Lack of homes for the 'missing middle' to impact GTA

Building the right homes to meet the demands of the population is essential to avoid a sizeable deficit in housing supply in the Greater Toronto and Hamilton region.

A new report from the Residential and Civil Construction Alliance of Ontario warns that the region is at risk of missing provincial population targets, which could potentially result in 7,200 fewer new homes being built each year until 2041.

The report says that homes to encourage seniors to downsize and to provide the right space for families are essential to avoid skewing the region’s population older with a resulting impact on the economy.

The report - GTHA's Unbalanced Housing Stock: Benchmarking Ontario's New LPAT System - says that up to 165,600 homes are at risk of not being built over the next 23 years, equal to an annual loss of $1.95 billion in GDP from residential construction activity if various constraints continue to inhibit the goals set by the provincial growth plan, Places to Grow.

Medium density homes – the so called ‘missing middle’ are key to addressing this issue says Paul Smetanin – president of socio-economic research and data firm the Canadian Centre for Economic Analysis (CANCEA)who conducted the research.

"Hamilton has made the most progress on the 'Missing Middle,'" Smetanin says. "Toronto, Mississauga, Markham, Newmarket less so, while Brampton is biased towards lower density starts."

The big issues
The report highlights the key issues for the region’s most populous municipalities including:

• Only 15% of GTHA households live in medium-density housing, which leads to an inadequate supply of appropriate housing types for a range of household sizes and budgets.
• Toronto's number of annual starts is 5-15% higher than required to hit P2G targets. However, the mix of housing is constrained by land, meaning the city's supply will be highly skewed towards taller towers.
• York Region is the only one in the GTHA with current annual starts on pace to meet its future target population.
• Among municipalities with populations over 80,000 people, Oshawa, Brampton and Newmarket have the lowest share of higher-density starts.
• Municipalities can better optimize infrastructure investments by ensuring that community growth planning is based on a long-term and strategic analysis of our future housing requirements.

Source: https://www.canadianrealestatemagazine.ca/market-update/lack-of-homes-for-the-missing-middle-to-impact-gta-251794.aspx

Builders are planning to increase housing supply

The value of residential building permits issued by Canadian municipalities in October was up 4.2% to $5.2 billion.

The increase, reported by Statistics Canada, shows that the number of units for which permits were issued was up by a similar share (4.1%) to 20,017.

Both single-family and multifamily units posted increases month-over-month although overall it was apartment condos that drove the increase.

For single-family dwellings, there was the first increase in five months in value terms; up 4.6% to $2.3 billion. In unit volume terms, the increase was 2.2% to 5,052.

For the multifamily sector, there was a rise of 3.8% to $2.9 billion; and a rise of 4.7% to 14,965 new units. Ontario ($222m) and BC ($115m) posted the largest gains while Quebec saw a sizeable decline (-$238m).

The value of non-residential building permits fell 7.0% in October to $2.9 billion. Eight provinces posted declines, most notably British Columbia.

The overall value of permits issued for residential and non-residential properties was $8.1 billion in October, down 0.2% from September. The decrease was mainly attributable to lower construction intentions for industrial and institutional buildings.

Source: https://www.canadianrealestatemagazine.ca/market-update/builders-are-planning-to-increase-housing-supply-251718.aspx

Why VR and AR may become standard terms for real estate agents

The importance of effective listings is highlighted by a new report which shows that 1 in 5 homebuyers bought their home without physically walking through the property before deciding it was ‘the one’.

While that may be a risky strategy and most buyers still want to go inside their potential purchase, online listings do play an increasingly prominent role with almost three quarters saying that they toured or viewed images online before deciding which homes to physically visit.

The survey also reveals that 60% of respondents said they prefer to see homes furnished and professionally staged, or both furnished and empty, before making a purchase or signing a lease.

When moving into a new space, 65.4% of respondents said their top pain points included the stress of buying new furniture at once, shopping for furniture or designing their homes and finding furnishings to match their existing pieces.

The study was carried out by roOomy, a virtual staging and 3D modeling company which has just launched custom augmented reality (AR) and virtual reality (VR) tools for the real estate industry. The technologies allow for enhanced live views or an immersive digital experience.

“We’re enabling our Real Estate partners to transform the home buying and renting processes with the development of custom apps that allows users, both agents, and home seekers, to take control of how they visualize a new space. In this digital era, consumers expect to use advanced technology regularly, including when considering one of the biggest purchases of their lives – a home,” said Pieter Aarts, CEO of roOomy.

Sothebys International adopts AR
Sotheby’s International Realty has launched an AR app called Curate, which it says has empowered agents and consumers to virtually stage properties and view them with AR technology.

Nick Church, Pacific Sotheby’s International Realty sales associate says it adds an extra tool to win business.

“The seller felt confident in my ability to use the latest technology to sell the home,” he said.

Source: https://www.canadianrealestatemagazine.ca/market-update/why-vr-and-ar-may-become-standard-terms-for-real-estate-agents-251539.aspx

Investors have little to fear of a housing meltdown

Would-be investors who remain wary of the Canadian real estate market’s price growth should take a measure of comfort in the results of a new study conducted by Chartered Professional Accountants of Canada (CPA Canada).

The research found that the market’s fundamentals have robustness as their main feature, precluding any U.S.-style meltdown in the near future.

“Beyond prices and debt levels, Canada shares far fewer similarities with the U.S. than you might think. This becomes very apparent when you look at just one measure: credit quality,” CPA Canada chief economist Francis Fong stated.

Fong emphasized that seeing the U.S. crisis as a reference point for the possibility of a Canadian collapse would be futile due to the pre-eminence of different factors in the two markets.

The sheer volume of subprime mortgages issued to borrowers with low credit quality, who cannot afford to repay debt, is frequently cited as one of the leading causes of the U.S. breakdown.

In comparison, Canada’s share of high-credit-quality clients increased from 66% in 2002 to 88% in 2017, according to CMHC. During the same time frame, the proportion of low-credit-quality borrowers fell from 17% to just 3%.

“The situation in Canada is likely not a bubble in imminent danger of deflation; in fact, housing prices may reflect the true value of living space in Canada and in some markets increased household debt may be the new price for real estate,” Fong explained.

“Our cities frequently are listed among the best places to live and work in the world and, compared to their peer cities abroad, they are not among the most expensive. We may simply be dealing with the law of supply and demand so affordability could continue to be a challenge for the foreseeable future,” he added.

Source: https://www.canadianrealestatemagazine.ca/news/investors-have-little-to-fear-of-a-housing-meltdown-251448.aspx

Cut the mortgage red tape Mattamy Homes urges

Rising interest rates mean that the tighter mortgage lending rules introduced earlier this year are no longer needed.

That’s according to Toronto-based Mattamy Homes which says the measures brought in to cool overheated housing markets have done their job but are now having a negative impact.

Mattamy, along with the Canadian Home Builders Association, is urging the government to relax lending rules to enable younger buyers to move forward with their homebuying ambitions.

“We’re going to continue to lobby for a pullback now on B-20,” Brad Carr, chief executive officer of Mattamy Homes Canada told Bloomberg. “That had a very targeted outcome. It’s been achieved so it’s kind of overkill now.”

David Foster of the CHBA added that markets that were already soft, such as Calgary, are getting “hammered” by the B-20 mortgage regulations that introduced stress tests for CMHC-backed loans.

Despite the pleas from builders, an OFSI spokesperson told Bloomberg that sound mortgage underwriting including consumer stress tests are important given “current risks and vulnerabilities”.

Source: https://www.canadianrealestatemagazine.ca/market-update/cut-the-mortgage-red-tape-mattamy-homes-urges-251356.aspx