Canadian home sales drop in April

Ottawa, ON, May 15, 2017 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in April 2017.

Highlights:

  • National home sales fell 1.7% from March to April.
  • Actual (not seasonally adjusted) activity in April was down 7.5% from a year earlier.
  • The number of newly listed homes jumped 10% from March to April.
  • The MLS® Home Price Index (HPI) was up 19.8% year-over-year (y-o-y) in April 2017.
  • The national average sale price rose 10.4% y-o-y in April.

Home sales over Canadian MLS® Systems fell by 1.7% in April 2017 from the all-time record set in March.

April sales were down from the previous month in close to two-thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.

Actual (not seasonally adjusted) activity was down 7.5% year-over-year, with declines in close to 70% of all local markets. Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last year’s record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.

“Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close,” CREA President Andrew Peck. “Meanwhile, sales are up in Calgary and Edmonton from last year’s lows and trending higher in Ottawa and Montreal. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to.”

“Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto,” said Gregory Klump, CREA’s Chief Economist. “The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only ten days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers.”

The number of newly listed homes jumped 10% in April 2017, led overwhelmingly by a 36% increase in the GTA. Housing markets in the Greater Golden Horseshoe also saw similar percentage increases.

The jump in new listings and drop in sales eased the national sales-to-new listings ratio to 60.1% in April compared to 67.3% in March.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above 60% in just over half of all local housing markets in April, mostly in British Columbia and southwestern Ontario. The GTA downshifted into the middle of the balanced range in April, while Greater Vancouver and the Fraser Valley have returned to sellers’ market territory.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.2 months of inventory on a national basis at the end of April 2017, up slightly from 4.1 months in March when it fell to its lowest reading in almost a decade.

Although new listings surged in the Greater Golden Horseshoe, inventories remain tight at near or below one month across the region. Ontario’s recent changes to housing policy were announced late in the month, so their full effect on the balance between supply & demand has yet to be determined.

The Aggregate Composite MLS® HPI rose by 19.8% y-o-y in April 2017. Price gains accelerated for all benchmark housing categories tracked by the index.

Two-storey single family homes posted the strongest year-over-year price gains (+21.8%), followed closely by townhouse/row units (+19.9%), apartment units (18.8%) and one-storey single family homes (17.2%).

While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by location.

After having dipped in the second half of last year, home prices in the Lower Mainland of British Columbia have been recovering, are up from levels one year ago, and are now at new heights or trending toward them (Greater Vancouver: +11.4% y-o-y; Fraser Valley: +18% y-o-y).

Meanwhile, benchmark home price gains remained in the 20% range in Victoria and elsewhere on Vancouver Island. Price gains were in the 30% range in Greater Toronto and Oakville-Milton, and ranged in the mid-20% in Guelph.

By comparison, home prices eased in Calgary (-0.9% y-o-y) and Saskatoon (-2.6% y-o-y) and are now about 5.5% below their peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+0.4% overall, led by a 2% increase in apartment prices), Ottawa (+4% overall, led by a 4.9% increase in two-storey single family home prices), Greater Montreal (+3.7% overall, led by a 5.5% increase in prices for townhouse/row units) and Greater Moncton (+4.8% overall, led by a 12.7% increase in prices for townhouse/row units).

The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in April 2017 was $559,317, up 10.4% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations trims more than $150,000 from the average price.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month. 

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. 

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. 

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca




Canadian home sales edge higher from February to March

Ottawa, ON, April 18, 2017 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in March 2017.

Highlights:

  • National home sales rose 1.1% from February to March.
  • Actual (not seasonally adjusted) activity in March was up 6.6% from a year earlier.
  • The number of newly listed homes climbed 2.5% from February to March.
  • The MLS® Home Price Index (HPI) was up 18.6% year-over-year (y-o-y) in March 2017.
  • The national average sale price increased by 8.2% y-o-y in March.

Home sales over Canadian MLS® Systems edged up 1.1% in March 2017, surpassing the previous monthly record set in April 2016 by one-quarter of a percent.

March sales were up from the previous month in more than half of all local markets, led by the Lower Mainland of British Columbia, London & St. Thomas and Montreal.

Actual (not seasonally adjusted) activity in March was up 6.6% year-over-year, with gains in close to 75% of all local markets. Sales in the Greater Toronto Area (GTA) posted the biggest increase, which offset a decline in the number of homes changing hands in Greater Vancouver.

“The current strength in national home sales mainly speaks to what’s going on in and around Toronto,” said CREA President Andrew Peck. “Elsewhere, sales either remain slow or well below previous heights. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”

“The latest Canadian housing market statistics suggest that the drum-tight housing market balance in Toronto and nearby cities stands in contrast to housing market trends elsewhere in Ontario and other provinces,” said Gregory Klump, CREA’s Chief Economist. “Because housing market balance varies by location, federal or provincial policy measures aimed at cooling demand in Toronto risk destabilizing housing markets elsewhere.”

The number of newly listed homes rose 2.5% in March 2017, led by gains in the GTA, Calgary, Edmonton and the Lower Mainland of British Columbia.

With new listings having climbed by more than sales, the national sales-to-new listings ratio eased to 67.4% in March compared to 68.3% in February.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above the sellers’ market threshold in about 60% of all local housing markets in March, the majority of which are located in British Columbia, in and around the GTA and across southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.1 months of inventory on a national basis at the end of March 2017, down from 4.2 months in February and the lowest level for this measure in almost a decade. The number of months of inventory in March 2017 stood at or below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie & District, parts of the Niagara Region and parts of cottage country.

The Aggregate Composite MLS® HPI rose by 18.6% y-o-y in March 2017. Price gains accelerated for all benchmark housing categories tracked by the index.

Prices for two-storey single family homes posted the strongest year-over-year gains (+21%), followed closely by townhouse/row units (+17.9%), one-storey single family homes (16.6%) and apartment units (16.3%).

While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by location.

In the Fraser Valley and Greater Vancouver, prices have been recovering in recent months after having dipped in the second half of last year. On a year-over-year basis, home prices in the Fraser Valley and Greater Vancouver remain well above year-ago levels (+19.4% y-o-y and +12.7% y-o-y respectively).

Meanwhile, y-o-y benchmark price increases were in the 20% range in Victoria and elsewhere on Vancouver Island. Guelph recorded a similar price gain, while Greater Toronto and Oakville-Milton saw prices rise in the 30% range in March.

By comparison, home prices eased by 1.2% y-o-y in Calgary and by 1.5% y-o-y in Saskatoon. Prices in these two markets now stand 5.4% and 5.1% below their respective peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+1.7%), Ottawa (+4%), Greater Montreal (+3.3% y-o-y) and Greater Moncton (+4.7%).

Year-over-year price gains were led by different benchmark housing categories in each of these markets. In Regina, apartments posted the biggest price increase, which snapped a long series of price declines for apartments that began in early 2015. In Ottawa, prices rose most for one-storey single family homes. In Montreal, two-storey single family home prices posted the biggest gain; meanwhile in Moncton, it was townhouse/row unit prices that climbed the most.

The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in March 2017 was $548,517, up 8.2% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets.

Greater Vancouver’s share of national sales activity has diminished considerably over the past year, giving it less upward influence on the national average price. Even so, the average price is reduced by more than $150,000 to $389,726 if Greater Vancouver and Greater Toronto sales are excluded from calculations.

– 30 –

PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month. 

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. 

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. 

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca




Laura-Leah Shaw, REALTOR® from Vancouver, selected for national award celebrating wide range of philanthropic work

OTTAWA, March 27, 2017 – The Canadian REALTORS Care® Foundation has named Laura-Leah Shaw, of Vancouver, British Columbia, the recipient of its national award – the Canadian REALTORS Care® Award 2017 Proudly Presented by REM.

Shaw, of RE/MAX Crest Realty Westside, was selected because of the multitude of charities and activist organizations she actively supports. From supporting Vancouver-based homeless shelters and spearheading animal rights’ groups, to dropping off items at city food banks and being the longest-serving volunteer of the REALTORS Care® Blanket Drive, Shaw fully devotes herself to helping others.

For more than 15 years, Shaw has been collecting healthy food options for the Lookout Society, an emergency aid organization helping Vancouver’s most vulnerable. Last year, she delivered more than 2,500 boxes of food – as well as furniture, clothes and appliances – to the Lookout Society and similar organizations in the city’s poorest neighbourhoods. She was also the first REALTOR® to join the HomeStart Foundation more than 11 years ago, helping those who are less fortunate complete their home.

As well as going above and beyond caring for humans, Shaw is passionate about the welfare of animals. She’s president of the Anti-Vivisection Society of British Columbia, advocating for an end to animal testing, has been volunteering with the Vancouver Humane Society for 12 years and estimates having saved the lives of thousands of animals.

“Laura-Leah is a relentless force for good in her community,” said Ralph Fyfe, chair of the Canadian REALTORS® Care Foundation. “Her noble commitment to helping others and working towards creating a cruelty-free world is truly inspiring.”

In recognition of the award, the Canadian REALTORS Care® Foundation will be donating $5,000 to Animal Justice Canada – a registered non-profit animal law organization close to Shaw’s heart.

“Being honoured with the Canadian REALTORS Care® Award is truly humbling. It’s not an award for me, it’s an award for all the people and animals in need that we can touch and help,” Shaw said. “Helping those in need feeds my soul. I hope to be able to use the award to bring new ideas of how to help and encourage the generous giving spirit in even more REALTORS®.”

The Canadian REALTORS Care® Award was established in 2015 to honour REALTORS® who do outstanding charitable work in the communities where they live and work. The Foundation’s inaugural winner was Vince Mirabelli of Thunder Bay, Ontario. A selection committee reviews nominees and chooses a winner based on the REALTOR®’s personal contribution and commitment to supporting one or more registered charities in Canada.

– 30 –

About the Canadian REALTORS Care® Foundation

The Canadian REALTORS Care® Foundation is the REALTOR® community’s national charitable foundation, founded in 2007 and funded by the Canadian Real Estate Association. Our Foundation is dedicated to inspiring, supporting and sharing REALTORS®’ charitable achievements in their communities and raising awareness about the charities they care about.

From 2012 to 2015 alone, the Canadian REALTOR® community reported giving in excess of $91.2 million to the various charities close to their hearts. Please visit www.REALTORSCare.ca to learn more about how REALTORS® are making a difference in communities across Canada.

About the Canadian Real Estate Association

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 REALTORS® working through some 90 real estate boards and associations.

For further information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
613-237-7111 or 613-884-1460
pleduc@crea.ca




Canadian home sales climb in February

Ottawa, ON, March 15, 2017 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in February 2017.

Highlights:

  • National home sales rose 5.2% from January to February.
  • Actual (not seasonally adjusted) activity in February was down 2.6% from a year earlier.
  • The number of newly listed homes was up 4.8% from January to February.
  • The MLS® Home Price Index (HPI) in February was up 16% year-over-year (y-o-y).
  • The national average sale price edged up 3.5% y-o-y in February.

Home sales over Canadian MLS® Systems rose by 5.2% month-over-month in February 2017 to reach the highest level since April 2016.

While February sales were up from the previous month in about 70% of all local markets, the national increase was overwhelmingly driven by an increase in activity across the Greater Toronto Area (GTA) and environs.

Actual (not seasonally adjusted) activity was down 2.6% from levels for the same month last year. The decline reflects a moderation in sales in the Lower Mainland of British Columbia compared to extraordinarily elevated levels recorded one year ago.

“Housing market trends continue to differ by region,” said CREA President Cliff Iverson. “Homes are selling briskly throughout the Greater Toronto Area and nearby communities. Elsewhere, competition among potential buyers is less intense, so listings take longer to sell. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”

“In and around Toronto, many potential move-up buyers find themselves outbid in multiple-offer situations amid a short supply of listings,” said Gregory Klump, CREA’s Chief Economist. “As a result, they aren’t putting their current home on the market. It’s something of a vicious circle from the standpoint of a supply shortage and a challenge for first-time and move-up home buyers alike. By contrast, housing markets in urban markets elsewhere in Canada are either balanced or are amply supplied. Because housing market conditions vary by region, further tightening of mortgage regulations aimed at cooling the housing market in one region may destabilize it elsewhere.”

The number of newly listed homes rose 4.8% in February 2017, led by the GTA and nearby markets following a sharp drop in January. More than one-third of all local housing markets saw new listings recede from levels the previous month, including those in the Prairies, northern Ontario and the Atlantic region. Meanwhile, new listings in the Greater Vancouver region fell significantly from January levels, having retreated by nearly 25% to reach the lowest level since 2001.

With similar monthly increases in both sales and new listings, the national sales-to-new listings ratio was 69.0% in February, little changed from 68.7% in January.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above 60% in almost 60% of all local housing markets in February, the majority of which are located in British Columbia, in and around the GTA and across southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.2 months of inventory on a national basis at the end of February 2017, down from 4.5 months in January and the lowest level for this measure in almost a decade.

The imbalance between limited housing supply and robust demand in Ontario’s Greater Golden Horseshoe region is without precedent (the region includes the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country).

The number of months of inventory in February 2017 stood below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie & District and the Kawartha Lakes region.

The Aggregate Composite MLS® HPI rose by 16% y-o-y in February 2017. This was up from January’s gain reflecting an acceleration in home price increases, particularly for single family homes in and around Toronto.

Prices for two-storey single family homes posted the strongest year-over-year gains (+17.9%), followed closely by townhouse/row units (+16%), one-storey single family homes (15%) and apartment units (13.7%).

While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by location.

In the Fraser Valley and Greater Vancouver, prices are slightly off their peaks posted in August 2016. That said, home prices in these regions nonetheless remain well above year-ago levels (+21.4% y-o-y and +14% y-o-y respectively).

Meanwhile, benchmark prices continue to climb in Victoria and elsewhere on Vancouver Island, as well as in Greater Toronto, Oakville-Milton and Guelph. Year-over-year price gains in these five markets ranged from about 18% to 30% in February.

By comparison, home prices were down by 1.9% y-o-y in Calgary and by 1.2% y-o-y in Saskatoon. Prices in these two markets now stand 5.6% and 5.1% below their respective peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+3.5%), Ottawa (+3.8%), Greater Montreal (+3.3% y-o-y) and Greater Moncton (+1.2%).

The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in February 2017 was $519,521, up 3.5% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets.

That said, Greater Vancouver’s share of national sales activity has diminished considerably over the past year, giving it less upward influence on the national average price. The average price is reduced by almost $150,000 to $369,728 if Greater Vancouver and Greater Toronto sales are excluded from calculations.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month. 

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. 

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. 

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca




CREA Updates and Extends Resale Housing Market Forecast

Ottawa, ON, March 15, 2017 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2017 and 2018.

Canadian housing market trends continue to display considerable regional divergence. In British Columbia, activity in the Lower Mainland has cooled markedly from all-time highs recorded early last year; however, sales and price pressures elsewhere in the province remain historically strong.

In the resource-intensive provinces of Alberta, Saskatchewan, and Newfoundland and Labrador, sales activity is still running at lower levels and supply is elevated. This has resulted in weakened price trends for these provinces.

In housing markets around the Greater Toronto Area and including the furthest reaches of Ontario’s Greater Golden Horseshoe (the region includes the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country), the balance between supply and demand has become increasingly tight. This is expected to lead to continued double-digit price growth, resulting in further erosion in affordability and sales activity in the absence of a significant and sustained rise in new supply.

Elsewhere, housing markets in places like Manitoba, Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island have all experienced, to varying degrees, a breakout year in 2016 following a number of years of stagnation, with rising sales drawing down elevated supply.

Recently tightened mortgage rules, higher mortgage default insurance premiums and an expected rise in mortgage interest rates all represent headwinds to affordability in all Canadian housing markets. It will be some time before their full impact on housing markets is evident.

In some regions, the recently tightened “stress test” for mortgage financing qualification will force some first-time buyers to re-think how much home they can afford and may lead to a drop in home purchases as they shop for a lower priced home. In regions where there is a shortage of lower-priced inventory, some sales may be delayed as buyers save longer for a larger down payment.

In markets like Vancouver and Toronto, where single family homes are in short supply and there are few affordable options, some buyers may find themselves priced out of the market entirely. In Toronto, the stress test for mortgage qualification may prompt some buyers to move further out into communities located in the Greater Golden Horseshoe where homes are more affordably priced.

Nationally, sales activity is forecast to decline by 3% to 518,700 units in 2017. In line with CREA’s previous forecast, the upward revision to the sales forecast for Ontario offsets a downward revision to British Columbia’s.

British Columbia is forecast to see the largest decline in sales in 2017 (-17.5%), followed by Prince Edward Island (‑10.8%). Activity in both provinces is retreating from all-time highs reached last year. Newfoundland & Labrador is also forecast to see a decline in sales in 2017 (-8.4%), continuing a softening trend that stretches back nearly a decade.

Alberta is forecast to have the largest increase in activity in 2017 (+5%) that still leaves it nearly 10% below the 10-year average.

Elsewhere, sales activity is forecast to be little changed from 2016 to 2017. Ontario sales are forecast to rise by less than 1% in 2017, as strong demand runs up against an increasingly acute supply shortage.

In provinces where economic and housing market prospects are closely tied to the outlook for oil and other natural resource industries, average prices are showing tentative signs of stabilizing in Alberta while softening in Saskatchewan and Newfoundland and Labrador.

While prices are still rising rapidly in Ontario, British Columbia has seen a compositional shift in the average price that reflects softer sales activity in the Lower Mainland which has some of the most expensive real estate in Canada.

Average prices in other provinces are either rising modestly or holding steady, reflecting well balanced supply and demand.

The national average price is forecast to rise by 4.8% to $513,500 in 2017, with significant regional variations. The average price is expected to retreat by more than 5% in British Columbia as well as Newfoundland and Labrador, by 2.8% in Saskatchewan while rising by more than 15% in Ontario.

In other provinces where average price last year began showing tentative signs of improving, average price gains are forecast to hold below the rate of inflation in 2017 as the impact of recent regulatory changes and higher expected mortgage rates lean against stronger demand and tighter market conditions.

In 2018, national sales are forecast to number 513,400 units, representing a decline of 1% compared to the 2017 forecast. Most of the annual decline is expected result from fewer sales in Ontario.

The national average price is forecast to rise by 5% to $539,400 in 2018, reflecting ongoing market tightness in Ontario and a further return to more normal levels in British Columbia. Price gains outside of the Greater Golden Horseshoe are not expected to approach the increase in the national average price.

Saskatchewan and Newfoundland and Labrador are projected to see average prices decline in 2018 by less than 1%. In most other parts of Canada, home price increases are forecast to more or less track overall consumer price inflation in 2018.

– 30 –

About The Canadian Real Estate Association

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 real estate Brokers/agents and salespeople working through more than 90 real estate Boards and Associations.

For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca­




GTA boom behind new Fiera Properties fund

Fiera Capital Corp. unit Fiera Properties Ltd. is launching a new, five-year closed end investment fund designed to capitalize on the rapid and seemingly unstoppable growth of the Greater Toronto Area.

Fiera PropertiesThe firm’s new GTA Opportunity Fund, currently with committed capital of $55 million after its first closing in July 2016, intends to invest in well-located, value-add and development projects through a joint-venture partnership strategy. The fund is currently raising additional investor capital for its second closing, scheduled for late 2016.

“This is focused on rising demand for space in the core urban markets, and it is following along the trends of urban intensification, transit-oriented development, live-work-play, walkability scores,” said Peter Cuthbert, Fiera Properties’ chief operating office and co-manager of the firm’s CORE fund.

“You hear about all those things. This GTA fund is really driven off those themes and we think they are very sustainable over the longer run.”

Underlying the investment strategy, he added, is the steady influx of new arrivals to Canada’s biggest city: an average of 100,000 new people every year and about 37,000 new housing starts annually. Municipalities in the GTA are struggling to keep pace with the growth and the strain on infrastructure such as roads, sewers and utilities and welcoming intensification to pay its bills.

“The best way for them to capitalize so they can reinvest in this failing infrastructure, and you see it all over Toronto with the construction that is going on, is to intensify use and create new taxpayers. So it is those themes that the fund is playing off of.”

High yield play

Fiera is touting “high mid-teen returns” which is attracting both institutional capital and private high net worth capital,” said Cuthbert.

“The institutional capital tends to be institutional investors who are already comfortable with real estate and are probably already working in the core space in real estate and they are now understanding the risks and appreciating the risks and finding the risk-return structure of what we are doing to be acceptable and another diversifier within the real estate asset class.”

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A common theme for investors in today’s ultra-low interest rate environment is the search for yield, something that firms such as Fiera are capitalizing on. “Yes it is yield, but the truth is that commercial real estate has become a legitimate asset class within a diversified portfolio and it didn’t used to be.

“Everybody had a 60-40 equity bond split and now they are realizing that commercial real estate with all its characteristics that are somewhat unique has a legitimate place in a diversified portfolio and adds elements that are both bond-like, or income-oriented and equity-like, so capital appreciation. Depending on how you want to structure a fund and the type of asset base that you want to invest in, you can literally manufacture a wide range of risk-reward profiles that can fit into any portfolio.”

Property in private hands

Cuthbert sees the investment prospects of the GTA fund starting with the value add repositioning of existing properties such as an old industrial building, upgrading it and increasing the rent revenue as part of the growing live, work, play theme.

“In general you are looking at buildings that have been undercapitalized, so they are probably in private hands, the family has not reinvested, they are taking all the rents out, things are starting to fall apart and they don’t want to reinvest in it.

“So we come in with intelligent capital, put it to work, and a building that is turning $3, $4, $5 in (per square foot) rent to something that is turning $14. It is pretty simple.”

At the other end of the spectrum, Fiera wants to invest in ground up development of under-utilized sites.

Fiera sees its role ultimately as the backer of six to eight development projects with about $70 million in equity at the end of the year when the fund closes. That investment capital will be boosted by debt leverage of between 65% to 70%.

“Some of it could be condo, some of it could be purpose-built rental, brand new retail, some of it could be brand new industrial. It is very opportunity driven. But it is really focused on this intensification and gentrification of older property in close proximity to long-term infrastructure.”

What’s in it for developers?

Filling the development funnel will be a partnering strategy with established developers who are project-rich but funding challenge.

“They have traditionally run around sourcing their capital from friends and family and then run it through the banks. That is quite a labour intensive process and you also have a lot of people to manage.”

Fiera’s alternative is to screen developers to select suitable partners and step up with funding. “What we have found is when you remove the task of finding the capital from the developer, the developer becomes more efficient and we are able to lever their platform with them. These guys tend to, for every project they are involved with, they already know two others that they want.”

The lure for developers, besides easier access to capital, is better financing terms through Fiera than developers would secure on their own, the executive added.

More funds in the future

Cuthbert noted that his firm targeted the GTA initially because the growth there is the strongest of any big city in the country, but said that Vancouver and Montreal are potential targets as well.

“This is fund one, there will be a fund two, a fund three, a fund four, if we have success with this one. It is why we deliberately provided a geographic focus, because we could see a series of these funds focused on different sectors and different regions and our investor client base now have an even broader choice in how they diversify and participate in the market.”

New faces at Fiera

Fiera also announced the hiring of Blair McCreadie as senior vice-president and fund manager. A 25-year industry veteran, he will be responsible for co-managing and growing the Fiera Properties CORE Fund. He was recently head of Canadian real estate at Standard Life, prior to its acquisition by Manulife Financial Corp. last year.

As well, William Secnik has joined Fiera Properties as vice-president, investments and will source and execute transactions for Fiera Properties’ investment funds. Will’s experience of more than 20 years includes acquisitions, financing, repositionings and dispositions on behalf of a cross-section of investment vehicles. He was recent managing director and senior portfolio director of real estate with Manulife Real Estate.

Fiera Properties currently has $1.7 billion of assets under management, made up of the Fiera Properties CORE Fund, the Fiera Properties GTA Opportunity Fund and its segregated accounts.

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Mainstreet Health Investments keeps its IPO promises

Modern U.S. presidents are often measured by how much they can accomplish in their first 100 days in office. By that yardstick, the performance of Mainstreet Health Investments (HLP.U-T) since its initial public offering in June looks pretty good.

Main Street Health“We don’t sit still long,” said Scott White, Mainstreet’s president.

The U.S.-based, Canadian-listed real estate company recently announced a series of deals to acquire holdings in seven seniors housing and care properties in the U.S. and Canada totaling 739 beds and suites as well as to invest in five mezzanine loans for a total of US$152 million. As well, it has reached an agreement for the termination of the company’s existing asset management agreement and the internalization of management.

“We announced this transaction 110 days after the IPO,” said the Indiana-based Scott. As well, the company raised US$78 in capital to support the acquisition.

Mainstreet has been busy over the past year, during which it assembled a portfolio of 24 properties which it took to market in June with its successful IPO, raising US$95-million in its IPO.

Second go round

The Mainstreet venture represents the second iteration of a previously successful strategy for the executives behind the company, explained its president.

In 2012 the same management group took a portfolio of assets public in Canada under the name HealthLease Properties.

“We built that portfolio from 2012 to 2014, from originally 12 assets to 53 assets then we sold it to Healthcare REIT. Had you been an investor with us in that original HealthLease Properties and held onto to your shares for a little over two years, you made a 67% return.”

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The management’s goal was “to reintroduce the strategy” that proved to be a winner with Canadian shareholders “given that we already had a track record there (and) we had brand recognition there.”

The Strategy

Unlike major competitors such as Chartwell Retirement Residences and Revera Inc., Mainstreet does not employ the owner-operator model, instead opting to own the real estate with a select group of operators.

“We may partner and make investments in operators, but we are not operators. This is a real estate play.”

Mainstreet does not have the size of a number of U.S. healthcare players such as Welltower Inc., Ventas REIT and Omega Healthcare Investors Inc. That may be an advantage, however, added Scott.

“We are looking at smaller transactions, we are not going to bid on large portfolios because we can’t prevail because our cost of capital is not going to compete with Welltower. But Welltower is not going to acquire a 50-50 joint venture with an owner operator in North Ontario, i.e. our Autumnwood deal (for two properties in Sudbury and North Bay, Ont.)

“We are a small company, they are a small team. We got to know the owner there, we are keeping him on as an operator and we are going to help him fund the growth of the company through future development.

“We are going to be more nimble, the ability to be able to create deal flow that way.”

New development pipeline too

Mainstreet is also affiliated with Indiana-based private property company Mainstreet Property Group “a very large developer of senior housing assets in the U.S.”

The public Mainstreet has a development agreement that allows it to see every development deal and it has the right to fund in part development in any project it likes.

“So it is a unique way to create a dedicated pipeline to the public company without making it a mandatory takeout vehicle.”

How Fast?

Asked how quickly Mainstreet can grow its asset base, the president used the prior company’s experience as a measuring stick.

“We grew that at about (US)$300 million to (US)$400 million a year. In the last year we assembled a portfolio a little north of over $600 million. That is probably a little bit aggressive. But if history is any indicator, I think for us to grow by $300 million to $400 million in gross book value, that is doable.”

Scott sees plenty more deals like the seven his company reached over the summer. “It is not going to be a lack of opportunity, we see substantial opportunity and we have a robust pipeline, I think it is more going to be access to the capital markets.”

Promises kept

Unlike those aforementioned U.S. presidents, Mainstreet has done a pretty good job keeping its promises to shareholders since its IPO, Scott said.

“We committed to investors at the IPO that we will internalize as soon as it made sense financially in terms of the size of the offering.

“The overarching theme is that 110 days ago when we did the IPO we told the investors that we are committed to building a portfolio, we are committed to diversifying by operator, we are committed to diversifying by geography, we are committed to diversifying by type of asset, we are committed to adding new quality of operators, we are committed to internalizing. Then 110 days later we went back to the market and said we did everything we told you we would do, and really fast.”

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Time to build purpose built rental units?

14DarrylBellwood-FNFCondominium construction has dominated the residential development space for a number of years now. This was primarily due to the demand for the condominium product and due to the fact that the demand almost ensured that an entire condominium project would be pre-sold prior to the construction commencing. For many developers condominium development meant that the developer could put less equity into a project and selling off the individual units to earn a large and quick return on their equity very quickly. This represented a shift from holding onto the real estate for lengthy periods to generate a return on their equity over a longer time frame.

Historically, the average sized condominium unit sold at prices that were less than the cost to buy a single family home or semi-detached home. For many first time home buyers they could purchase these units at affordable prices and still feel like they were involved in the ownership of real estate. For most new developments, the buyer could delay such a large purchase since timing for delivery of the finished product might occur between 12 to 24 months after they entered into the purchase and sale agreement. The buyer could then delay the purchase and focus on saving additional equity for the down payment and still have real property to look forward to when they were ready to move into the unit.

More recently though, there has been a gradual change in the condominium market. With the change and increasing difficulty of obtaining a mortgage in the single family financing market, potential buyers are having more and more difficulty obtaining a mortgage. The average buyer is required to save more capital for the down payment of the property, which can take longer. With the single family mortgage requirements being more difficult, qualification becomes harder and has impeded the first time entrant. With these difficulties, the level of pre-sold units can drop and delivery of the condominium project could take longer with more unsold units being held by the developer.

Some of these factors have lead to some recent construction of purpose built apartment buildings. There has not been a significant boom in this area of housing in a long time remaining relatively dormant in major urban centres while the condominium market has excelled. Any form of rent control only acts to further impede purpose built rental units and therefore the lack of new construction has most developers preferring to continue to target the condominium market. Some smaller rural areas across the country have seen new units developed, but the buildings are generally smaller in size and do not fill the immediate need for demand in the area.

However this trend is slowly changing. More and more developers are looking at purpose built apartment buildings since the condominium market does not represent as quick of an exit as it once did. Most municipalities have increased the development costs associated with building condominium projects, while corresponding land costs have also increased for developers since most condominium projects require well located parcels of land close to major thoroughfares and Municipal transit in order to attract purchasers.

Purpose built rentals do not necessarily require this and can be built in less central locations and a little off the main through fares. Renters will target good quality rental buildings that are clean, are environmentally friendly and have good amenities to fit their profile. Not every renter wants to be located in the downtown core on a major thoroughfare which is generally where condominiums are.

In the past, developers saw the impediment to purpose built rental buildings in the amount of equity required, the breakeven rental rates required and the level of financing available to construct the buildings. With condominium construction, the equity requirements were generally less and financing levels highly available depending on the total pre-sold units for the project. With pre-sales not as robust as they were previously, the level of financing available has dropped and many of the projects are now looking at a switch from condominium to a purpose built rental property. With home affordability dropping as prices continue to increase, more and more potential buyers are shifting back to the rental market putting downward pressure on vacancy rates and upward pressure on rental rates. As rental rates increase, this will make it more attractive to build a purpose built rental property and maybe even start another boom in this space.

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Crown marks 15 years in the GTA CRE market

Crown Realty Partners has grown from five employees 15 years ago to 101 today, and managing partner Les Miller says it’s people that have driven the company’s prosperity.

Crown Properties“The staff that we’ve hired have all had an entrepreneurial spirit and been customer-focused and had a true appetite to succeed.”

Of course the above market returns that Crown has earned for itself and its investment partners, prompting return business, has also enabled the commercial real estate firm to purchase more than 50 properties encompassing 8.51 million square feet and valued at more than $2 billion across the Greater Toronto Area (GTA) since inception. Today it manages 5.23 million square feet of space occupied by 560 tenants and some 16,500 employees.

Crown primarily invested in office buildings that needed physical capital repairs in its early days. But now service improvements have become a much bigger part of what it does with acquisitions so that its buildings better meet the needs of tenants.

Sustainability and environmentally friendly features have grown in prominence just as the size and complexity of projects that Crown has become involved with has increased. The company has converted warehouse to office space and gutted and torn down buildings as part of redevelopments to meet the rising demands of what tenants want in their workplaces.

Increasing tenant demands

“It’s becoming a tenant recruiting tool,” said Miller. “We’ve almost taken a page from condo developers and what they need to do to attract sales.”

While there have been ebbs and flows in the GTA office market over the past 15 years, demand has generally kept up with all of the new construction that’s been taking place. Crown has evolved to become an important player in this environment.

“We’ve gone into class-A complexes in the suburbs, which I don’t think Crown would have contemplated in the past,” said Crown leasing and marketing partner Scott Watson, noting the company’s investments in Markham.

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“It’s a growing suburb where some of the buildings are in need of some tender loving care and some repositioning to get them to attract tenants and retain and grow the tenancies that are in there.”

The condominium boom that’s taken over downtown Toronto has also benefitted office building owners, as office space is being converted to condos or razed to make way for multi-residential projects, forcing office tenants to seek new space.

Crown’s rebranding of 901 King St. W.

Crown took advantage of this with its property at 901 King St. W., a 250,000-square-foot, eight-storey class-A building acquired in 2011 in partnership with another Canadian investment fund. The building was strategically repositioned and branded after physical improvements and additional services and amenities were introduced.

A new tenant signed on for 20,000 square feet within 90 days of closing and an additional 110,000 square feet were leased within the first year. The building is now 98-per cent occupied and attracting creative businesses to its Liberty Village area location.

Crown’s newest purchase, announced on Wednesday, is a four-storey, 146,000-square-foot office property at 2233 Argentia Rd. in the Meadowvale Business Park that was acquired from a client on behalf of its Crown Realty III Limited Partnership fund. Crown has managed the property for the past five years and in 2014 it earned LEED Gold certification, The Outstanding Building of the Year (TOBY) Award at BOMEX (in the 100,000- to 249,999-square-foot category) and the National Outstanding Building of the Year Award in the same category.

Major tenants including Brink’s, Expedia, Intertek, Regus and SunOpta have relocated to the building in the past three years, attracted by abundant on-site parking, a café, a common tenant meeting room and plentiful storage. Crown plans to renovate the lobby to provide new collaborative zones for tenants to work from.

Crown also announced this week that it closed on the disposition of Britannia Common at 220-262 Britannia Rd. E. and Matheson Woods at 391-415 Matheson Blvd. E. in Mississauga. These properties, comprised of 13 single-tenant office buildings, were acquired by Crown on behalf of its Crown Realty II Limited Partnership fund, which is now fully divested with the exception of two assets.

Crown’s future plans

“As we look to the future, you’ll start to see us look outside the Toronto marketplace and into areas like Ottawa and Kitchener-Waterloo to try to extract value out of those markets and give tenancies the same things as we have been in Toronto that have worked very successfully,” said Watson.

Forecasting Crown’s next 15 years, Miller says the firm will likely expand on its primary office base and add a wider range of property types to its portfolio. He sees it as a natural extension of what Crown has done through its first decade-and-a-half.

“We’ve beefed up our staffing to deliver it on a larger and broader scale, but we’ve always thought that execution, operations and customer service were our core. And we continue to keep to that core.”

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Would you like a $1.7M property taxes refund?

If your MPAC assessment doesn’t have you seeing red, maybe it should.

John ClarkYou may recall a few posts back I coined the phrase “red building.” This label applies to any building that, due to its age, operational inefficiency or lack of amenities common to newer real estate, just doesn’t have the market appeal it once did, and is going to be out bid in the marketplace by new green construction.

These negatives can push a property into the domain of C-class space. There likely is no return from this abyss without substantial reinvestment, provided the cost of that reinvestment doesn’t exceed the potential return.

Now consider this concept, and any red buildings in your portfolio, in the context of the commercial property assessment notices that will be hitting mailboxes on Oct. 18.

I wrote last time about the need to take a close look at that notice when it arrives to ensure the assessment of your property is accurate and fair versus comparable properties in your market.

But what if you have a property that is, for one reason or another, losing or has lost market appeal? Does the assessment adequately reflect that?

Assessments should be based on true market value

A building you can’t lease, or can only lease by cutting your rates below that of your competition, represents a loss of revenue and market value. The property may just be less valuable than it once was, or less than the newer competition. Your assessment should reflect that, but you may have to stand up and take action to get noticed by the assessor.

Take, for example, one property I’ve been involved with that’s had trouble leasing vacant space since a key tenant left. The reason? It’s too far from public transit for most prospective tenants.

These days, people want to commute without their car and employers want or demand space that’s within reasonable walking distance of a transit stop. “Reasonable” is typically five to seven minutes, tops.

On this basis alone, I would argue the owner of this building has grounds to appeal if a commercial property assessment doesn’t take this negative point into account.

The jury is still out on that building, but on another file, appealing an assessment due to red building factors had a huge impact.

A $40M property really only worth half that

How huge? We got this property’s assessed value cut in half, by $20 million. This drastically cut the property’s tax burden with the local municipality. The owner got a retroactive reduction in his property taxes – a $1.7 million refund cheque.

What are this building’s red factors? Yesterday’s innovation became today’s albatross. The chief culprit is the “state-of-the-art” ductless heat pump system installed when the building was constructed 40 years ago. The building is still operational and usable, but the growing age and inefficiency of this equipment impacted its cost of operation and market value. The building was designed in such a way that replacing this system would require quite costly renovation. On this basis we were able to successfully appeal the original assessment.

But this silver lining does tarnish

Appealing the assessment of a red building can result in a silver lining in an otherwise grey cloud for the property owner. But it bears noting that a growing stock of red buildings in Canada’s commercial real estate market is bad news for municipal coffers. Lost value and lower assessments adds instability to the municipal tax base. City hall has to recoup this lost revenue in some way, and the key source of municipal revenue is the remaining taxpayers.

Which means the ultimate solution for a red building is its redevelopment as a higher-value green property, rather than settling for a downward spiral of diminishing returns. Maybe this is a good place to invest a refund cheque should you achieve a successful assessment appeal.

To discuss this or any other valuation topic in the context of your property, please contact me at jclark@regionalgroup.com. I am also interested in your feedback and suggestions for future articles.

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