Jordan Maxwell
Other

More than 2,800 condos were available for purchase or rent last month in Toronto, but failed to move to closing. It’s a sign, say some analysts, that buyers are speculating more on condos as a solid investment option. 

“The rental market is still very strong and nothing alarming has happened yet, however certain pockets within the city still have a lot of inventory, such as the Bathurst and Lakeshore area and the area where the Pan Am residents are based on River St.,” said Kenny Wong, an agent and condo manager in Toronto, adding he expects more vacancies after the Pan Am Games wraps up in August. 

The older units tend to have much more favorable pricing for first-time buyers but it’s the newer units that are presenting challenges. 

“The prices are getting so high considering additional closing costs and HST that I am not sure how the buyers will be able to make money,” added Wong.

His comments follow the publication of a National Bank Financial report, which used information from the Canada Mortgage and Housing Corporation and the Toronto Real Estate Board to highlight a record number of vacancies for the month of May; however, economists have been careful not to read too much into the rise. 

“To be sure, the situation deserves monitoring, but one month does not make a trend,” said Marc Pinsonneault, an economist at National Bank, adding that numbers from Realnet Canada showed that the number of unsold condos have been trending down since the second half of 2014. 

However, concern remains a strong factor for agents and something that is deterring first-time millennial homebuyers from entering the market. 

With houses out of reach for many, and the threat of leaving money on the table with condos, more are turning to renting, a move that is affecting agents but is also one welcomed by a firm focused on providing millennials with investment advice.

“You can’t put all your eggs in one basket, especially if you’re trying to invest short-term to lead to a larger transaction,” said David Nugent, CIO and COO or WealthSimple.

“There are more hurdles for condo investment than ever before so you have to be prepared for the realities.” 

Copyright © 2015 Key Media Pty Ltd

Jordan Maxwell
Other

The announcement of Zoocasa’s closure sent agents into a frenzy as many called the shutdown an inevitable scenario for the online brokerage; however, some are stepping up in favour of the service. 

“Zoocasa did a pretty good job of filtering leads and they sure did a lot of advertising,” one agent said on REP‘s website. “I am full-time agent with production numbers to prove my abilities. That’s why they chose me. 

“I did not mind paying back a referral fee. It’s business that I wouldn’t have had otherwise. There were mostly qualified leads, and now some of these people will be my clients and friends for the rest of our lives. I have Zoocasa to thank for that, and [on that front, they were] worth every penny.”

While the Rogers-affiliated service was beneficial for some in passing on valuable leads, most agents rejoiced in its demise.

“The internet has brought about a false sense that buyers and sellers think they know everything that an agent knows and as long as things go smoothly, they are fine,” Debbie Wilding, an agent with Re/Max, wrote on REP‘s website.  

“The minute stuff starts to happen, they call us to fix it, advise them to find a lawyer, mortgage broker, home inspector, contractor, electrician, mould removal specialists, movers and insurance companies. If everyone could do the job of a Realtor everyone would have a licence, but it’s hard and not as easy as we make it look.”

In an email sent to its homebuyer and investor clients, the company broke the news that it would cease to be registered and “will be prohibited from trading in real estate as a brokerage” as of June 22, 2015. 

Analysts are already suggesting that it may hint at what’s to come in September this year, when the Competition Bureau decides whether sold data should be made public.

But for now, the closure of the online brokerage hasn’t deter some from stepping up to pay Zoocasa its due. 

“[Agents] are going to say whatever they are going to say, but I’m proud of what we accomplished,” Darryl Mitchell, Zoocasa’s broker of record, told REP. “We worked hard to provide quality leads, and the stats show that. That’s all that matters.

Copyright © 2015 Key Media Pty Ltd

Other

The British Columbia Real Estate Association has published a report on the implications of foreign buyers on the housing market in the province.

It has concluded that there is no need for government action to tackle the issue at this time.

The report notes that housing affordability is, and has for a long time, been a problem for the Vancouver metro but says that data shows that the impact of foreign investment in such a large and diverse market is small with the exception of some luxury property.

BCREA says that a lack of land supply and densification policies have placed “significant upward pressure” on single-detached properties in the metro region.

Among the association’s findings are that foreign investment makes up no more than five per cent of sales activity and foreigners own “considerably less” than five per cent of housing stock.

However, the report recommends that the level of foreign ownership should be monitored by means of a residency declaration to the land transfer process or a similar procedure.

Copyright © 2015 Key Media Pty Ltd

Other

As Canada’s increasingly hot real estate market pushes many homeowners back to the rental market, a new infographic demonstrates just how many apartment units there are across the country.

The infographic, by Rentseeker.ca, features the amount of rental units in Canada’s largest cities, including Toronto, Montreal, Vancouver and Ottawa.

It may – or may not – surprise you to learn that Montreal actually has more rental units than Toronto, at 534,005 compared to 308,212. Meanwhile, Canada’s hottest real estate market, Vancouver, has just 106,111 rental units available.

Ottawa and Edmonton have a comparable amount of rental units on the market, at 60,086 and 60,032, respectively. Saskatoon (13,017) and Regina (11,647) are neck and neck, while Charlottetown (4,784) and St. John’s (3,538) have the least rental units among all the cities studied.

See the full infographic from Rentseeker.ca here

Copyright © 2015 Key Media Pty Ltd

Other

Vancouver-based Diversified Royalty Corp. has inked a deal with Sutton Group Realty Services to acquire the Canadian and U.S. trademarks and other intellectual property rights for $30.6 million. Immediately following the closing of the acquisition, Diversified Royal Corp. will license the Sutton Group trademarks back to Sutton for 99 years, in exchange for an initial royalty payment of $3.5 million per annum.

The transaction is expected to close before the end of June.

Founded in 1983, Sutton has more than 8,200 agents and 200 offices across the country. “Sutton is a franchise business with a history of innovation and a tradition of leadership in the residential real estate industry,” says Diversified Royalty Group in a news release. “Sutton began with a revolutionary business idea (charging agents a low fixed monthly fee) that remains current and relevant after over 30 years.”

The company says Sutton has a strong presence in B.C. and Quebec (together representing 45 per cent of their total agents). Ontario has about 40 per cent of Sutton’s agents while Alberta has less than five per cent.

Sean Morrison, president and CEO of Diversified Royalty Corp., says in the release: “The royalty acquisition from Sutton is… another step in our strategy of purchasing royalties from a diverse group of high quality multi-location businesses and franchisors.

“Sutton is a market leader with a strong national brand, an attractive business model and experienced leadership – all of which are key success factors for a royalty acquisition.”

Scott Shaw, president and co-founder of Sutton, says, “The transaction… provides Sutton with the ability to realize some of the value of the Sutton brand today and an even more exciting opportunity to invest in and grow Sutton.”

A management presentation for investors says that Sutton charges agents a “low fixed monthly fee (currently $110), which contractually increases by $2.50 each year on July 1.” It says virtually all of Sutton’s revenue is generated by the fixed monthly fees. “Sutton continues to offer a compelling model for top brokers and part-timers alike,” says the presentation. “Sutton is a pure franchisor (no corporate stores) with over 125 franchises across Canada.”

It says that Sutton’s agent count has remained steady during the last 10 years, “despite it not being active in developing new regions or acquiring brokerages.” It says after the transaction closes with Diversified Royalty Corp., “Sutton expects opportunities to be more active in expanding its agent count – primarily through investments and acquisition.”

Diversified Royalty Corp. describes itself as “a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America.” The company’s objective “is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.”

© 2015 REM Real Estate Magazine

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It seems that seniors in Alberta would rather struggle to pay property taxes than to take what they perceive as a risk from provincial help.

The Alberta Seniors Property Tax Deferral Program enables seniors who own their homes to get a loan from the government to cover property taxes for as long as they own the property. Interest is charged at prime rate and as long as they live in the home they will pay nothing back.

It sounds like a good deal, but figures reveal that less than 2,000 Albertans have taken up the offer.

The Calgary Herald reports that seniors are not keen to take a loan against their asset and many who do use the program do not keep it up.

The article compares the program to a similar one in B.C., which has been in operation for four decades. However, that scheme is open to more people with those over 55 eligible to apply (it’s 65 in Alberta) and interest charged a sub-prime one per cent. 

Copyright © 2015 Key Media Pty Ltd

Other

The bidding wars in Vancouver are intensifying, leading to more buyers paying larger premiums to secure the home of their dreams.

The National Post reports that a West Vancouver home listed at $2.98 million sold for $4.1 million, more than a million over the asking price and a premium of 37 per cent.

The bungalow is nothing remarkable with the seller having considered demolition and building something new on the plot; however, the views are stunning.

The fact that it’s a standard home shows how desperate some are to buy in the city; the property attracted nine bids, mainly from the local area, with the winner from mainland China. 

Copyright © 2015 Key Media Pty Ltd

Jordan Maxwell
Other

Strong condo numbers released by Colliers International recently show that investors will soon be in for major profits as prices rise but the outlook isn’t all good, says one industry vet.

“I do think we have a major problem brewing with the current low interest policy,” said Kenny Wong, real estate broker with Tradeworld Realty.

“The value of properties keeps increasing to unsustainable levels and the income ratios do not move in line with earning.”

In short, he argues that most people now jumping on the bandwagon, especially in the low-rise market, will eventually sell these units. That translates into limited upside potential in the long-term and yet there is the challenge of cash flowing newer condo units in the short-term.

Toronto alone has witnessed a significant increase in the amount of rental buildings under construction with more than 45 either being built or planned for neighbourhoods scattered across the city. That figure, at 75 per centt, is a significant increase to what’s been seen over the last decade, according to Urbanation.

In fact, some projects originally slated for condos have now become rental buildings as developers and investors see more upside for their pocketbooks and maintaining tenants in the long term.

Urbancorp’s Kingsclub condo complex on King Street West and a proposed 49-storey tower at Bloor and Sherbourne called The Selby are examples of building shifts.

With home prices at record levels, demand for rental properties are on the rise while interest in condos wanes for a number of reasons, says Wong.

“Closing costs are a huge issue that’s starting to deter investors,” he said. “I was just looking at a closing statement from a client who purchased a condo in Calgary and the closing cost was a mere $2,000. He was looking at the same size unit at 295 Adelaide Street which cost more than $25,000 to close.”

Despite these factors, the Colliers report highlights a large market for condo rentals, a boon for investors in the market. According to the report, growth near public transit stations on Yonge Street, Bathurst and Highway 7, as well as the development of East Toronto, will lead to significant growth that outweigh negative sentiments from potential renters. 

Copyright © 2015 Key Media Pty Ltd

Jordan Maxwell
Other

The pool of prospective tenants are drying up in Calgary as a tough job market is forcing some to reduce rents in response – and the situation could worsen as tenants leave the market for good.

“People are having to break leases, which is making it tough for landlords,” said Bill Blake, a landlord and member of the Alberta Landlord Association.

“There are always ebbs and flow, and landlords need to be prepared, but it’s a tougher time these days because the job prospects aren’t as readily available. Things are not terrible, but there’s been a definite change.

“More and more landlords are preparing for the reality that their units could be vacant for a month or two before finding someone qualified.”

The comments reflect a difficult situation taking place in Alberta with the effects of low oil prices, which has created a tough situation not just for homeowners, but people’s job prospects as well with many energy companies forced to layoff employees.

The once-hot housing market has cooled down considerably, especially in the last couple of months, with huge layoffs announced from large energy conglomerates such as ConocoPhillips, Nexen Energy and Talisman Energy Inc.

Just last year, Blake said, some were raising rents by 20 to 30 per cent year-over-year.

Now with many tenants breaking their leases and moving out of the province altogether, it’s created a troublesome and uncertain picture for landlords.

Last year, the vacancy rate was 1.4 per cent when the CMHC tabled a rental report in October 2014, while the average monthly rent for a two-bedroom apartment was $1,322 during the same period.

The housing corporation predicted a 1.6 per cent vacancy rate in 2015, but that figure could climb to more than two per cent as rental market trends point to a change.

“There are good and bad times, and this is one of those moments,” said Blake. “As a landlord, you have to be prepared and plan for this during the good days so that you can outweigh the bad.” 

Copyright © 2015 Key Media Pty Ltd