Save Transit City

Here is a great infographic from the Toronto Environmental Alliance on the bang for buck of transit dollars.

Access to transit is an absolute necessity for real estate values to grow in a city. For examples, of what not to do, go visit cities in the States where barriers because of poor transit and poor urban planning cause massive ghettos where people are forced to live in an area because of poverty.

I blogged about this previously here. It's sad to see that Toronto is following down the path of many major cities where the rich live close to transit and the poor do not (see recent work from Dr Hulchanski from U of T here). If this trend continues, you will see property values neighborhood drop.



Tell Rob Ford and Toronto City Council we want Transit City. Sign and Retweet!

http://t.co/KXFKvOQ

Hot Toronto Neighborhoods as of June 2010

Here are the top 10 neighborhoods for single-detached homes in the GTA:

Toronto Real Estate Stats

Browsing through the Toronto Real Estate Board Stats, Sales actually went up from March...who would of thought?

In April 10,898 Sales
in March 10,430 Sales

This is a marginal increase in sales.

Even the seasoned agents thought the market peaked in March and felt it was peaking? Why did they feel that? Because the amount of listings shot up from 18,684 (huge decrease from March 2009) in March to 22,951 in April (about the same as 2009).


Sales are still up, but it seems that with rates coming up and the strict mortgage rules the market should be dampened coming into the next quarter.

Development Merry Go Round

Councilor Adam Vaughan was one of the city officials to vote down Brad Lamb/Peter Clewes project next to King Street's Royal Alexandra Theatre .

I can see his reasoning, part of making a livable city is to have a mix of old and new. If there is too much development, the new buildings will have lease rates will based on today's construction costs and the older properties will have property taxes based on the value from the development potential.

This results in fewer cool and trendy local shops that gives a neighborhood an identity and replaces them with big chains than can afford the higher costs.

On Brad Lamb's side, there are very few sites that make sense, and those that have potential are priced high as owners hope developers will speculate and buy their property.


Councilor Vaughan will be appearing on Inside Toronto Real Estate on April 21st.

Peter Clewes and Brad Lamb will also be appearing on a future episode.

Stay tuned as we will see Royal Alexandria project come up again (going to the Ontario Municipal Board for appeal).

Source: National Post:
Community council rejects King St. tower

10,430 sales through the Multiple Listing Service® (MLS®) in March

This market is nuts, 10,430 sales and it's mainly Toronto (vs the rest of the GTA i.e. the 905) that's leading the charge.

Consider this:



Yes there is a condo craze going on...but there is huge increases in detached properties in the 416. WOW, I believe it.

So does how our market compare to other markets that I frequently look at

Vancouver 2,473 sales in February

This is a an increase of 67.1 per cent compared to February 2009. However, 2473 sales is a 7.6 per cent decline compared to the 2,676 sales recorded in February 2008 and were 13.5 per cent behind February 2007 when 2,859 residential sales were recorded on the Multiple Listing Service (MLS®) in Greater Vancouver.


Edmonton 3,728 residential listings in March

This up over 30% from a year ago and up 246% in the first quarter. Residential sales of 1,571 properties in March were up 15.1% from a year ago and 77.3% in the first quarter. Sales were up from 1,307 in February: a 20.2% increase.


Taking a look at the most recent housing Charts available at TREB, we see how hot this market is when comparing to 2007.

For the love of us buyers, please go down.

New mortgage rules for rent to limit first-time homebuyers

So now CMHC is only going to take 50% of the rental income from basement apartments. Not good (I wonder if CRA will do the same). Expect to see values come down in Vancouver and Toronto where this was a popular option.

I always thought having a tenant pay for part of your mortgage as a prudent strategy to decrease your expenses so you can save and invest that money into property in the future...CMHC feels that's speculating.

I love how the tenant association gets quoted saying its a good thing when smaller landlords have been the saving grace for the rental industry because very few purpose built projects will be built.

Suburbs Appreciation in GTA: Are people rushing to take advantage of interest rates?

Let's do some quick analysis on the data in the article in The Star (Suburbs the big winner for price appreciation)

So E12, and E11 did well for appreciation. Why? Well, you would assume because interest rates are so low there were a lot of first time home buyers taking advantage of the times to buy a home. Well let's do some quick analysis with data from TREB (note this is for overall sales including semis, towns and condos - TREB doesn't break down totals for each housing class).



Both e12 and e11 had listings go down a significant amount. In e12 in particular, sales remained the same while listings went down 21.65%

It should be noted that both in 2008 and 2009 there was only 232 sales.

In e11 listings went down and sales went up, again showing a supply shortage. Following the trend, it only represented a total number increase of less than a 150 sales.

So it seems more of a listing crunch that is causing the appreciation - as opposed to a mad dash of "sub-prime" buyers teetering on the brink of insolvency.

KPMG report on HST's impact to Real Estate

For more information on HST's impact on real estate...check out KPMG's report here

Proponents argue that HST is going to beneficial for Ontario as a large portion of our economy is based on construction and manufacturing (industries that require a lot of start up capital rather than labour capital).

Some benefits include:

• More construction jobs. A recent C.D. Howe Institute report estimates there was an increase in construction machinery and equipment investment by 12.1 per cent in the Atlantic Provinces after a HST was implemented there. As the purchasing power of a business increased, thanks to the benefits of input tax credits, so did the investment.

• Infrastructure construction stimulus. The Ontario Road Builders’ Association (ORBA) have been longtime advocates for sales tax harmonization and say the new HST will help with competitiveness and clarity. With a simpler tax system it will eliminate a lot of bureaucracy and paperwork. Construction is a paper-heavy industry, but having a streamlined tax system will alleviate a lot of that burden.”

For finance, insurance and real estate (FIRE), which are huge component of the Toronto economy, this is not so much of a good thing, especially for real estate investors like us (will it drive jobs away from Toronto?). It will be inflationary and add significant costs to our business. Services such as home staging, legal fees, accounting, maintenance, real estate commissions, new home prices will all go up with no benefit to the parties involved.

Hard numbers of the Toronto area Economy

Snap shot of the Economic Fundamentals of the GTA by CIBCWM available here.

Notice housing starts and permits plunged from 46k to 26k...Brad Lamb expects another supply bottle neck in 2012 as a result

TD also published their Employment monitor. Ontario gained 27,100 jobs (however according to Ben Tal, Senior Economist, CIBC World Markets Inc., Toronto is still hurting)

Is this a bubble? - Comment on TD Housing Outlook

TD bank recently published a Resale Housing Outlook report (see here)



TD comments if the real estate market is in a bubble.

Conclusions:

• On a national level, they feel that prices are overvalued 12% based on market fundamentals (income growth, job growth etc).
  
• Most of pent up demand from the sales crash last year should be clear by now
  
• From next year on, we should see the real estate market return to growth based on fundamental drivers (or have price growth slow to catch up to the fundamentals since incomes are expected to go up).
  
• They don't expect prices to fall, in fact their fear is prices may continue to rise.

Real Experts Comment: Yes the market overshot, and people have been taking advantage of rates to get into the market. As more supply comes online in the market (finished condos, and new listings) and as supply of buyers capable buyers fall, prices should level off to a lower growth rate.

As of today, this is no bubble.

Interesting Observation on the Toronto Condo Market after the Recession

After going through the research Ben Myers from Urbanation gave us for the show I noticed something interesting to follow up on a previous blog post. Beginning of this year was real estate Armageddon.

Sales of new condos went down to unforeseen levels. Developers were on average selling less than 5 condos per project for the first quarter...coming from a time when the developers were used to 25+ units sold per project over a quarter.

How would you react if your sales fell to 1/5th of the level it once was? I'd be sweating bullets and slashing prices.

But an interesting thing happened...prices didn't fall (resale went down slightly showing that individual owners panicked more than developers).

Simple economics here....you lower supply to keep prices the same (is life ever this simple?)

Toronto Condo Bubble Watch from Urbanation and Realnet

Interesting point from George Carras from Realnet, when the recession started last year Toronto was at record levels at inventory. Far outpacing demand.



Toronto builders adjusted strongly and brought inventories down significantly to match demand (George from Realnet feels that we are currently "under supplied" hence bidding wars).

Why did this happen? According to Ben Myers from Urbanation, the Toronto condo market is controlled by a number of well-healed developers (75% of the units in Toronto are built by "large and wealthy" developers).


As a result, the condos built in Toronto are built by financially stronger players than in other cities = no desperation to sell quickly = better able to manage supply = insurance against bubbles.

Condo glut an optical illusion?

Great show last week with George Carras from Realnet



He had the below graph that illustrated an interesting point about the Toronto housing market



As can be seen the GTA made a huge transition in 2002-2003 from low-rise (houses) to hi-rises (condo/lofts). This is due to the introduction of the green belt and the places to grow act in 2002 (encouraging intensification).

So when we see all those cranes floating around thinking we are in an over supply situation, we are actually building less units overall YTD...and we may be in a slightly under supply situation (that's why we are seeing bidding wars on downtown condos right now).


Moral: Government regulations have unintended consequences. smart investors see through the hysteria and profit.

I love Obama...and Torontonians and Calgarians should too

Check out this article from the Globe

Mr. Obama now proposes to levy a $210-billion tax increase (over 10 years) on U.S. corporations that operate through foreign subsidiaries – making them, by and large, the (nominally) highest-taxed corporate entities in the world. This will be negative for the United States, potentially terrific for Canada.

Beginning soon, major U.S. corporations can be expected to move head offices to Toronto and Calgary to take advantage of the lowest corporate tax rates (by 2012) in the G7. In the end, Mr. Obama will have ensured neither revenue nor jobs.

OBAMA OBAMA OBAMA

Big spike in number of homes lost in GTA

Response to Tony Wong's article in thestar

Big spike in number of homes lost in GTA
Tony Wong

umm, ok. According to the Canadian Bankers Association there are 6,608 mortgages that are more than 3 months in arrears in Ontario as of January 2009.There are a total 1,711,488 mortgages Ontario...this is 0.39%. The Big Spike that Mr Wong quotes is actually a 0.08% from last year. Thanks for the "information." To show my appreciation I'll do you a favour, i'm going to promote you and your article on my blog....smile






"I have not seen the level of desperation I am seeing out there now...
Jim Common, a realtor who has a monthly power-of-sale newsletter

Hey Jim, how many people read this article and have now signed up for your newsletter? It's your job to market power of sale properties and you are doing it well it appears. I just wish you would do it with hard evidence.

To show my admiration for your "information," I'll do you a favour, i'm going to promote you and your newsletter on my blog. Click here for Jim's super power power of sale newsletter.

there were 472 such listings in the Toronto area on the Multiple Listing Service in March, up 44 per cent from March of last year

I'm sorry you did quote a number...a number that hasn't been corroborated by any other non-biased industry group like StatCan, Canadian Banker's association or CMHC.
This number, a 44% increase may sound high it actually is equal to 145 more homes being listed as a power of sale according to Jim. TREB currently has 20,533 properties currently listed.

Ok I read on..the article is full of conjecture and anecdotal evidence.

This why I love doing research to find opportunities while other people get scared. One of my favourite saying, by best selling Real Estate Author Don Campbell, is always Look at "WHAT'S BEHIND THE CURTAIN"...do your own due dilligence and research for yourself. Don't take any article like this at face value.


According to the Canadian Bankers Association, mortgages in arrears (in default for three or more months) were up to 14,676 in February of this year from 10,376 a year earlier. The number is still small, representing just 0.38 per cent of all outstanding mortgages in Canada, but it is up from 0.27 per cent in 2008, a number that had remained relatively flat until it started creeping up in November of last year.

Some facts...AweSOME..i'll graph it for you..see historically, its not that different today as it was years ago.

What was the point of Tony's article again?

Big News: New rodent problems for Chinatown, Kensington Market

Now a high density of rodents in Chinatown shouldn't be surprising...it also has the highest density of restaurants and grocery stores in the city.

When I see Chinatown-Kensington market area I see great opportunity for some residential development. The area is a classic case of how economic fundamentals, when uncontrolled, can kill a neighborhood.
Being a neighborhood that is very accessible and close to the core, Chinatown-Kensington, has always been a highly concentrated area with business and retail. As a result, many different businesses move into the area and area becomes popular with people looking for a diverse shopping area.
Overtime, because of the super competitive nature of a neighborhood, the winners of economic fundamental dance are only a very narrow segment of particular uses, crowding out other businesses that supplied the diversity in the first place.

This is what happened in Chinatown. In its first incarnation, Chinatown started with one successful laundry business started by Sam Ching in the 1870’s.

Sam Ching, started a trend of thousands of Chinese immigrants starting laundry shops in the area, as more and more migrant Chinese started to move in they saw opportunity to open different kinds of businesses, and they opened restaurants and grocery stores. These businesses started to become really popular and profitable; as a result, more and more would be restaurant and grocery store owners starting to prospect the area and they were willing to pay higher rents to landlords than the other businesses (like the laundry shops).

The other businesses in the area started to get crowded out because they couldn’t afford the rents in the area as the rents were going up.

Fast forward to today, the area becomes super saturated with restaurants and grocery shops, driving away other businesses (i.e. to Markham). What’s ironic it’s the diversity of businesses that would create extra traffic to the area which caused the restaurants and grocery shops to be popular in the first place. Chinatown-Kensington market is now a rat infested fad neighborhood.

Toronto should increase the diversity of the area by making it economic viable for developers to increase the number of residential and office buildings available along Spadina (YES CONDO’s). The AGO and Ontario College of Art and Design are doing a great job creating a different type of anchor to attract people, however, it doesn’t make economic sense for a developer to build a condo or office building on Spadina over Markham…that’s why Markham is getting more jobs and Toronto is getting more rats.

Can Gordon Ramsay make real estate more attractive?

So if Starbucks can make your real estate double (see the Venti Indicator) can Gordan Ramsay do the same for some lucky Toronto neighborhood. The thought of that sweet smelling fresh and local ingredients bringing all those DINKS (Dual Income No Kids) into a transitioning neighborhood like Dundas East (ONE COLE anyone?) may have developers salivating for something else.