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Why real estate investments are uniquely positioned for ESG impact – Wealth Professional

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The value of social factors may also come in with respect to resolving difficulties in rent payments. For some tenants who are unable to make their monthly dues, the problem stems from a language barrier that hinders them from getting government aid they’re entitled to, in which case the landlord can step in and provide assistance, especially in cases where the tenant has been historically conscientious and trustworthy.

Going beyond specific tenant-landlord relationships, Floyd said real estate companies can also reap long-term benefits from becoming established pillars of the community. Embedding themselves and establishing goodwill through local engagement, she said, can make it easier to get approval for projects or rezoning requests from city and local officials, reducing risks and costs to future developments.

“We’re in the earlier stages of putting a number to social factors, but we can already feel or see its value in the returns of the capital market of the companies over long time periods,” Floyd said. “But this is becoming even more effective now. People will be increasingly conscious about putting money into companies that don’t consider those concerns. In effect, those who invest in such companies will see them as riskier, which means they’ll have to offer a richer risk premium.”

There are also issues to consider from a governance standpoint. Aside from questions of corruption, executive pay, ownership, and control, real estate companies are feeling the effects of a broader push for better diversity and gender representation at the board level. Diversity regulations are generally applied in Europe, though they aren’t much of a concern; real estate companies in certain Asian jurisdictions, Floyd said, generally require more encouragement.

Tracking ESG data and performance, she added, has become a key concern for European firms who seek to attract institutional investment. The European experience already shows how money flows can be influenced not just by a demonstrated history and potential for returns, but also compliance with regulatory standards defined by non-financial factors. Frameworks such as those established through the Paris agreements, as well as the UN Sustainable Development Goals and the new EU taxonomy for sustainable activities, have quickly become targets to hit for European companies, as well as North American equity and debt issuers who do not want to fall behind.

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Towns grapple with big-city-like real estate boom

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Real Estate Sales In September

Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the COVID-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services.

The growing demand has led to some small Canadian communities seeing house prices jump more than 75% in one year.

“The small towns are getting hit hard. They’re getting interest like they’ve never had before,” said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city. (Graphic: Annual price gains in select Canadian cities and towns,)

The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends.

The boom in Canada has builders flooding into smaller communities. More homes mean more demand for drinking water and wastewater treatment, forcing some towns to fast-track expensive infrastructure projects.

For locals, the influx of city people is a double-edged sword. New residents are breathing life and diversity into places where – before the pandemic – schools were closing and many businesses struggled through the winter.

But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff.

Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.

“You want people to come here and help build the community. But at what cost to the people who have been here for literally generations?” said Nancy Cherwinka, who lives in Prince Edward County, a peninsula in Lake Ontario known for its wineries and beaches.

MOVE TO THE COUNTRY

Roughly 75,000 people left Toronto and Montreal – Canada‘s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001, according to the latest Statistics Canada data.

For Prince Edward County, about 200 km (125 miles) east of Toronto, that migration has helped drive house prices up 78.5% on the year, putting ownership out of reach for many local residents. The average selling price of a home there in April was C$740,112 ($610,000).

“Now the rental market has gone nuts,” said Chuck Dowdall, executive director of the Prince Edward County Affordable Housing Corporation, with potential home buyers giving up on buying, and renting instead.

The rental crunch is making it difficult for small businesses to hire and retain staff, even if they pay above minimum wage.

It is a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small bunkhouse next to their brewery to house workers temporarily and have even had staff stay with them. This year, they arranged a lease for a three-bedroom home for employees.

“You have to be creative,” said Parsons, adding they still lose out on talent because of the housing challenge.

IF YOU BUILD IT

To tackle the housing crisis, Prince Edward County is planning for more than 3,000 housing starts through 2026, including dozens of below-market rental units.

That boom is putting pressure on municipal services, notably aging water infrastructure. The region is hastening plans to spend C$68 million ($56.2 million) on its water and wastewater system, with developers on the hook for much of the bill.

New-home construction is also surging in other smaller centers across Canada, with rural starts in the first quarter of 2021 at their highest point since 2008. (Graphic: Canada rural housing starts, )

In Collingwood, Ontario, a four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to pause all new-home construction while it sorts out how to address its critical water shortage.

In Nelson, a former mining town in British Columbia’s Kootenay mountains, a pandemic-driven explosion of infill and coach housing is forcing the small city to expand its wastewater and water infrastructure sooner than planned.

“We were heading down that road anyway … but now it’s been accelerated. So that’s going to put us a little bit on our back foot,” said Mayor John Dooley, adding that the sewage treatment plant alone will cost about C$25 million.

Dooley said Nelson hoped to split the costs with the province and federal government.

Back in Prince Edward County, about half the children at a rural daycare are new to the community since the pandemic. At the sister daycare in town, a quarter of students are newcomers. Enrollment at local schools is also up, reversing a trend that had led to closures in previous years.

More young families living in the community will ultimately be beneficial, said Cherwinka, as long as they stick around once life goes back to normal.

“Hopefully they stay, hopefully it’s not just a pandemic solution,” she said. “Hopefully it’s long term.”

($1 = 1.2092 Canadian dollars)

 

(Reporting by Julie Gordon in Ottawa; Additional reporting by Andy Bruce in London; Editing by Peter Cooney)

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Canadian home prices, sales to moderate but remain high

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By Julie Gordon

OTTAWA (Reuters) -Canada’s home sales and price growth will moderate over the coming years from the unsustainable levels of 2020, but remain elevated, with housing starts expected to stabilize by the end of 2023, the national housing agency said on Thursday.

While the pace of price growth is expected to ease as mortgage rates increase and buyers face already high prices, home prices could climb 14.4% on average in 2021, the Canada Mortgage and Housing Corporation (CMHC) forecast in its spring market outlook.

Its report does not forecast any annual price declines in the 2021-2023 period.

“Economic conditions are expected to return to pre-pandemic levels by the end of 2023 … This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period,” Bob Dugan, chief economist at the CMHC, said in a statement.

Dugan warned that significant risks that could impact the forecast include the path of the COVID-19 pandemic, a faster-than-expected increase in mortgage rates, and a reversal of the urban exodus that has driven up prices outside large cities.

The CMHC said last May that it expected housing starts, sales and prices to plunge amid the pandemic, with prices not expected to recover to pre-pandemic levels until 2022.

But home sales and prices soared to record levels, with the average selling price up 31.6% in March 2021 from a year ago. Housing starts also hit a record high in March.

Rental demand is also expected to recover through 2023 as immigration and inter-provincial migration resume, and as students return to campus, the agency said.

(Reporting by Julie Gordon in OttawaEditing by Paul Simao)

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'Unprecedented' demand driving real estate sales and prices in Canmore – CBC.ca

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It was just minutes after a new listing for a $1.15-million home in Canmore, Alta., went online when real estate agent Jill Law’s phone started buzzing.

Three days and 31 showings later, she had received 11 offers for the property, including one from a family who wrote a personal letter to the seller and included a family photo.  

It appears to be the winning “bid” in a soaring real estate market that is seeing more multiple offers and properties selling above the asking price. 

Real estate professionals, market watchers and long-time residents say there’s a combination of factors at play, including the pandemic and low interest rates. But the sales surge and rising prices are raising concerns in the community — which still considers itself a place where families can raise their children rather than an exclusive playground for the privileged.

The average house price in Canmore is closing in on $1.1 million, according to the Alberta Real Estate Association’s benchmark price.

“Sales are up, the inventory is down,” said Dan Sparks, one of Canmore’s busiest real estate agents, who has been selling homes in the Bow Valley for 20 years.

This home on Grotto Road received 11 offers in three days. The offer that was chosen is believed to be several thousand dollars above the $1.15-million asking price. The family wrote a personal letter to the seller and included a family photo. (Google Maps)

But there are fewer homes to sell. There are approximately 100 homes on the market right now. When you factor in the number of sales, it works out to a one-month supply, down sharply from the usual five- to six-month supply at this time of year.

What does all of that mean? To put it mildly, it’s a sellers’ market.

“We’ve had exceptional sales throughout the Canmore area, but the listings and the supply haven’t kept pace,” said Ann-Marie Lurie, the chief economist with the Alberta Real Estate Association. 

“And that’s what’s causing some of the price gains that we’re seeing in that market.”

And some of those price gains have been astronomical.

A condominium hotel unit in Canmore recently sold for $50,000 over the $600,000 asking price. The seller had purchased the unit for $350,000 in 2016. (ReMax Alpine Realty)

Kelly MacMillan with ReMax Alpine Realty says she just sold a hotel condominium unit for $50,000 above the asking price.

The two-bedroom, two-bathroom condo — which has the potential to generate nightly hotel revenue — was listed for $600,000. The sellers purchased the property four years ago for $350,000.  

“There was an opportunity to cash out of the marketplace,” said MacMillan.

“They’re very happy,” she said of her clients.

Pandemic pushes demand

Sparks calls it COVID fatigue. Although he has been taking calls from people in Toronto and Montreal — and even a family in Germany — a good portion of buyers are people from Calgary and Edmonton who have been stuck at home for over a year and are looking for a change of scenery, he says.

Real estate agent Dan Sparks says buyers from Calgary, Edmonton, Toronto and Montreal have purchased or are considering purchasing homes in Canmore as a result of the pandemic. He says people have the flexibility to work from home on a permanent basis and are choosing the resort town as their base. (Bryan Labby/CBC)

“They’ve been working from home for a while, and they can continue to do so. And if they can do that, then they’ll do it where they want to be,” he said.  

MacMillan agrees.

“Canmore, especially recreational markets, where people are discovering that they don’t have to be where they work. They have that work-from-home flexibility.”

Housing affordability

As the inventory dwindles, so do the opportuniites to find a traditional, single family, detached home. Sparks says last week there were just two homes listed for under $1 million — and only five were on the market for under $1.5 million.

Sparks spent several years on the board of directors of Canmore Community Housing, a town-owned corporation tasked with creating affordable housing options for people and families.

A 10-unit townhouse project is under construction and is expected to open in early 2022.

Construction has started on a 10-unit townhouse project on Lawrence Grassi Ridge in Canmore, Alta. It’s being built by Canmore Community Housing in an effort to increase the supply of affordable housing in the mountain town west of Calgary. (Bryan Labby/CBC)

Already there are 150 people on the waiting list to either buy or rent a property.

“It’s basically just fingers in the dam,” said Sparks.

“Housing affordability in Canmore is always going to be a problem. We’re just going to constantly be working on that problem.”

The average condominium price in Canmore is now $500,000. 

New development, more affordable housing?

Canmore town council recently approved a series of amendments to the latest development plan for the Three Sisters Mountain Village (TSMV) on the east side of the community. 

One of the changes is a proposed requirement that the developer include 20 per cent affordable or subsidized housing — double the amount proposed by TSMV. A spokesperson for the developer says the company is still assessing the impact of the amendments and is withholding comment until the plan goes back to council on May 11. 

The proposed area structure plan for Three Sisters Mountain Village in Canmore will include a requirement that 20 per cent of future development fit the town’s affordable housing requirements. The plan will be debated again on May 11, 2021. (Bryan Labby/CBC)

The mayor says that while it will take years for those units to become available, council had to act now.

John Borrowman says young families have been leaving the community for years because they can’t afford to stay.

“We’ve been bleeding the next generation like that for years,” he said.

“If we don’t do something to ensure affordable housing is a big part of our future, the town will become … it will only be a place for the very wealthy.”

New housing options, slow uptake

The town recently said it would consider secondary suites to be built or legalized in existing neighbourhoods. Financial incentives are being offered to homeowners to add what it calls “accessory dwelling units.” 

So far, only three homeowners have applied for the $20,000 grants. 

A recently completed secondary suite inside a new $1.4-million duplex in Canmore. The town allows ‘accessory dwelling units’ in existing neighbourhoods and offers up to $20,000 in grants to help homeowners add the suites and expand the community’s affordable housing stock. (Bryan Labby/CBC)

Dale Hildebrand is a local real estate agent and builder. He recently sold two duplexes that were listed for $1.2 million and $1.4 million. One of them includes a separate, one-bedroom suite. 

Hildebrand’s next project is in the early stages, but he’s hoping to redevelop several residential lots near downtown into 16 to 18 townhouses. Several will be purpose-built for employers to purchase for their employees.

“They can … rent them out to their employees at a subsidized rate,” said Hildebrand.

But as demand remains strong and prices climb, the market may be too hot for employers to consider employee housing.

Infill housing in some older neighbourhoods in Canmore, Alta., is increasing density. Two single family homes are being replaced by three duplexes that are expected to sell for $1.2 million to $1.4 million each. (Bryan Labby/CBC)

It’s a problem for the community, which has had trouble attracting employees.

“It’s harder for young people to find affordable accommodation,” said Michel Dufresne, the director of the Job Resource Centre for Banff and Canmore.

“It also makes it harder for small businesses to provide that housing for their employees. It’s become a bigger play when you have to buy a house for a million dollars to house five people,” he said.

“It’s very costly.” 


Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at bryan.labby@cbc.ca or on Twitter at @CBCBryan.

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