Ignore the rumours of “overbuilding,” says a new report – even more properties will be required to satisfy immigration levels now expected to surpass expectations.
New immigrants account for 70 per cent of the increase in Canada’s population. Half of these new immigrants are aged between 25 and 44, representing the country’s economic engine, says the report.
“Ask any real estate developer in any of Canada's major cities about the risk of overbuilding, and the first line of defense would be immigration and its critical role in supporting demand,” says Benjamin Tal, CIBC’s deputy chief economist. “It turns out that, at least for now, this claim is more valid than widely believed.”
Non-permanent residents, such as students, temporary workers and humanitarian refugees who are currently residing in Canada, add another cushion for the housing market.
Residential investors should look to this population as tenants, since they have a relatively high propensity to rent.
CMHC’s 2014 Canadian Housing Observer, published today, also reiterated the message of the CIBC report, observing that immigrants continue to be important influences on housing demand.
It also showed that, although the majority of immigrants arriving between 2006 and 2011 continued to settle in Canada’s largest metropolitan areas (33 per cent in Toronto, 16 per cent in Montreal, 13 per cent in Vancouver) increasing percentages are settling in smaller cities and communities.
Sheila Botting, national real estate leader at Deloitte, says: “The general dynamic behind the housing market is directly related to immigration.
“In Canada, we immigrate around 250,000 new Canadians every year. As you can imagine, with those new Canadians that come in, they are going to require any kind of housing product, whether or not they choose apartment buildings, townhouses through to single-family homes.”
Source: http://www.canadianrealestatemagazine.ca/news/housing-starts-not-taking-into-account-high-levels-of-immigration-185635.aspx
Thursday, November 20, 2014
Wednesday, November 5, 2014
Canadian Real Estate Market Sees Homeowners Picking Downtown Over Suburbia
Homeowners who choose the convenience of city life over the more generous living space in suburbia are driving Canada's real estate market, according to a new report jointly produced by consultancy PricewaterhouseCoopers and the non-profit Urban Land Institute.
The annual outlook on emerging real estate trends says the move downtown, which has emerged in the past few years, will continue as more Canadians decide to stay in or move back to urban cores.
Much of this is due to changing demographics as young families and millennials forgo the white picket fence and house in the suburbs to take advantage of downtown living, where properties are smaller but offer more conveniences, said the 112-page report released Tuesday.
According to Statistics Canada, the most recent numbers available show that the population of urban centres grew 7.1 per cent between 2006 and 2011.
Frank Magliocco, Canadian real estate leader at PricewaterhouseCoopers, said there are a number of factors behind the urban growth, including that Canadians are more aware of the environmental costs associated with urban sprawl as well as the cost in time and money of lengthy commutes.
As well, provincial land use regulations that protect green spaces — for example Toronto's Greenbelt involving about 800,000 hectares of protected land from Peterborough, Ont., to Niagara Falls, Ont. — have made it more difficult to find land to develop and has pushed an explosion of condominium growth in major cities.
But one of the concerns is what will happen to these urban properties once the younger generation grows out of them.
"This continuing urbanization trend has fuelled the condo boom in Toronto and other cities, but some question what will happen as the lifestyles of today's young urban singles and couples change. Will they move out of the city core in search of larger homes, schools and services, or will they — like their counterparts in other parts of the world — simply adapt to smaller living spaces?" the report asks.
Magliocco said Canadian cities will either go the way of New York, where families are willing to sacrifice space to live in the city, or the way of London, where families are used to living outside the city and commuting downtown for work.
The rapidly growing condo markets in cities such as Toronto and Vancouver have also raised concerns about an oversupply of units and whether the boom is overly weighted towards wealthy, foreign investors who lease the units to others.
Meanwhile, an expected rise next year in interest rates from historically low levels may also influence demand in the housing market.
However, among the 1,400 people interviewed and surveyed for the report, which included private property investors and developers, commercial developers and real estate service firms, the consensus was that the Canadian market is strong enough to weather a bump in mortgage rates.
"The improvement in the U.S. economy indicates that higher rates could be coming, but the economic stability in Canada and the United States will continue to attract foreign capital," said the report. "In addition, retiring baby boomers are likely to flood the market with private capital as they look to turn stock options and retirement packages into stable, income-generating assets."
Overall, the report sees developers responding to the needs of downtown dwellers by building more mixed-used properties, which include residential and retail space.
"Looking ahead, we can expect to see more and more retail and services along the streets of Canada's city cores and along major transit arteries, especially where new developments predominate. Major brands are likely to move into these new spaces, too — though with new formats and smaller footprints," said the report.
The report also noted that Calgary, Edmonton and Vancouver, will see the most residential growth in 2015, a trend that has been helped by more jobs becoming available in the West than in Central Canada, while Calgary and the Greater Toronto Area will hold the most potential for retail growth.
Source: http://www.huffingtonpost.ca/2014/10/28/canadian-real-estate_n_6059170.html?utm_hp_ref=real-estate-canada
The annual outlook on emerging real estate trends says the move downtown, which has emerged in the past few years, will continue as more Canadians decide to stay in or move back to urban cores.
Much of this is due to changing demographics as young families and millennials forgo the white picket fence and house in the suburbs to take advantage of downtown living, where properties are smaller but offer more conveniences, said the 112-page report released Tuesday.
Frank Magliocco, Canadian real estate leader at PricewaterhouseCoopers, said there are a number of factors behind the urban growth, including that Canadians are more aware of the environmental costs associated with urban sprawl as well as the cost in time and money of lengthy commutes.
As well, provincial land use regulations that protect green spaces — for example Toronto's Greenbelt involving about 800,000 hectares of protected land from Peterborough, Ont., to Niagara Falls, Ont. — have made it more difficult to find land to develop and has pushed an explosion of condominium growth in major cities.
But one of the concerns is what will happen to these urban properties once the younger generation grows out of them.
"This continuing urbanization trend has fuelled the condo boom in Toronto and other cities, but some question what will happen as the lifestyles of today's young urban singles and couples change. Will they move out of the city core in search of larger homes, schools and services, or will they — like their counterparts in other parts of the world — simply adapt to smaller living spaces?" the report asks.
Magliocco said Canadian cities will either go the way of New York, where families are willing to sacrifice space to live in the city, or the way of London, where families are used to living outside the city and commuting downtown for work.
The rapidly growing condo markets in cities such as Toronto and Vancouver have also raised concerns about an oversupply of units and whether the boom is overly weighted towards wealthy, foreign investors who lease the units to others.
Meanwhile, an expected rise next year in interest rates from historically low levels may also influence demand in the housing market.
However, among the 1,400 people interviewed and surveyed for the report, which included private property investors and developers, commercial developers and real estate service firms, the consensus was that the Canadian market is strong enough to weather a bump in mortgage rates.
"The improvement in the U.S. economy indicates that higher rates could be coming, but the economic stability in Canada and the United States will continue to attract foreign capital," said the report. "In addition, retiring baby boomers are likely to flood the market with private capital as they look to turn stock options and retirement packages into stable, income-generating assets."
Overall, the report sees developers responding to the needs of downtown dwellers by building more mixed-used properties, which include residential and retail space.
"Looking ahead, we can expect to see more and more retail and services along the streets of Canada's city cores and along major transit arteries, especially where new developments predominate. Major brands are likely to move into these new spaces, too — though with new formats and smaller footprints," said the report.
The report also noted that Calgary, Edmonton and Vancouver, will see the most residential growth in 2015, a trend that has been helped by more jobs becoming available in the West than in Central Canada, while Calgary and the Greater Toronto Area will hold the most potential for retail growth.
Source: http://www.huffingtonpost.ca/2014/10/28/canadian-real-estate_n_6059170.html?utm_hp_ref=real-estate-canada
Monday, November 3, 2014
‘Bully offers’ create fairness for investors
A new phrase being added to real estate listings is treating investors as fairly as it treats sellers, say agents.
Bosley Real Estate has added the phrase, ‘the seller reserves the right to consider pre-emptive offers’, commonly known as ‘bully offers’, to its listings.
Ann Bosley, vice president of Bosley Real Estate, says: “I think it makes it fairer for the buyers; they’re not left out in the cold.”
The Canadian housing market has seen an increased demand for property. For example, a house would be brought to market on a Friday and it would be sold by Friday night.
But is this timeline fair to investors? Does it allow for the property to really be exposed on MLS? Is there enough opportunity for people to see it?
“We heard of a recent case with the Real Estate Council of Ontario, where a buyer had walked through an open house but hadn’t contacted his agent,” says Bosley. “He learned at the open house that there were no offers until Thursday, so the buyer waited to contact his agent, and lo and behold, the property was sold.”
“In instances like that, we’re actually saying in our listings, the seller doesn’t want to look at offers until Thursday but he does reserve the right to change his mind.”
This added phrase provides the interested investor the opportunity to get their ducks in a line, adds Bosley.
“You don’t have to offer earlier, but don’t sit back on your haunches and wait until Thursday before you start calling the bank. From our perspective, it’s a fair way to treat the buyers while still exposing the property and allowing for the fact that the seller might change their mind.”
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