Fewer Ontario Foreign Real Estate Buyers, A Third Bank of Canada Hike, and the Purrrfect Listing: Weekly Real Estate News Recap

Fewer Foreign Buyers in Ontario

The latest statistics released by the provincial government reveal Ontario foreign real estate buyers have accounted for fewer home transactions since April, when it introduced a non-resident speculation tax as part of the Ontario Fair Housing Plan.

Foreign buyers made up just 3.2 per cent of transactions between May 27 to August 18 in the Golden Horseshoe, the numbers show, declining from the 4.7 per cent recorded between April 24 – May 26.

“Out of the 35,264 transactions outside of the GGH, approximately 1.6 per cent involved at least one foreign entity,” reads the report. “Overall, out of the 101,698 transactions in Ontario, approximately 2.6 per cent involved at least one foreign entity.”

Stated provincial finance minster Charles Sousa on the data to reporters at Queen’s Park, “We put in those measures, and it shows that they’ve been reduced, and it also shows that the market stability is there.”

Foreign speculation has been pointed to as a contributor to unsustainably high real estate prices in Toronto, which the Ontario government took aim at with its 16-measure Plan.

 

A Third Bank of Canada Hike?

Could borrowers be in store for higher interest rates before the year is through? It’s looking more likely following stronger-than-expected jobs data last month. Wage growth broke a 10-year record in August with hourly pay up 1.7 per cent, prompting analysts to think that gives the Bank of Canada reason to tighten monetary policy for a third time in 2017; it has already increased its trend-setting interest rate to a full 1 per cent via two quarter-per-cent hikes in July and early September.

Markets now predict there’s a 76.2-per-cent chance of a hike in December, up from 57 per cent, on news of the jobs report. Paul Ferley, assistant chief economist at Royal Bank of Canada, says this could be a sign that stubbornly low inflation may finally be on an upward track.

“It’s been a bit of a mystery why, with the Canadian economy growing so strongly and the labour market tightening, we weren’t seeing more indications of inflation pressures building,” he told Reuters. “(The) report is suggesting that pressure is starting to rise, and it certainly provides validation in terms of the bank’s move (on September 6th).”

Report Says Canadian Home Prices Will Slow Over 5 Years

 A combination of rising interest rates, tougher mortgage qualification and foreign buyer taxes will effectively lower housing prices in most Canadian markets over the medium term, says a report from Moody’s Analytics. However, Toronto won’t be one of them.

Single-detached home prices in Canada’s largest city will continue to be supported by tight supply and high incomes in the area, reveals the report, though the pace of price growth will moderate to just 7.7 per cent – down considerably from the double-digit price appreciation seen in the spring market. However, house prices are in for a signifcant dip in Edmonton, Quebec City, Regina, Saskatoon and Winnipeg, and for a slighter softening in Montreal, Vancouver and Calgary.

Montréal est Très Chaud

Montréal real estate has been referred to as a “Goldilocks” market for its “just right” conditions, as it continues to be a draw for buyers and investors alike; prices remain within the realm of affordability for average home seekers, while out-of-country purchasers remain unfettered with no foreign buyer tax in the region.

In fact, the Greater Montréal area has just had its busiest August on record, with sales up 8 per cent year over year, and 2,899 homes changing hands. Activity was even brisker on the Island of Montréal, where sales rose 12 per cent.

The region is officially in a seller’s market, according to the Greater Montréal Real Estate Board.

“The Montreal real estate market has been building an impressive track record,” says GMREB President Mathieu Cousineau. “Sales have increased for 29 of the past 30 months, with July 2016 (0%) being the only month in which sales did not increase.”

The Laval, North Shore and South Shore markets saw activity rise 7, 5 and 7 per cent, respectively.

Condos are by far the top performing housing segment, with 19 per cent more sales and 1-per-cent price growth, to a median of $251,500. House sales rose 6 per cent, with a price of $325,000, while plexes (structures with two to five units), saw a 2-per-cent uptick to a median price of $470,250.

There were also 15-per-cent fewer listings that coming to market in August, which will contribute to steadily rising prices. Quelle surprise!

Bodies Must Be Moved Before Hamilton Condo Breaks Ground

A historic Hamilton church wants to build a condo on its grounds, but it faces a macabre problem: the removal of roughly 400 bodies, which have rested under its current parking lot for over a century.

Christ’s Church Cathedral wishes to partner with DPAI Architecture to erect a 12-storey, 110-unit tower on the site, which was originally used as a graveyard as early as 1832, reports the Hamilton Spectator. After closing in the mid 1900’s, the land was eventually paved over – and despite moving many of the gravestones to the city’s main graveyard, a large number of the bodies stayed behind. Their less-than-ideal resting place has long been a point of contention for the church, and resident Reverends say they’d like to take the opportunity to move them to a respectful location. In a meeting with Hamilton city councillors, Rector Very Rev. Peter Wall stated, “It’s time that we stopped parking on top of those people. They need to be released from asphalt hell.”

Exhuming and relocating the remains is anticipated to cost the church $1 million – hopefully that’s not passed onto the living as a special assessment!

Toronto 1-Bedroom Rents Surpass $2,000

Despite recent measures to reduce rent prices in the City of Toronto, average rents continue to rise – and it now costs over $2,000 per month for a mere one-bedroom unit, according to an analysis from PadMapper.

Based on data from 5,418 listings, their September numbers reveal a 5-per-cent increase for one-bedroom rents from August, and up $500 from just nine months ago.

Studio apartments saw the greatest price increase, up 26.9 per cent month over month to an average of $1,650. Two-bedrooms rose 6 per cent to $2,650, three-bedrooms hit the $3,000 mark (though just a 0.7-per-cent increase), while four-bedrooms actually declined 11.39 per cent in price, to an average of $3,500.

Ontario Opens New Land Up to Affordable Rentals

However, it does appear some of the rent protection measures promised by the Ontario Fair Housing Plan are coming into practice. The City of Toronto announced this week it will move ahead with the building of 2,000 market-rent and affordable units, via an agreement to utilize provincial lands for residential development. Lots located on the West Don Lands, Grosvenor Street and Grenville Street will be sold off to developers with proposals to create affordable housing.

Stated Toronto Mayor John Tory at a press conference with Ontario Minister of Housing Peter Milczyn, “There are far too many people who need to live in this city, who we need to have live in this city, who would have an income that wouldn’t allow them to live affordably in this city,” he said.

The plan mandates that 30 per cent of the units created must be considered “affordable”, or under current market rent rates, while the remainder will be “low end” market priced. As a further incentive to developers, the city is waiving $2.79 million in fees and taxes via its Open Door Program.

The Purrrfect Listing?

It’s undisputed that the Internet loves cats – a quick Instagram scroll proves kittens have serious social media power. But while there are plenty of reasons to adore our four-legged feline friends (they wear melon hats! They love boxes! They have grumpy faces!), it is, perhaps, possible to love cats a bit too much.

That may be the story behind this Concho, Arizona listing for a two-bed, one-bath, 2,500-square-foot log cabin, located on a sprawling 20-acre lot for a mere US$240,000. Why such a bargain, you ask? Well, in addition to custom wood and river rock finishes, skylights and fireplace, “Catopia” features:

  • An extensive network of kitty-access-only walkways
  • Great room with built-in stone “Medieval” cat castle
  • An explosion of kitten-inspired décor that covers literally every surface of every room

Put it this way – whoever decorated this place had way too much catnip in their system.

As the listing puts it: “If you love cats this is the home for you! If not bring your sandblaster!”

It goes on to add that buying this home guarantees celebrity cat-like fame, as “Catopia has had three million views and likes online!”.

What a great chance to be a hoMEOWner!

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Related Read: The Price Difference Home Staging Can Make

New Home Construction Still Strong

Despite slower resale trends in Canada’s biggest real estate markets, new home construction keeps booming, with building kicking off on 219,447 dwellings in August, up from the 217,3339 started in July.

It was the eighth consecutive month that housing starts were above the 200,000-unit mark says CMHC Chief Economist Bob Dugan.

“Demand for new homes remains strong, consistent with consumer confidene which reached its highest level in 10 years,” he says.

In Toronto, starts were 8 per cent higher month over month, with condo builds leading activity. “While new construction activity of low-rise homes remains strong, last month’s momentum was mainly reached thanks to a strong increase in apartment starts,” reads CMHC’s statement.

Demand for pre-built units is driving sales, which is in turn prompting developers to initiative new projects, the Crown Corporation says. In fact, this “unprecedented” sales activity will support high rise construction in the city for the near term.

In Vancouver, the pace of new home construction remains well above the historical average, as developers focus on adding density to traditionally single-family suburban neighbourhoods with multi-family dwellings. “Demand for new housing is being supported by employment gains, migration and relatively low mortgage rates,” the CMHC states.

Good News for BC Renters

The new British Columbia NDP government has just released its first budget since taking office in July, and it includes a new commitment to creating affordable housing for renters and the province’s most vulnerable.

The province will invest $208 million over the course of four years to build more than 1,700 affordable rental units. An additional $291 million has also been set aside to create units to house the homeless.

Stated BC Finance Minister Carole James to the legislature: “Putting people first is our government’s priority, and we’re working on a comprehensive strategy to improve housing affordability, close speculation loopholes and reduce tax fraud and money laundering in B.C. real estate.”

About Penelope Graham

Penelope Graham is the Managing Editor at Zoocasa. A born-and-bred Torontonian and quintessential millennial, she has over a decade of experience covering real estate, lifestyle and personal finance topics. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods. Find her on Twitter at @pjeg14.

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