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

What's going on in the Toronto Real Estate Market

Comparing March and May:


March


In May


Huge run up in detach prices in the 416 had only one place to go (down). I can see the market for detach stagnating until the fundamentals catch up (i.e Incomes).

For condos, they still keep chugging along. However expect price increases to cool as inventory starts coming on the MLS at a time when people are not buying as much (June to January).

Interest rates seem to be holding steady because of the European banking and US job numbers (I won't say crisis like the Globe)

House prices overvalued by 14 per cent in Canada: CIBC

I agree with Ben Tal from CIBC about the market being overvalued (see here)


Already in some neighborhoods detached has fallen off 5%-10% since February and March (not so bad because it had a huge run up)


Condo Market

(Panorama, BSN, Maple Leaf Square, Luna, 550 Wellington) there is a huge shadow inventory and the Days on Market are creeping up.

Sellers are holding firm on their prices, but they are always the last to know when the market shifts. Buyers searching for are usually the first.


I don't see a crash, because I don't get a sense that there is real fear in the market (Canadians have a lot of equity in their homes and won't walk away) . Just a correction

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.

Population Increase: South Asian Factor

According to the City Mayors Website, many of the fastest growing cities in the world are home to south asians (see here). No surprise to those in Toronto, as now South Asian's represent the single largest visible minority group (just edging out Chinese Torontonians).


Since there are more South Asians taking post secondary education than the population of Canada, this represents a great opportunity for Toronto businesses if immigration can be fast tracked and education/experience abroad would be better recognized. US's tougher immigration laws would lead Toronto to be a beacon of skilled labour for large US corporations looking to set up shop in Canada.

These initiatives were something close to the late David Pecaut, who saw skilled worker immigration as one of the tools to a prosperous city.

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?)

Gentrification in Action

Toronto is home to the largest re-development in the western world. I've been to a number of the consultations over the past two years and I'm pretty excited for the future.

I think people get pretty frustrated at the speed governments do things. I think we should consider the impacts of hasty decisions and not doing full studies and consultations...as highlighted by Infranet Lab in a recent blog post

They note that sometimes when things move too quick, politics trump utility:

…the places that are most critical to the country’s economic competitiveness don’t get what they need. The nation’s 100 largest metropolitan regions generate 75 percent of its economic output. They also handle 75 percent of its foreign sea cargo, 79 percent of its air cargo, and 92 percent of its air-passenger traffic. Yet of the 6,373 earmarked projects that dominate the current federal transportation law, only half are targeted at these metro areas.

“Clogged Arteries”, Bruce Katz and Robert Puentas, The Atlantic

WaterFRONToronto seems to be doing things right and I can't wait to see how it get's translated. I appreciate the world class vision they have (examples: make the best street in the world at Queens Quay and make the largest urban park in North America Lake Ontario Park - set to be bigger than central park).

Watch for areas around the gentrification, all the changes will have a positive impact on surrounding real estate.


Check out the videos and enjoy

GDP growth and Toronto

Don Campbell was recently on the Hour telling us Torontonians why Hamilton would be a better place to invest than Toronto. Crazy? No



Picking up on my GDP example from my previous post I remembered an article I read in the Hamilton Spectator. the article noted that Hamilton ranked 7th of all the cities in Canada to do business (see here). Toronto didn't even break into the top 10.

Here's why: it costs too much in Toronto to do business. The article states:

It would cost a 300-person insurance firm or IT company at least $2 million more a year to operate in Toronto than in Hamilton.

So jobs are more likely to be created, real estate is generally cheaper...won't this increase the population? Won't more people working in a town mean more tenants (driving up rents) and more demand for housing (driving up prices).
Amid the bad news, take a look at the back pages to find the opportunities (I mean for clips like this, not the classifieds)

Employment Diversity and Effect on Job Loss during the Recession

Thanks to Don Campbell for keying me on this fundamental.

When the Conference Board of Canada publishes its quarterly economic outlook for Canadian cities we take a particular interest in how they rate the diversity in the amount of industry groups for the town.

Diversity is a strong indicator for how resilient the town will be in the future when shocks to the local economy happen.

Resilience, rhymes with Brilliance, is defined as “the power to return to the original form after being bent or stretched; elasticity; buoyancy; ability to recover readily from illness or adversity

During the current recession the oil and gas sector in Alberta had overall job losses as the price of oil faltered and investment in Oil sands was postponed. Edmonton and Calgary have weathered the storm of job losses (in fact they gained 0.2% and 0.4% new jobs respectively) in part because the cities were diverse outside of oil and gas.

Toronto with its massive job market (almost as big as the combined labor force of Alberta and Saskatchewan) is an example of great resiliency. The number of people employed in Toronto has decreased 2.0% vs. the 2.3% loss for the entire province of Ontario (Ottawa has a less diverse economy and lost 4.8% --more jobs than the provincial average).

Toronto has survived the Nortel crash and it has survived the NAFTA transition away from manufacturing in the past...and will survive the global financial meltdown and the auto sector mess today.

As for the anomalies in Quebec and Vancouver...who cares!

I won't even begin to explain Montreal and Quebec City because I would never invest their anyway....one of the most anti-landlord places in North America and Vancouver is currently the real estate bubble capital of Canada because the homes are not affordable.

In closing:

Why should the diversity the local economy is a factor to look at when looking at investing in real estate in a town?

Diversity = More jobs created in good times and less jobs lost in bad times = higher population growth in good times and less population loss in bad times = more stable real estate investments.