Collins Condos News

This Toronto building shows why developers are converting rentals to condos

Posted on October 24, 2017

Posted in Toronto Real Estate, Toronto Rental Market

Photo: King Portland Centre

This week, a major new development’s condo units sold out, just days after they went on sale. But those same units had originally been designated as rental, before the new rent control legislation led the developers to have a change of heart.

On Tuesday, RioCan and Allied Properties announced that the condo units at the downtown Toronto King Portland Centre — 133 units which went on sale just a few days before, on October 14 — where substantially sold out.

“The strong response to the sales launch… this past weekend affirmed the decision by RioCan and Allied to convert the project from rental to condominium,” writes RioCan CEO Edward Sonshine, in a statement.

The development — a mixed-use commercial/residential complex set to house Canadian tech giant Shopify — made headlines last month for the conversion, a decision Sonshine attributed to the introduction of province’s extended rent control under its Fair Housing Plan. 

The development is just one example of a growing trend. According to a report commissioned by the Federation of Rental-housing Providers of Ontario, more than 1,000 planned purpose-built rental units have been converted to condos since the provincial policy came into effect.

The report also found that 20,000 of more than 28,000 planned purpose-built rental units in the GTA were under review as a result of the policy change.

“The introduction of rent control was the main catalyst for many of these developers to convert planned rental units into condos,” Urbanation senior vice president Shaun Hildebrand tells BuzzBuzzNews.

Hildebrand says that, while the number of proposed purpose-built rental units continued to rise in the second quarter, the pace of growth had slowed.

9 key takeaways from Toronto’s resale housing market in September 2017

Posted on October 16, 2017

Posted in Toronto Real Estate

Photo: Christine Wagner/Flickr

The results are in for the first month of the fall homebuying season and they are decidedly mixed.

According to September data released today by the Toronto Real Estate Board (TREB), GTA home sales continued their downward trend that began in the summer months. Last month the GTA recorded 6,379 home sales, down 35 per cent compared to the same period in 2016.

Home prices continued to increase, but at a much slower clip compared to the highs experienced in the first four months of the year.

In short, GTA housing’s performance in September wasn’t a formidable return for the once red-hot market, nor was it the major correction some had been predicting.

Here are 9 more key stats and takeaways from the September 2017 TREB report:

1. New GTA listings shot up to 16,469 in September, a 9.4 per cent increase over the same time in 2016.

2. TREB President Tim Syrianos believes homebuyers who remained on the sidelines waiting for more supply to hit the market will spring into action in order to take advantage of the changing marketplace.

3. The average sold price in the GTA was $775,546, up 2.6 per cent from September 2016. Meantime, the MLS Home Price Index composite benchmark — a steadier measure of the market — rose 12.2 per cent year-over-year. For comparison, the composite benchmark increased 31.3 per cent year-over-year in April of this year.

4. Despite the overall market showing signs of price growth moderation, the resale condo market remained hot to the touch. Both average and benchmark sale prices were up 20 per cent compared to 2016 for GTA condos.

5. While prices in the condo segment were up, sales were not immune to the declines observed in other market segments. Condo sales dropped 27.5 per cent year-over-year in September.

6. The largest declines, however, were observed in the detached housing segment, where sales fell 40 per cent year-over-year across the GTA.

7. While the detached home average sale prices fell in the 905, the 416 still posted a 4.4 per cent gain, hitting $1,355,234 in September.

8. In a note published in response to the TREB data, RBC economist Robert Hogue writes that “the period of monthly price declines could be ending soon.” Hogue says that August and September were characterized by “balanced demand-supply conditions” in the GTA and this balance is expected to be maintained over the near term.

9. But Hogue is quick to clarify that he doesn’t expect prices to rebound. “Rising interest rates, poor affordability and the possibility of further policy tightening will generate significant headwinds for local buyers,” he writes. Instead, he is predicting a period of flat or “minimally rising activity and prices.”

The factors influencing Toronto’s real estate market this fall (and beyond)

Posted on October 12, 2017

Photo: Josh Sherman

Toronto’s real estate board recently released data giving a glimpse of how the city’s housing market is performing in the early fall, typically a busier time of the year for the industry.

But this fall is anything but typical.

In this uncharted territory, here’s what experts are saying about the real estate market, and the September numbers from the Toronto Real Estate Board (TREB).

Listings surge still not here

Around the midway point of last month, at least some realtors had been caught off guard. There hadn’t been the widely expected surge in new listings after a quiet late summer. That surge still has not materialized, and BMO Senior Economist Robert Kavcic suggests why.

“I think, for one, a lot of people are probably looking at — especially in the detached market — prices that are 10 per cent off from where they were a couple months ago, right? So in some cases, they may want to just be holding back and waiting for prices to come back up,” he says, noting he observed the same thing happening in Vancouver when that market was cooling.

John Pasalis, founder of Realosophy, a data-savvy brokerage, says stabilizing listings have “brought a little bit more balance to the market.”

However, Diana Petramala, senior researcher at Ryerson University’s Centre for Urban Research and Land Development, adds more homes are on the market this fall than last. “Note that while new listings have returned to normal levels, active listings are still up 70% year-over-year,” says Petramala.

Interest rates should tame Toronto

Listings may not have spiked, but sales activity was down 35 per cent in September from a year prior. Part of the reason the market hasn’t heated up again is because interest rates, while still historically low, have begun to rise on the shoulders of back-to-back overnight rate hikes from the Bank of Canada.

“On top of the [Fair Housing Plan] measures, we had the Bank of Canada raise rates for the second time, so psychology is still getting returned back to a more normal environment,” says Kavcic.

Toronto still has “terrific” fundamentals, often considered factors conducive to homebuying, such as population growth and employment rates, so further action from the Bank of Canada will be needed next year to keep a lid on prices, Kavcic says. “If they raise rates three or four times, I think that’ll really [keep] psychology in check.”

In addition to the Fair Housing Plan and central bank moves, Petramala says eroded housing affordability is cooling Toronto’s market.

“The average sales price has come down by almost $100,000 since the market peaked earlier this year… but affordability is still the most unfavourable it’s been in over a decade,” she says.

OSFI a wildcard factor

A notorious Canadian housing bear previously issued a dire prediction about the countrywide impact an Office of the Superintendent of Financial Institutions (OSFI) decision could have on the housing market. 

OSFI, an independent government watchdog and regulator, is considering expanding stress testing to all uninsured mortgage applications.

But while the bearish Garth Turner said the move could take up to 20 per cent of current potential homebuyers out of the market, Kavcic responds more generally. “It probably ends up having a bigger impact than some of the smaller changes we’ve seen in the past,” he says.

Realosophy’s Pasalis expects the Toronto market to continue on its current soft-sellers-market path — unless OSFI steps in. “If that happens, I mean, it’s anyone’s guess,” he says.

The top 10 Toronto Developments on BuzzBuzzHome in September 2017

Posted on October 10, 2017

Posted in The One, Bianca, Bisha Condos,

10. Glen Agar by Minto

9. One Forest Hill by North Drive

8. 88 Scott by Concert

7. The Residences of 33 Yorkville by Cresford Development Corporation

6. Canada House Condos by Concord Adex

5. Mirabella Luxury Condos by Diamante Development Corporation

4. Bianca by Tridel

3. The One by Mizrahi Developments

2. Bisha Hotel and Residences by Lifetime Developments and INK Entertainment

1. ZEN King West by CentreCourt Developments

This CentreCourt development is launching soon on Toronto’s King West, near Strachan Avenue. With the Entertainment District nearby and a new trendy bar or restaurant opening up seemingly every day on King Street, it’s not surprise ZEN has shot up to the top of this list. Future residents will also have the newly opened Trillium Park only a short bike ride or stroll away, as well as a 3,500 square foot on-site ZEN spa at their disposal.

Great Gulf set to acquire Mirvish Gehry project in Toronto’s Entertainment District

Posted on October 03, 2017

Posted in Toronto Real Estate, Toronto Rental Market

Great Gulf announced today that it has reached an agreement to acquire the two-tower Mirvish Gehry project on Toronto’s King West.

“We are very excited to add this signature project to our Great Gulf development portfolio. It will be Toronto’s first internationally acclaimed development from one of the world’s most celebrated architects, Frank Gehry,” says Great Gulf Homes President Christopher Wein, in a media release announcing the acquisition.

First announced in fall 2012, the ambitious proposal from David Mirvish and famed Canadian architect Frank Gehry originally included three towers. However, current approved plans scaled back the proposal to two towers, with a 92-storey west tower and a 82-storey east tower. A total of 1,949 residential units will be spread across the two buildings.

“It’s a magnificent development opportunity and aligns well with our vision to build iconic state-of-the-art developments. Toronto is truly a global city and this development will continue to build our reputation on the world stage. The entire team at Great Gulf is excited to work with Frank Gehry to realize the bold vision and legacy of David Mirvish,” says Great Gulf’s Wein.

The Toronto-based developer has 12 developments (including Mirvish Gehry) either selling, renting or in registration in southern Ontario, including the recently completed Number One Bloor, one of the city’s tallest condo towers. It remains unclear if the development plans will change in any material way following the acquisition, though the language used by Wein and Ed Mirvish Enterprises President David Mirvish indicates it will remain true to the original vision for the project.

“I believe the project will do honour to the history of the people in the city who built it to what it is today and will continue to project Toronto’s possibilities onto the world stage. Ed Mirvish Enterprises and Projectcore will move forward to support Great Gulf’s efforts throughout the process as they fulfill Gehry’s vision for Toronto,” says Mirvish, in the media release.

Ontario’s potential rental housing crisis in 11 statistics

Posted on October 03, 2017

Posted in Toronto Rental Market, Toronto Real Estate

Photo: James Bombales

Earlier this week, the Federation of Rental-housing Providers of Ontario (FRPO) published a major report prepared by Toronto-based real estate market data firm Urbanation on the state of the Ontario rental market with a focus on the province’s largest region, the GTA.

A number of the report’s key findings will come as no surprise to those who have recently searched for rental housing in the city and surrounding region. Demand for rentals has hit multi-decade highs, according to the report, “driven by robust economic and population growth, job creation for prime renter cohorts, and a decline in homeownership affordability.”

While the report makes some encouraging observations on expected increases to the rental supply, the housing advocate concludes that a significant supply shortfall will remain and likely worsen unless the pace of construction ramps up quickly to meet demand.

Without policy action, the FRPO expects Ontario renters, especially those in the GTA, will experience mounting challenges in finding suitable housing.

Here are 11 stats from the report that illustrate the difficult market conditions that the province’s renters face:

1. The vacancy rate for purpose-built rental buildings sat at a 15-year low at the end of 2016. It was 2.1 per cent in the province and 1.3 per cent in Toronto.

2. The vacancy rate for Toronto condos — many of which are purchased by investors and added to the city’s rental pool — was even lower at the end of last year, sitting at a seven-year low of 1 per cent.

3. Eighty-five per cent of purpose-built rentals in Ontario are over 35 years old. Upgrading this aging existing stock will require a significant investment from rental owners, possibly to the tune of $5 billion over the next 5 years, the report estimates.

4. When looking at the age distribution of renters, the 25 to 34 year old demographic made up 21 per cent of total renter households in Ontario, making this cohort the “prime renter age segment.” The 35-44, 45-54 and 65+ age segments each made up 19 per cent of the total. Over the next five years, however, the prime 25 to 34 year old segment will see “accelerated population increases” thus further increasing demand for rentals.

5. Immigration to the Greater Toronto Area represented 30 per cent of Canada’s immigration total. Ninety thousand immigrants came to the region in 2016 and a similar number are expected to arrive in 2017. As the report notes, the majority of recent immigrants rent when they arrive.

6. After hitting a five-decade high in 2011, the homeownership rate in Ontario is expected to “flatten or decline in the next 10 years.” Affordability issues, higher interest rates and stricter mortgage policies are all expected to contribute to this trend.

7. By mid-2017, the cost disparity between owning and renting in the GTA remained at its highest level in more than five years.

8. On the rental supply side, purpose-built rental development reached its highest level since the 80s in both Ontario and the GTA. However, after the new rent control measures were unveiled as part of the province’s Fair Housing Plan, the rate at which new purpose-built rental buildings were proposed slowed when compared to previous quarters, with some projects originally proposed as rental even indicating a change to condominium.

9. On the rental demand side, the report forecasts that rental demand will outweigh supply by approximately 57,500 units over a 10-year period, or 5,750 units per year. This unit total “does not necessarily represent the level of additional rental development required to bring the market into a state of balance, but rather represents a level that keeps conditions from worsening over time.”

10. There is only one rental unit under construction per 1,000 GTA residents. In Vancouver, the ratio is over three rental units while in Montreal, it’s two units.

11. According to the report, rental starts need to double immediately and eventually triple from current levels just to satisfy demand.