Aalto Townhomes takes a convenient location near rapid transit and urban amenities

Simon Briault
The Province

Aalto Townhomes

What: : 76 three- and four-bedroom townhomes

Where: 1228 Hudson Street, Coquitlam

Residence size and prices: 1,434 to 1,838 square feet; from $799,900

Developer: Intracorp

Sales centre: 1228 Hudson Street, Coquitlam

Hours: noon — 5 p.m., Sat — Thurs

Telephone: 604-891-1282

It’s relatively easy to find a modern townhome development in the Lower Mainland. It’s also easy to find a new condo in one of the region’s urban centres, particularly given city planners’ penchant for approving new homes next to major transit hubs. But a new townhome development with homes above 1,500 square feet that’s within walking distance of rapid transit and urban amenities is harder to come by.

Aalto Townhomes, Intracorp’s new townhome development in Coquitlam, is just such a development.

“What’s super rare about Aalto is that you’re in a ground-oriented townhome community in an existing single-family neighbourhood that’s also highly walkable,” said Barrett Sprowson, Intracorp’s vice-president of sales. “Typically, you would only get this type of home in this type of neighbourhood much further away from the urban core. That would mean you’re stuck with your car.”

Aalto Townhomes is a 76-unit development with three- and four-bedroom homes and is at 1228 Hudson Street, just up the hill from the Lafarge Lake – Douglas SkyTrain station.Coquitlam Centre, which has 910,000 square feet of retail on two levels, is also within walking distance.

“What we keep hearing from people is that they love Aalto’s proximity to transit,” Sprowson said. “You’re a 10-minute walk to the SkyTrain or a three-minute walk to a bus line that can take you to the SkyTrain if you don’t want to walk.”

Sprowson said that Intracorp entered into a partnership with the Finnish Canadian Rest Home Association and that the land that Aalto is being built on was given to the association by one of their members many years ago.

“They’ve had their eye on developing a better facility for their members so we’re building them an apartment building on the Eastern portion of the site, a seniors’ housing community that will take up about a third of the total area,” he said. “In return, we then get to build Aalto, which is a totally separate entity on the other two-thirds of the site and which we will then own.”

Homes feature nine-foot ceilings, washers and dryers on the upper floors, pot lighting in main living areas and powder rooms on the main levels. Kitchens have oversized island, flat-panel cabinetry, soft-close doors and drawers, engineered stone countertops and porcelain tile backsplashes.

Master bedroom and ensuite bathrooms have engineered stone countertops, undermount Duravit sinks, porcelain tile flooring, Grohe lavatory faucets, chrome fixtures and semi-frameless shower doors.

All the above has helped to bring in a healthy stream of buyers, according to Sprowson.

“We’ve seen two primary buyer types,” he said. “These are move-up buyers who maybe own a condo and are looking for some more space. The other one is active downsizers who still love the stairs and are not prepared to move to a condo just yet. They still want to have a front door.”

© 2019 Postmedia Network Inc.

The rental market in Canada is accelerating this year

other

News of record-breaking real estate prices and government-imposed foreign home buyers’ taxes are just some of the headlines dominating the Canadian real estate market. As summer heats up, many Canadians are wondering if the rental market will follow suit.

Whether you are looking to rent a new condo or debating on extending your current agreement, it’s important to know what’s happening in the rental market. As we’re all aware, when real estate prices go up, rental prices are sure to follow. 

Rental Market Trends Across the Country

There is one trend that should be addressed first and foremost. The rental market in Canada is accelerating this year and prices are steadily increasing across the country. Just look at the headline of this Vice article on Canada’s “out of control rental market” that was published a few months ago. 

From Vancouver to St. John’s, demand for rental units is increasing, spearheaded by a record number of immigrants in 2018 and a steadfast Canadian economy. Steep rate increases and “renovictions” are the outcome of a rental market that cannot keep pace with demand, for the most part. Vacancy rates are at multi-year lows, and efforts to build more affordable rental units have fallen in the shadows of cranes and new condos. 

Most & Least Expensive Markets

Wondering who topped the list of the most and least expensive cities to rent in Canada? RentSeeker recently published information showing the average rent costs for the biggest cities across the country.

Toronto and Vancouver have long been the leaders of the pack, but now Ottawa and Montreal are taking over, reaching all-time highs and leading the country in terms of growth. Vancouver and Toronto are still the most expensive rental markets, though both have shown signs of improved affordability. 

New Kids on the Block

It may surprise some Canadians to see so many cities outside the GTA enter the top 10 most expensive list, with fewer cities from Western Canada than previous years. Kingston, Barrie and Oshawa are all well outside of the GTA, showing how far the expansion has reached in a saturated and competitive market. 

Cities outside the GTA (like Barrie and Oshawa) are experiencing increases in rental rates on a monthly basis, and despite increased calls for government intervention, the soft landing has ended and the rental market is once again, ready for takeoff.

Good News on the Horizon 

The Toronto rental market seems unstoppable for the foreseeable future and winning an NBA championship has only increased demand for rental units in (and anywhere near) the downtown core. Finding an apartment to rent in Toronto can be competitive, but there are lots of opportunities to live in the world famous city.

Nevertheless, for the first time in several years there are signs of increased affordability as freshly finished towers hit the market with new vacancies, and prices are balancing out. Keep in mind a modest drop in average rent price at this point would still be considered high in a city where a one-bedroom condo in the downtown core will cost you over $2,000 a month. 

In Vancouver, prices have started to change as well. For the first time in years, prices have dropped, technically speaking. Rent is still incredibly high as home prices in the city exploded 200% faster than New York City since 2000, a figure that helps put the current “dip” into perspective. 

Value in Quebec

Montreal has always been considered a bargain compared to other cities and this notion has spread as the popularity of the city increases, especially with investors looking to avoid a foreign home buyers’ tax. Quebec is well represented on the list of the most affordable places to rent, and there are lots of deals to be had.

Affordability measures continue to be the lowest in British Columbia and Ontario where some renters spend nearly 80% of their income on rent according to the Canadian Rental Housing Index. Quebec and Eastern Canada present more affordable options, but one trend is constant across the country, demand and rental prices are going to increase alongside the population and competition in popular markets. 

© 2015-2017 Zoocasa Realty Inc.,

The Bank of Canada ushered in another season of stability for interest rates

Penelope Graham
other

The Bank of Canada (BoC) ushered in another season of stability for interest rates as it held its trend-setting Overnight Lending Rate at 1.75%, where it has remained since October of last year, in its July announcement.

While the economy has been stabilizing and strengthening on the home front, global growth has been considerably slower as trade tensions between the U.S. and China have taken a bite out of global GDP. As a result, central banks around the world, including the U.S. Federal Reserve and European Central Bank, have been on a rate-cutting mandate. Thus far, Canada has bucked that trend by keeping its cost of borrowing at status quo, though it acknowledges that “escalation of trade conflicts remains the biggest downside to the global and Canadian outlooks.”

It reports the Canadian economy is “returning to growth and potential” with a strong performance in Q2, rebounding from temporary slowdowns throughout the beginning of the year when poor weather delayed operations and oil prices tumbled. Today, the job market continues to be strong, which is supporting consumption, and exports continue to improve.

Improving Housing Market Boosts Economy

The housing market, which is one of the largest contributors to the economy, is also stabilizing. Demand for condos and houses for sale is returning, as buyers have absorbed the affordability fallout from the federal mortgage stress test. Sustained lower mortgage rates have also helped boost real estate demand.

Stated the BoC, “At the national level, the housing market is stabilizing, although there are still significant adjustments underway in some regions. A material decline in longer term mortgage rates is supporting housing activity.”

The BoC forecasts that Canadian GDP will grow to 1.3% this year and 2% in 2020 and 2021. Inflation, which is one of the largest factors influencing rate hikes and cuts, remains close to its 2% target and is expected to stay steady into 2020.

The BoC’s Governing Council noted it will pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.

What Does This Mean for Borrowers?

Despite strong domestic economic performance, which typically would set the stage for a rate hike, the BoC has to keep rank with other central banks, and particularly the U.S. Fed, in order to prevent the Canadian Dollar from getting too strong. 

As a result, it’s expected to hold its Overnight Lending Rate – which consumer banks use to set their own borrowing rates – steady all through the remainder of this year, and may even cut it in 2020 should growth start to slow.

This trajectory was widely forecast by a poll of 40 economists conducted by Reuters – they expect the BoC will resist a cut for as long as it can, despite the likelihood the U.S. Fed will do so, with 40% expected rates will go down next year. There is very little expectation rates will be hiked during that time frame.

This means variable borrowers, whose rates are set based on the BoC’s trends, can expect price stability throughout the remainder of this year, and may even enjoy a discount to their monthly payments next year, or see a greater portion of them go toward their principal debt.

That means it can be a great time to go variable for those who are less risk-averse and have the capacity within their finances to handle the uncertainty that comes along with a market-linked rate.  However, five-year bond yields – which consumer banks use to set the cost of borrowing for their mixed mortgage rates – also remain historically low, at well below the 2% mark. This has narrowed the difference between fixed rates – which are traditionally priced higher due to the stability they provide – and variable, meaning it could also be an advantageous time for borrowers to lock in at a discount, if they prefer.

© 2015-2017 Zoocasa Realty Inc.,

Exclusive listings preferred to ensure data privacy

Neil Sharma
REP

Nearly a year after the Toronto Real Estate Board lost its appeal to the federal Competition Bureau over the issue of sold data, it turns out its privacy concerns were valid.

Sotheby’s International Realty Canada’s 2019 Mid-Year Real Estate Report revealed a 19% year-over-year sales decline in the Multiple Service Listings of Toronto homes priced over $4 million, but it doesn’t tell the whole story, says Don Kottick, Sotheby’s president and CEO.

“We’re starting to see in the $4m-plus range that sellers are opting to have their properties sold exclusively through the brokerage as opposed to going on the MLS, and this is largely due to privacy concerns over sold data,” Kottick told REP. “They’re opting to use brokerages with big, strong international networks with very strong marketing and that have strong internal networks, rather than going on the MLS where data gets shared in the public domain. We’re seeing more exclusives than we have in the last few years.”

Conversely, there has been a 12% year-over-year sales increase of homes priced over $1m through the first six months of the year, indicating that sellers have privacy thresholds.

“The reality is [$4m-plus] properties are selling,” continued Kottick. “Years ago, a lot of listings were traditionally brought and tested on the market exclusively, so it’s almost a return to the old days. It’s not a concern at all, but what it does do is skew the information available for the MLS. It just brings a little variance when comparing historical data and it reinforces the need to have big brokerages with strong marketing internationally to facilitate the sales.”

Matt Smith, a real estate broker with ENGEL & VÖLKERS Toronto Central, says many luxury homes priced $2m and up are listed exclusively, as well, but it isn’t necessarily a bad thing.

“It’s typically with the older demographic,” he said. “They don’t want things on the public record, whether nosy neighbours or a hundred people coming through their homes; they want select prequalified people coming through, and things are moving quickly. I can sell an exclusive in, say, Yorkville in a couple of days.”

Opening sold data to the public, added Smith, has been good for individuals, but not the market, because the latter wants the most accurate data it can get—something exclusives flout. Moreover, a dearth of data on comparable properties makes listing accurately arduous.

“Because of that, Broker Bay has spawned up,” said Smith. “It’s a database for exclusives that the brokerage community uses and it’s become a really important tool over the last 12 to 18 months for this reason. We basically have our own MLS for exclusives and we know what they sell for. It’s a group of top-tier brokerages in the city—you have to become a member.”

Copyright © 2019 Key Media Pty Ltd

Toronto, Vancouver tied for tightest office markets in NA

Steve Randall
Canadian Real Estate Wealth

Demand for offices in Toronto and Vancouver has squeezed the vacancy rates of both, making them the joint tightest markets in North America.

CBRE Canada says that Vancouver’s office vacancy rate dropped to 2.6% in the second quarter of 2019, from 4.7% only a year ago. Meanwhile, the vacancy rate in Toronto held steady at 2.6% thanks to a downtown construction boom.

“Two years ago, it would have been unprecedented to have a Canadian city top the North American office rankings. We now have two Canadian cities setting the pace, which is truly remarkable,” noted CBRE Canada Vice Chairman Paul Morassutti. “Something special is happening in this country and the investments being made by businesses and developers suggest that our office and industrial markets are well-positioned for the digital economy.”

For office building owners, the tight vacancy rate is good news, with record-high average rental rates for Class A offices in Toronto’s financial district – reaching $40 per square foot for the first time ever. For Vancouver, the average rate increased to $44 psf from $42.02 psf in the previous quarter.

Other markets, property sectors

CBRE’s Q2 Quarterly Statistics Report shows that Ottawa’s office vacancy dropped to 7.0% in Q2, down from 9.9% in the same quarter last year, due to increased demand and limited new supply.

Calgary’s downtown office vacancy rate continued its slow decline to 26.1% in Q2, down from all-time high of 27.8% a year ago.

For the industrial sector, Toronto and Vancouver may not have the tightest vacancy rates in North America but they are in the pack.

Vancouver’s industrial availability rate fell to 2.1% in Q2 2019, despite having had the largest amount of new supply delivered in a single quarter in over 10 years in Q2 (1.5m sq. ft.) Toronto’s industrial availability rate has sat at a record-low 1.5% for the past two quarters.

In Montreal, availability of industrial product sits at half of what it was two years ago, dropping to 3.2% in Q2 while in the Waterloo Region five consecutive quarters of positive absorption means an all-time-low industrial availability rate of 1.6% in Q2, rivalling Toronto.

“Across the country the demand for industrial properties, from tenants and owners alike, has seemingly never been stronger,” Morassutti said. “Third-party logistics, food and beverage and retail companies are snapping up space as the momentum of online retail sales continues to build.”

Copyright © 2019 Key Media Pty Ltd

Real estate disruptor pulls out of US after just 2 years

Ryan Smith
other

After less than two years, a UK company that promised to disrupt the American real estate market is pulling out of the US.

Purplebricks, a real estate company that charges homeowners a flat fee whether or not the property is sold, built a successful business in the UK, but has seen its stock plummet by 75% since entering the US market in September 2017, according to a Bloomberg report.

The company’s claim to fame was that it charged homesellers a single fee — $3,200 – to list their home, regardless of the price the home was selling for. 

Purplebricks said that while there is still a “significant opportunity to disrupt the US market,” it would take “substantially more management time and resources than the company is able to commit at this time.”

The news comes on the heels of a May announcement that it would scale back its US operations and exit Australia entirely.

“We have taken the difficult decision to exit our businesses in both Autralia and the US, as it is very important that we now focus our resources on the UK and Canada, where we have a strong, established presence and where there are significant opportunities to grow market share and deliver profitable growth for shareholders,” Vic Darvey, Purplebricks CEO, said in a statement.

Copyright © 2019 Key Media Pty Ltd

Co-working, serviced, and hybrid centres, shows that Toronto has seen the largest percentage increase

Steve Randall
Canadian Real Estate Wealth

The shift towards flexible working has been changing the demand of office tenants over recent years and a new report shows the strength of the market.

An analysis of the top 18 global markets for space including co-working, serviced, and hybrid centres, shows that Toronto has seen the largest percentage increase in centres, gaining 37% year-over-year to 118.

The Instant Group says that currently flexible space represents 5% of overall office space, showing immense future growth potential despite already significant surges in growth and supply. The firm’s forecast suggests that it could increase to between 30% and 40% of total office space in the next decade.

“The market for flexible workspace is becoming increasingly sophisticated as operators go after the corporate market. Requirements are being taken for longer, client demand is becoming more nuanced, and operators are responding because of their agile business models,” explained Tim Rodber, CEO of the Instant Group. “Now we are seeing the market evolve outside of the CBDs of the leading cities.”

Both flexible workspace demand from clients and flexible workspace supply increased 19% on average last year.

Toronto was second only to New Delhi for growth of city-specific inquiries for flexible workspace (35%).

Pricing moving lower

Across the cities included in the report pricing has cooled by an average of 5%.

New York remains the most expensive market per-desk in the world (averaging $1,063) despite a decrease in desk rates of 4%, largely accounted for by a supply increase year-on-year of 21%, much of which was in Brooklyn and Queens, which have lower rates.

San Francisco had the second highest cost-per-desk, at $951 per desk, on average, despite a decrease in desk rates of 12%.

“Overall, we have seen that in markets that have seen supply increase by more than 20%, those same markets have seen reductions in average desk pricing, largely because the growth accounts for new flexible workspaces outside the primary office market, which as such have lower costs-per-desk,” said Rodber.

Copyright © 2019 Key Media Pty Ltd

Nearly four out of 10 condos in Toronto are not owner-occupied

Ephraim Vecina
Mortgage Broker News

Nearly four out of 10 condos in Toronto are not owner-occupied, according to the latest Statistics Canada data.

As much as 39.7% of the city’s condo units were found to be either vacant, rented out, or used as second properties by their owners.

The growing prevalence of investment-use condos has been cited as a major factor in sky-high housing prices, further adding fire to the market’s long-running home affordability crisis.

Compounding the situation is that over the past four decades or so, the development of purpose-built rental units was never a high priority. And any additional units that end up getting built tend to be high-end offerings that get rapidly snapped up by wealthy investors, Realosophy Realty president John Pasalis argued.

With a consistent shortage of mid- and low-cost options, Toronto’s condos saw their rents grow by 30% between 2006 and 2018.

“Five years down the road, do we really need 50,000 micro-condominiums that are renting for C$2,000 a month?” Pasalis stated, as quoted by The Guardian. “I think this is the risk when your entire new housing supply is driven by what investors want, rather than what end users want.”

Andy Yan, the director of the City Program at Vancouver’s Simon Fraser University, stated that the latest figures pointed to a disturbing truth: that housing in Canada’s largest cities no longer exists for Canadians, but rather for the highest bidder.

“It’s not about supply or demand anymore,” said Yan. “It’s ‘who are we building for?’”

Vancouver itself is labouring under similarly problematic conditions, as nearly half of its condo units are owned by investors. A mere 12% of the population is estimated to be able to afford the market’s homes at the benchmark price.

Copyright © 2019 Key Media

Businesses lose around $3 billion to fraud annually

Ephraim Vecina
Mortgage Broker News

Canada’s porous justice system is promoting the rapid growth of fraud as a business, a former RCMP top investigator has warned.

These criminal enterprises are using the same systemic vulnerabilities that foster the prevalence of money laundering in Canada’s largest housing markets, according to Henry Tso, the former head of RCMP’s federal organized crime and financial integrity team in BC.

Tso, who now works with MNP as a senior consultant, said that among the worst of these weaknesses are toothless prosecution, weak sentencing, and insufficient resources for law enforcement.

As a result, up to $6 billion in proceeds from criminal activity move through the Canadian financial system every year. Canadian businesses lose around $3 billion to fraud annually, while individuals were swindled of roughly $405 million from January 2014 to December 2017.

“Fraud is very similar to money laundering, but with fraud they are also generating large amounts of criminal money,” Tso told Global News.

“Organized crime knows fraud is the way to go. Because if you get caught it is not like getting caught for drug-trafficking.”

Moreover, criminal organizations rely on accountants, lawyers, computer experts, and other skilled professionals to project an aura of legitimacy in their operations, all the while laundering behind the scenes.

“Organized crime is not blue-collar now,” Tso stated. “They are very sophisticated.”

Among the most serious of such cases in recent memory was the alleged laundering of funds through a Metro Vancouver condo project by a rumoured Chinese drug ring head.

According to an exhaustive investigation by Global News, said condo development has been grabbed by Kwok Chung Tam, who reportedly holds a high position in the Big Circle Boys cartel, according to the Canada Border Services Agency.

Tam surreptitiously used a “bare trust” joint venture via Liberal MP Joe Peschisolido’s law firm to acquire a majority stake in the project. Peschisolido has maintained that he had no knowledge of the transaction.

Per court records, Tam was still serving a conditional sentence for a 2010 drug trafficking conviction at the time of the deal’s completion.

Copyright © 2019 Key Media

Home sales across Canada plummeted to start 2018

BCREA

Home sales across Canada plummeted to start 2018. The near-coincident implementation of several new federal and provincial housing policies designed to temper BC housing demand has given rise to competing explanations for what ultimately caused the downturn. Was it the B20 mortgage stress test? Higher interest rates? The provincial speculation tax or the expansion of the foreign buyers’ tax?

 In this Market Intelligence, we will attempt to provide some insight into the causes of the 2018 housing market slowdown.

Isolating the Impact of the B20 Mortgage Stress Test

The coordinated decline in Canadian home sales, which began immediately after the implementation of B20, makes that policy a natural place to look as we investigate the cause of the housing downturn. The fact that so many Canadian markets saw home sales drop sharply to start 2018 indicates a common factor driving that decline.

Many markets in BC experienced a much deeper and more prolonged decline in home sales than in other Canadian markets, perhaps pointing to provincial polices weighing down sales over and above the impact of the stress test alone. However, when we look at markets across Canada, it appears that the outsized decline in BC may have more to do with relatively stretched affordability in BC compared to the rest of the country. Expensive markets in other areas, most notably those near Toronto, also experienced significant declines in 2018.

Methodology

The ideal way to identify causation in economics is to use a controlled experiment, in which impacts can be compared between a test group subject to the new policy and a control group that is not. Unfortunately, such experiments in macroeconomics are rare. Since B20 applies across all Canadian markets, we do not have a suitable control group to use as a baseline for comparison. As a next best solution, we can instead use econometric modelling to estimate a baseline of home sales if the stress test had not been implemented.

Using BCREA’s workhorse forecasting model, we

estimate a 2018 baseline of BC home sales of 90,500 units, a decline of roughly 11,000 units from 2017. This decline was driven by market forces such as rising interest rates, deteriorating affordability and a slowing economy. Given that home sales in 2018 were 78,346, this means that factors outside of those explicitly controlled for in the model need to explain about 13,400 additional lost sales.

Isolating the share of sales lost due to the stress test is a challenging task. To do so, we employed both our own forecasting model and a model of sales fundamentals developed by the Bank of Canada. Specifically, we tried to isolate the impact of the stress test using 5 different shock specifications. These include incorporating B20 as a shock to an affordability index, a shock to the cost of borrowing, a policy dummy variable and a shock to a macroprudential policy index both by itself and interacted with mortgage rates. We then compared dynamic simulations from these models to our estimated baseline.

We estimate the lost sales due to B20 in 2018 to be a range of 5,300 to 11,500 units, with an average of 7,500 units. On average, we estimate that B20 accounted for about 30% of the total downturn in BC home sales observed in 2018 and cost the province approximately $500million in spin-off activity related to MLS® home sales.

©BCREA