9,750 new construction condo units may launch in the GTA by end of Q1-2022

Michelle McNally
Livabl

Since the first Toronto condo project kicked off sales just six days into 2022, the Greater Toronto Area pre-construction market has been hot. New data insights shared with Livabl show that substantially more units have been launched during Q1-2022 compared to last year, and more are on the way.

Pauline Lierman, Zonda Urban’s vice-president of market research for Ontario and Quebec, told Livabl that by the end of March, about 9,750 new condo units could launch in the GTA during Q1-2022.

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As of March 7th, Lierman said that there have been 25 condo apartment project launches in the GTA totalling approximately 7,964 units. In Q1-2021, there were 14 project launches with 3,931 condo suites. Overall, Q1-2022 has delivered 50 per cent more units to the market than a year ago.

“Crazily enough, we have not yet reached the next wave of typical March launches,” Lierman said in a statement. “While some of these may not start doing firm sales until the second quarter period, I have another 10 potential projects, which would bring up that total to around 9,750 units that could be launched by the month’s end.”

416 and 905 condo launches neck and neck

As buyers look to get more bang for their buck, some have traversed into the GTA’s suburban areas. When it comes to new condo launches, however, the 416 and 905 areas have produced similar amounts.

Lierman explains that the two regions have been nearly evenly split, with 13 launches in the 416 area and 12 launches in the 905 to date. The 416 also leads with the total number of new units being brought online during Q1-2022 with 4,981 condo suites launched in Toronto versus 2,983 units in the 905. Not all of these projects are downtown — only four of them are located in the core downtown submarkets.

“Project openings are broadly spread across the GTA, from Durham Region to Halton and Hamilton, and within the outer 416 former municipalities, including two with direct proximity to the edging-towards-endgame Eglinton Crosstown LRT,” said Lierman. “Oakville and Milton continue to be high in-demand market areas.”

While Zonda Urban is working to confirm this data, Lierman said that her early estimate is “a minimum half of the released units thus far are sold,” which includes some near or fully sold out buildings. The remainder of the launches are more recent and are just starting to write deals. Lierman expects most of these to hit 70 per cent sold within a month, with total sales activity rising as the marketing of the more recent launches progresses.

“The rapidity of absorptions has clipped by even what I would call strong selling periods in past quarters,” she said.

Rising costs, high demand driving developers to launch now

It’s not just one reason that is prompting developers to launch new condos sales now as opposed to later this year.

Lierman explains that low supply, high demand, rising construction costs and development charges in addition to interest rate increases are all influences driving developers to launch now.

“Developers have had many of these projects set to go, so why not launch when conditions are at their most receptive?” she said.

Lierman anticipates that we’ll see a good pace of launches as we head towards the early summer. Last year and 2020 were atypical periods for market activity, with launches increasing as COVID-19 cases and restrictions eased during the summer months. Should we “approach some sort of normalcy,” Lierman notes that the pre-construction market might see a return to a slower summer for Q3-2022 followed by a typical ramp up into the fall.

 

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844-unit New Westminster mini-storage sells for $27.5 million

Colliers, Vancouver
Western Investor

Located in Queensborough area of New Westminster B.C., the property is on three acres with expansion potential

Property type: Mini-storage

Location: 800 Boyd Street, New Westminster, B.C.

Number of units: 844 lockers; 122 rentable parking stalls

Size of property: 89,156 square feet

Size of land, in acres: 3 acres

Zoning: MI industrial

Price: $27.5 million

Brokerage: Colliers, Vancouver

Broker: Phill Gibbons

© 2022 Western Investor

844-unit New Westminster mini-storage sells for $27.5 million

Western Investor Staff
Western Investor

Located in Queensborough area of New Westminster B.C., the property is on three acres with expansion potential

Property type: Mini-storage

Location: 800 Boyd Street, New Westminster, B.C.

Number of units: 844 lockers; 122 rentable parking stalls

Size of property: 89,156 square feet

Size of land, in acres: 3 acres

Zoning: MI industrial

Price: $27.5 million

Brokerage: Colliers, Vancouver

Broker: Phill Gibbons

 

© 2022 Western Investor

March’s Greater Vancouver housing market on track to be ‘barnburner’

Michelle McNally
Livabl

With February having come and gone, Vancouver’s housing market could be a “barnburner in March,” marking one of the busiest months in the real estate calendar.

In a monthly sales and listings report for the Greater Vancouver area, broker and chief economist at Dexter Realty, Kevin Skipworth, said that the number of sales and new listings recorded in February could be setting up March for intense market conditions.

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“February, with the highest increase in listings in eight months and the fourth-highest home sales for the month in history, set the stage for what should be [a] barnburner in March, traditionally one of the strongest months in the Metro Vancouver housing market,” said Skipworth in the report.

The broker noted that March 2021 saw the highest number of both new listings and sales by month last year, establishing the all-time annual high of nearly 45,000 sales.

Home sales up 50 per cent from January

Across all property types, 3,451 homes were sold in Greater Vancouver during February, up 50 per cent from January and 30 per cent above the region’s 10-year average. However, there were fewer sales during last month than there were a year ago, with 3,852 sales logged in February 2021.

Condo apartments dominated housing sales as the number of units sold year-over-year was up five per cent compared to a 24 per cent sales drop for townhomes and a 17 per cent decline for detached properties over the same time period.

Greater inventory choices and lower prices fuelled condo apartment demand, even as supply was down 29 per cent year-over-year in February while some larger new condo projects stalled or have been completely pre-sold, Skipworth said. The benchmark price of a Greater Vancouver condo apartment was $807,900 in February.

Last month, 5,573 new listings were added to the market, more than the 5,191 properties added in February last year. Still, there were 7,062 active listings in Greater Vancouver at the end of February, an all-time low for the month. On average, 251 listings were added a day in February during the first week, rising to an average of 350 new listings a day in the last week of the month.

“So, barring a huge increase in listings, the start of the spring buying season should continue to see the higher prices and multiple offers that characterize a lack of supply amidst high demand,” said Skipworth.

The benchmark price for a townhome was up about six per cent – more than $64,000 – from January to $1,090,000. There was just one month’s worth of townhome supply across Greater Vancouver in February. By comparison, there was three month’s worth of detached housing in February as the benchmark price hit $2,044,800.

Rising rates won’t dent affordability too much

With home inventory still low and the Bank of Canada now into it’s rate hike cycle, Skipworth doesn’t expect sales this year to top 2021 records. The Real Estate Board of Greater Vancouver (REBGV) predicts total 2022 sales to drop 12.2 per cent from 2021, but prices will climb 8.9 per cent compared to last year.

However, it’s possible that sales levels could go higher over the next two months as purchasers try into a market with historically low mortgage rates, Skipworth explained.

“In reality, even the most pessimistic forecasts for a Bank of Canada rate increases this year –175 basis points – will not have much effect on what a buyer can afford,” he said.

For example, the average mortgage amount in Canada is about $371,500, which would equal a $1,485 payment with a variable-rate mortgage of 1.5 per cent and a 25-year amortization. An increase of 175 basis points would raise the same rate to 3.25 per cent, boosting the monthly payment to $1,807, $322 more per month.

Meanwhile, the composite home price in Greater Vancouver is expected to rise 0.75 per cent — an average of $9,000 — a month during 2022.

‘Cooling off’ period could confuse spring market

In the monthly market report, Skipworth commented on the provincial government’s proposal for a ‘cooling off’ period, which may result in fewer listings and delays within the market.

A ‘cooling off’ period would be implemented to give buyers an opportunity to reconsider and withdraw their offers. Already, British Columbia real estate boards have voiced their opinion on the matter in a 57-page white paper published by the British Columbia Real Estate Association (BCREA) in late February.

“The effect would be chaos, with a cascading effect,” said Skipworth. “A seller would not know for a week or so whether the sale was actually going through. If it didn’t, the next buyer would also have a mandatory grace period, and so on.”

 

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One acre of Chilliwack industrial sells for $3.29 million

Homelife Advantage Realty Ltd
Western Investor

Land zoned for light industrial with easy access to Trans-Canada Highway sold for the full asking price.

Property type: Industrial

Location: 8004 Enterprise Drive, Chilliwack, B.C.

Size of property: 43,734 square feet

Size of land, in acres: 1 acre

Zoning: M2 (light industrial)

List price: $3.29 million

Sale price: $3.29 million

Date of sale: November 20, 2021

Brokerage: Homelife Advantage Realty Ltd., Chilliwack, B.C.

Broker: Rick Toor

© 2022 Western Investor

Another Bank of Canada rate hike likely in April: BMO economist

Fergal McAlinden
other

The Bank’s first rate jump since 2018 is unlikely to be its last

 The Bank of Canada introduced its first policy rate increases since 2018 in its latest announcement – and it’s not likely to wait long before it hikes that rate again.

That’s the view of BMO Financial Group chief economist and managing director Doug Porter (pictured top), who told Canadian Mortgage Professional that further quarter-point raises in each of the Bank’s next two rate announcements were a very real possibility.

“Historically, the Bank of Canada has not tended to fool around once they start raising interest rates. They tend to go on a series of moves when they decide it’s time to start moving on rates, and I didn’t get the sense that they were going to change from that pattern this time either,” he said.

“I would expect them to hike rates again in April and probably the next meeting after that.”

That said, Porter indicated that BMO did not view rate hikes of more than 0.25% each as “terribly likely,” even if it couldn’t be ruled out entirely. More clarity is required on the evolving situation in Ukraine, he said, before individual 50-point increases – which US Federal Reserve chair Jerome Powell has not discounted later in the year – could be deemed viable.

Other than its rhetoric on Russia’s invasion of Ukraine, which it called a “major new source of uncertainty”, the Bank’s latest rate announcement was a largely predictable affair, having already heavily telegraphed a March rate hike in its January statement.

A housing slowdown?

The standalone impact of that quarter-point increase on Canada’s housing market will probably be mild, Porter said, with a cooling effect only likely to come into play after the rate has been raised several times.

“I always say every basis point matters to somebody out there, so I don’t brush off even just a quarter-point hike,” he said, “but the market just has so much momentum that I think it’s going to take quite a bit more to seriously dampen [it].

Read more: Bank of Canada hikes rate

“Our general working assumption is that it takes about 100 basis points of rate hikes to make a serious impact on the housing market. Having said that, we’ve just had such scorching numbers over the past year [that] it’s tough to believe that anything close to that pace can be maintained.”  

While gradual rate increases should eventually moderate the housing market and level off sales to some degree, the same can’t be said for house prices, according to Porter.

Even in the event that rates increase this year, prices look set to continue their steep upward trajectory, he said. “In January, depending on which measure you look at, prices are up by 25-30%. It’s pretty difficult to believe that they’re going to suddenly hit the brakes, let alone go into re0.verse.”

Inflation concerns continue

The Bank’s announcement featured some interesting language on inflation, signalling that it was expected to be higher in the short term than originally anticipated – and mentioning the prospect of a more pervasive long-term problem.

Porter said that while the Bank had struck a fairly confident tone in previous statements that current inflation levels were a transitory phenomenon, its most recent announcement showed that may no longer be the case.

Read more: Inflation hits milestone high in Canada

“You can sense their concern on the inflation front is getting ramped up with pretty much every rate decision,” he said. “They have been slowly but surely warning, or sounding more concerned, that inflation is proving to be stickier than they believed.”

While the Bank may initially have viewed increases in the price of oil and other commodities as relatively temporary, there’s now a risk that it’s feeding into the price of other goods that may not have been affected by supply chain issues or energy prices, according to Porter.

A cautious note

The Bank opted against adjusting its quantitative easing program (a monetary policy to decrease the economy’s liquidity) in the recent rate announcement, a move that surprised some observers who believed it would take steps to start reducing its balance sheet rather than holding it steady.

That could be a sign of its concern over the Russia-Ukraine war, Porter said, with an unpredictable outlook ahead in that current conflict and for its international repercussions.

“Their decision was maybe a little less aggressive than it could have been,” he said. “Again, I can’t help but wonder if the uncertainty around Ukraine made them pull back a bit.”

 

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Grosvenor gets greenlight for a car-free Brentwood development

Western Investor Staff
Western Investor

Near-eight-acre pedestrian-friendly Burnaby proposal plans 3,450 homes with six towers, including a 60-storey rental high-rise, and 200,000 square feet of commercial space
On March 7, the City of Burnaby approved a Grosvenor master plan for the company’s largest mixed-use development in North America, a pedestrian-only project at Brentwood that will include a 60-storey rental tower, the tallest in Western Canada, 3,450 homes, about 200,000 square feet of commercial space and a new multi-storey community centre.
City approval means the proposal can now move forward to consultation.
The plan includes a total of six residential towers above underground parking that will allow the 7.9-acre site to be car-free, according to Ryan Bragg, principal, Perkins & Will architects.
“Typically, in this type of development, instead of plazas and courtyards there would be streets and space to support vehicles, but here there will be no cars, just trails and green space. It’s a complete paradigm shift for the region,” he said.
The development includes approximately 2,000 market-rental homes and 450 below-market rentals, with rents set at 20 per cent below Canada Mortgage and Housing Corp. median rental rates for the area, which is set at $1,450 per month.
“Burnaby has shown leadership in encouraging the development of rental housing. That opened up this great opportunity to deliver much needed rental housing at a significant scale,” said Marc Josephson, senior vice-president, development with Grosvenor
The development, located within one of Metro Vancouver’s fastest-growing communities and one block from the Brentwood Town Centre SkyTrain station, aims to be a model for future large-scale, pedestrian-focused, transit-oriented developments, according to a Grosvenor statement.
The master plan also incorporates an abundance of green space in a public courtyard for both residents and the general public, including landscaped trails and routes for cyclists and a new, approximately 100,000-square-foot community centre for the City of Burnaby that is anticipated to attract well over one million visitors a year.
In addition, the development will embrace the City of Burnaby’s sustainability requirements, as well as achieve Grosvenor’s corporate commitment to net-zero carbon in operational emissions from all directly managed buildings by 2030, according to a company statement.
Grosvenor, a privately held, 340-year-old company based in London, U.K., is currently working on a US$2.7 billion development pipeline that includes urban mixed-use residential projects in the U.S. and Metro Vancouver. It holds or manages a US$4.8 billion real estate portfolio across North America.

© 2022 Western Investor

CMHC launches latest multi-unit insurance offering

Ephraim Vecina
other

The new product incentivizes rental supply preservation and creation, it says

 Canada Mortgage and Housing Corporation has announced the launch of its latest multi-unit mortgage loan insurance product, MLI SELECT.

This new product is designed to incentivize the preservation and creation of rental supply, as well as address the need for affordable and accessible housing that adheres to climate-conscious engineering principles.

CMHC said that the time is ripe for this product considering that almost one third of Canadian households are renting their homes; thus, preserving existing rental stock and increasing rental supply are increasingly important steps to maintaining healthy communities.

“MLI Select uses a point system to rate a rental housing provider’s commitment to affordability, accessibility, climate compatibility, or a combination of the three,” CMHC said. “The greater the social and environmental outcomes of a rental housing property, the broader the incentives are, including lower insurance premiums and longer amortization rates.”

Read more: CMHC’s Housing Supply Challenge enters its third round

The incentives will be available for both new projects and existing properties, CMHC added.

“As Canada’s only provider of multi-unit mortgage insurance for residential properties, we believe that MLI SELECT will be a critical component to achieving better housing outcomes for renter households,” said Romy Bowers, president and CEO of CMHC. “Increasing rental supply and preserving existing rental stock will offer more affordable options for renters, including those in core housing need, getting us closer to our aspiration of, by 2030, everyone in Canada has a home they can afford and that meets their needs.”

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“Encouraging” signs for GTA market: RE/MAX president

Fergal McAlinden
other

The company has launched its Quarter Century Market Report, shining a light on Toronto’s scorching real estate market

 There are “encouraging” signs for the Greater Toronto Area (GTA) housing market in RE/MAX Canada’s just-released Quarter Century Market Report, the company’s president has said, not least that market fundamentals appeared “very strong” during that 25-year stretch.

Christopher Alexander (pictured top) told Canadian Mortgage Professional that the average yearly price appreciation of just over 7% during that period was similar to that of the previous quarter-century, a development that suggested a strong and robust GTA market.

“I find that very interesting because 7% is the best you can hope for as far as an overall market health appreciation number. Once you get over that 7% mark, you’re into pretty strong upward pressure, and then people get concerned about longevity,” he said.

“I’m very encouraged by that number over the 25-year period, and I also find it fascinating that it’s almost identical to the previous 25-year run. Really what it tells me is that the market fundamentals over that period are very strong, and it’s a good confidence boost.”

In September, Canada Mortgage and Housing Corporation (CMHC) described Canada’s housing market as overheated, with the GTA among the markets that demonstrated the highest vulnerability during 2021’s second quarter, according to the body.

Alexander said it was important to take the red-hot Toronto market of recent years with a grain of salt, noting that current levels of activity were likely to persist indefinitely – although he indicated that prospects were good for strong market conditions to continue even despite that fact.

Read more: Canada’s housing market overheated, highly vulnerable – CMHC

“The market level activities that we’re seeing currently are not sustainable forever, but the real estate market goes through ebbs and flows,” he said. “Our fundamentals are really strong, plus we have a supply issue.

“Based on the population growth projections for Canada, and in particular the GTA, it looks like we’re going to continue to see those supply challenges. As long as there’s pretty good buying power, I think we’re poised to see a really strong future in real estate.”

The RE/MAX report highlighted the fact that the GTA market had demonstrated its ability to withstand periods of economic crisis and downturn including 9/11, the SARS epidemic, 2008’s global financial crash and, of course, the ongoing COVID-19 pandemic.

In the period between 1996 and 2021, it indicated, the area had seen the sale of over two million homes, with the average price in 2021 ($1.095 million) a far cry from the 1996 figure of $198,150.

That growth was accompanied by a population increase in the Toronto CMA to nearly 6.6 million in mid-2021, the report said, representing a spike of about 54% since 1996, when the population stood at about 4.26 million.

The Ontario provincial government has recently pushed forward with plans to tackle that much-publicized inventory crisis in the housing market, with a task force on the matter releasing 55 recommendations on making housing more affordable and accessible.

Alexander said he was encouraged by that progress, with possible densification in the GTA – the act of increasing the density of people living in urban areas – one of the ideas that could reap rewards if mapped out carefully.

Read next: How busy is Canada’s mortgage market in 2022?

“I really believe in densification if it’s done properly, and with character and thought,” he said. “It can really improve the quality of life that people have. It has a lot of residual spin off as well, like physical and mental health benefits. So, if we stay on that path, then I’m feeling good about the future.”

While the so-called urban exodus of Torontonians flocking out of the city to find more space is a much-mentioned theme of the COVID-19 pandemic, Alexander also highlighted the line-up of people queuing to get into the city’s condo market, a trend that he said could be set to continue in the coming years.

“The condo market has come back in a huge way in the last year,” he said. “As long as Toronto continues to drive innovation, adopts different corporations, provides first-class entertainment, restaurants and sporting events, it’s going to be a place people want to live.

“COVID really turned things upside down, but people’s lifestyle desires don’t change overnight. I have really strong confidence in Toronto continuing to grow and become even more of a world player than it’s been in the last decade.”

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StatCan: Values of most building permits drop

Ephraim Vecina
other

The most prominent declines were seen in Ontario and BC

Construction intentions nationwide slowed down in January with the total value of building permits seeing an 8.8% decline to $10.1 billion, according to Statistics Canada.

On a constant dollar basis (with 2012 set at “100”), the total value of building permits declined 8.2%. StatCan said that the main driver of the decline was the slowdown in the residential sector, which saw its total value of construction intentions drop by 11.6% to $6.7 billion last month.

“The majority of the drop in the residential sector was in the multi-family component (-18.5%), while intentions for single family homes decreased by 3.8%,” StatCan reported. “Most of the declines for January were in Ontario and British Columbia.”

Read more: Lumber prices – will they continue rising?

Non-residential construction intentions also declined by 2.7% to end up at $3.4 billion in January. The commercial segment accounted for much of the decrease, with a 10.2% drop spurred by slowdown in Ontario and British Columbia, where “the decline signified a return to more normal levels following a strong December,” StatCan said.

“Nationally, the decline in commercial construction intentions was partially offset by a 15.2% increase in the industrial component,” the agency added. “Construction intentions in the institutional component (-2.6%) were slightly lower in January compared with the value in December. Declines in six provinces were mostly offset by strong growth in Ontario (+68.4%), reflecting a $102 million nursing home permit issued in North Bay.”

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