November 3, 2017
Foreign Buyers Return to BC, Toronto to Hit $1,000 Per Square Foot, and Priced Out Millennials: Weekly Real Estate News Recap
Toronto Condos to Hit $1000 Per Square Foot
Condo prices have been on a tear in the City of Toronto, and are set to hit $1,000 per square foot before the multi-family housing market calms in 2018, reveals the latest report from Urbanation.
The condo market think tank, which tracks trends in both the resale and pre-construction segments, says the average price per square foot for existing condo inventory has already reached $991, and an average of $951 for new construction.
While this can be skewed by units with luxury price points coming to market, overall rising prices will soon start to dissuade buyers from the condo market, especially those seeking more affordable housing, said Shaun Hildebrand, head of Urbanation. “At current prices, demand will begin to moderate. Higher levels of inventory will emerge and that will help settle the market activity down,” he stated, adding that resale prices are already starting to moderate.
The average price per square foot for a resale unit fell by $2 to $648 in the third quarter. It’s the first time in three years that prices have declined.
As for the perceived fallout from the new rental rules introduced as part of the Ontario Fair Housing Plan, Hildebrand says it has not dissuaded investors or landlords from purchasing condo units, but could convince them to sell faster.
GTA Home Sales Rebound in October
The Toronto Real Estate Board has released its October data, and it reveals home buyers are returning to the market in higher numbers. Total sales were up 12 per cent from September to October at 7,118 homes – and while that’s a marked improvement from the slower activity seen over the summer and early autumn, it’s also a historically high surge, says TREB’s President Tim Syrianos.
“Every year, we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous 10 years. So, while the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” he said.
The average price for all home types in the TREB region is up 2.3 per cent year over year to $780,104, with condos leading price growth, rising 21.8 per cent to an average of $523,041. Detached homes also saw improvement, with sales improving 13 per cent month over month. However, sales are still down a whopping 29.8 per cent from last October, and prices softened slightly by 2.5 per cent to an average of $1,008,207.
Foreign Buyers Returning to BC Real Estate Market
The number of foreign buyers of Metro Vancouver real estate has been on an uptick, accounting for 5 per cent of all transactions in the region in September, according to new government data. That’s a hefty increase from the 0.9 per cent recorded last August when the provincial government implemented a 15-per-cent tax on real estate purchases made by non-residents. As a result, foreign buyer activity plunged from 24 per cent from the month prior, with detached and luxury home sales sliding to new lows.
BC NDP Finance Minister Carole James stated her office is reviewing the effectiveness of the tax, which was put in place by the previous Liberal government.
“I’m concerned about the role of foreign speculation in B.C.’s housing market… All options are on the table as we look at the impact the tax has had on the housing market,” she stated in a release.
The province has made a few tweaks to the foreign buyer tax since its inception on August 2, 2016, as critics said it was unnecessarily harsh, or even discriminatory. In January, B.C. Premier Christy Clark announced amendments to soften the impact of the tax on certain groups; those who have a permit to work in the province are now exempt. Foreign buyers who purchased a home and paid the tax following August 2 are also eligible for a retro-active exemption, and can apply for a rebate if they’ve become a permanent resident or Canadian citizen within the year following their purchase, and that they’ve lived in the home as their principal residence.
Toronto Housing Prices Driving Away Young Professionals
The high cost of housing in the Toronto real estate market isn’t just relegating millennials to the rental market for longer – it’s impacting their ability to live where they work while simultaneously paying down debt or saving for retirement, reveals a recent study.
A survey of over 800 young professionals, conducted for the Toronto Region Board of Trade by Environics Research and sponsored by the Toronto Real Estate Board and Options for Homes, finds highly qualified and educated millennial workers are struggling to get on the homeownership ladder in Toronto, despite often earning a competitive wage.
“Our survey covered a very specific demographic, representing our region’s top earning and most highly educated young professionals,” said Jan De Silva, president and CEO of TRBT. “If they are finding the market challenging, what does it mean for everyone else?”
A full 83 per cent of respondents said housing costs make saving for retirement a challenge, while 65 per cent said it was difficult to pay down debt. However, 86 per cent still indicated they intend to purchase a home, and 30 per cent expect to over the next two years. Of those, 33 per cent of respondents anticipate needing financial help from family and friends.
Fifty-eight per cent of respondents are currently renters, with 75 per cent saying the reason they don’t own is they can’t afford a down payment. Location is an issue for 60 per cent, while 46 per cent aren’t sure if they can carry the costs of homeownership.
Heather Tremain, CEO of Options for Homes, says that expensive housing has economic implications beyond homeownership. “When young professionals and families can’t move from renting to homeownership, it affects their quality of life. When they’re forced to commute it’s a huge economic, social and environmental toll. Enabling people to live where they work creates value for us all,” she says.
New Zealand Bans Foreign Buying
It may be a world away, but current issues in New Zealand’s housing market sound remarkably like those on Canadian soil – the country’s new liberal Labour leadership has announced it will outright ban foreign purchases of real estate, following spiking home prices and poor affordability for NZ residents.
“Foreign speculators will no longer be able to buy houses in New Zealand from early next year. We are determined to make it easier for Kiwis to buy their first home, so we are stopping foreign speculators buying houses and driving prices,” said incoming Prime Minister Jacinda Ardern. “Kiwis should not be outbid like this.”
The ban, which will go into effect by early 2018, will exclude Australians, NZ residents and citizens. As well, out-of-country buyers can still purchase land with the intention of building a residence on it.
Prices have risen 56 per cent over the last decade in Aukland, NZ’s largest city, with the rate of affordability the lowest since 1951. Banning foreign buyers was a campaign promise for Ardern, who is keen to have it implemented as soon as possible – but it has drawn criticism from sceptics, who say the decision isn’t backed by real data.
“This is a policy that’s designed to solve a political problem,” said Steven Joyce, opposition finance spokesperson. “Evidence in both Australia and here in New Zealand is that overseas buyers don’t have a significant impact on the housing market.”
The previous government claims foreign speculative activity accounts for just 2 per cent of real estate purchases in the country.
Toronto Parents Say Condo Developers Should Foot School Bills
That the population of rapidly-growing condo communities is outpacing local school capacity has been a heating issue in Toronto in recent years. Now, a group of parents are fighting for building developers to financially contribute to the upgrades schools need to accommodate the surge of new students.
The Toronto Star reports a number of Willowdale parents and Toronto District School Board trustees will publicly meet with education minister Mitzie Hunter to challenge what they say is an outdated school funding rule. At the heart of the issue is a provincial requirement that disqualifies the TDSB from accessing developer levies, which builders pay to support infrastructure in the neighbourhoods where they’re building.
The rule states that in order to access developer levies, a school board’s overall enrolment must exceed its capacity. However, given Toronto’s size and variety of neighbourhoods, the population of schools varies wildly. Take, for example, Vaughan Road Academy – the alma mater of Toronto rapper Drake – which was shuttered due to low enrolment last year. Meanwhile, portables sprout like mushrooms in school yards along the Yong-Eglinton corrider, where catchments have had to close to new student enrolment due to overcrowding.
In an interview with Zoocasa, Krista Wylie, co-founder of the Fix Our Schools campaign, says the mentality behind the regulation’s structure is no longer applicable to today’s residential development. “That regulation was approved over two decades ago,” she says, adding that at the time, most growth was happening outward into the surrounding 905 region.
“We were living in a land of suburban development… the wording of the regulation is such that it’s perfect for an area like Peel or Mississauga, or Milton, or Brampton where you’ve got not just condos going up, but big housing and townhouse developments being built up on greenspace.”
While the rules’ structure is intended to require developers to pay for new schools in new neighbourhoods, it ironically falls short of helping schools in an established board in an existing city experiencing a surge in building and population.
Wylie adds that while Toronto’s Catholic schools can access levy funding, they’re limited to the purchase of new land only, rather than using funds to make sorely-needed improvements to existing schools. According to the Star’s report, there is a $15-billion repair backlog across both school boards, including the repair of furnaces and roofs.
Chad Kroeger Lists Palatial BC Mansion
Nickleback frontman Chad Kroeger has put his luxurious Abbotsford property on the market for a cool $8.98 million – and this is how he reminds us of how rich he really is! At a gargantuan 20,135 square feet, with six bedrooms and eight baths, this is a truly impressive property – so much so, in fact, that the broker’s remarks refer to it as the “epitome of luxury and design with far too many features to list.” Well, here are a few of them:
- An indoor ice rink (not included in the living space square footage!)
- A waterfall pool and swirl pool / hot tub
- “many sundecks and patios”
- 10-car parking
- Theatre room
- Great hall-style dining room with vaulted ceilings
- Spacious equestrian barn and riding paddock.
It’s truly the perfect way to live like a rockstar.