity Partners

For further information: and potential investment opportunities, please don’t hesitate to contact Aly Damji at [email protected]

Related Links

ttp://www.forumequitypartners.com/

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The state of multi-family real estate in Canada – Mortgage Broker News

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If any readers are friendly with commercial real estate junkies, they’ll already have heard an earful about how industrial and multi-family properties are where the smart money is being spent by CRE investors. But with unemployment still over 10 percent in August, and rents in some of Canada’s tightest markets showing signs of softening, investors eyeing the multi-family space for the first time may feel there’s reason for worry.

Not so, says Geoff McTait, executive director of origination for Timbercreek in Canada.

“The underlying fundamentals of this market are exceptionally strong here in Canada,” he says. “We continue to see a significant shortfall in terms of new supply meeting demand. That remains true, even once things normalize post-COVID.”

McTait does, however, acknowledge that the pandemic has thrown the tiniest of wrenches into the gears of the multi-family space in the form of increased vacancies and falling rents.

He says the rise in vacancies that Timbercreek has been tracking could be tied to several issues: a significant drop in immigration, an increase in the number of renters taking on roommates to cover their expenses, or unemployed apartment dwellers returning home. 

“I think a lot of people are moving home,” he says.

The same factors are contributing to an overall softening in rents, which has made for some tasty headline fodder in Toronto and Vancouver. But McTait feels rents, like housing prices, could see significant growth once the economy levels out, immigration returns to normal levels and those renters who moved home temporarily are ready to get back out on their own.

“Normalization will occur,” he says. “Demand will return, which will put pressure back on pricing. And I think you’ll continue to see a shortage on the new supply side of things coming to the market.”

Where’s the demand? Follow the jobs

With densification being the order of the day in most space-starved metropolitan areas and smaller buildings being economically unfeasible for most developers, McTait says much of the future demand will be for mid- to high rises, even outside major urban areas.

But he is less convinced by the concept of the urban exodus many market hounds have been touting since the beginning of COVID-19. He says most people will still want to live within an hour or so of their employers in case they need to commute part-time or access their offices.

“The suggestion that people will go to rural locations is a nice idea at this point in time – certainly it’s more affordable – but I don’t think it’s necessarily a solution nor practical in the long-term,” he says. “Employment opportunities will continue to dictate where people live and how they live, and that will continue despite the fact that we have this new potential to work from home.”

It’s little surprise, then, that McTait identifies areas like the GTA, Greater Vancouver, and Greater Montreal as markets poised for strong growth in the multi-family sector. But surging secondary markets like Hamilton, Quebec City, and Kitchener-Waterloo will also attract attention thanks to their affordability, strong employment environments and continued population growth.

Even multi-family markets in Canada’s more problematic economies, like Calgary and Edmonton, have “pleasantly surprised” McTait. There may not be a slew of demand for new properties in these cities, but current demand levels are strong enough to support the existing inventory.

“Multi-family, more broadly, is really the one asset class that we’ve seen over time, from primary, secondary, even into tertiary markets, where you do, in general, see strong demand, even in the tougher markets,” where vacancy ranges from three to seven percent, he says.

And Timbercreek isn’t the only company bullish on the future of multi-family real estate in Canada. In its recent Multi-Family Market Update for Victoria, BC, Colliers International said multi-family properties continue to outperform many other asset types.

“This sustained performance leads many to believe that the asset class will weather the storm of the crisis and thrive in the recovery,” reads the report.

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