Photo Credit: Daniel Barnes
In The News
November 4-8, 2019
Toronto & GTA
The luxury segment of Toronto’s real estate market surged in October. Sales of properties priced above $5 million increased 8.5 per cent and those above $2 million have risen nine per cent year-to-date. Overall, the luxury segment increased 26 per cent year-over-year with Rosedale and Yorkville as the most competitive neighbourhoods.
The benchmark price experienced the largest increase since December 2017, a rise of 5.8 per cent from the same period last year to $810,900, according to the Toronto Real Estate Board.
Since the end of 2008, residential real estate has been outperformed only by the S&P/TSX Capped REIT Index and S&P/TSX Composite Real Estate Index, rising 354 per cent and 262 per cent, respectively. Liquidity is key, “You buy and sell REITs like you do any stock on the exchange rather than actually buying and selling properties themselves, which take a lot more time and also have a lot of transaction costs involved.”
Toronto-based REIT, Morguard North American Residential, will acquire a 51 per cent interest in a 690-unit high-rise in Chicago at a value of $384,000 per unit.
According to the CMHC, the national housing market has become less risky due to the stress test and other regulations impacting lending. Though some local markets continue to face elevated risk, CMHC falls in line with the Bank of Canada’s view that the housing market in Canada continues to stabilize
As traditional sources of financing have been dwindling, cannabis companies are turned to selling real estate and turning real estate assets into REITs in order generate capital and fuel expansion.
Greater Vancouver home sales spiked 45.4 per cent in October year-over-year, putting it 9.8 per cent above the ten-year average for the month.
Real estate markets experienced a rebound in Toronto and Vancouver for the month of October. On the one hand, Toronto has strong demand and economic principles forcing prices higher. On the other hand, Vancouver sales have surged partly due to price declines.
Despite a boost in sales during October, the benchmark price in Vancouver declined 6.4 per cent from the same time last year and 1.7 per cent in the past six months.
It is forecasted that national home sales will continue its upward trend over the next two years. The decline in sales over the past year are expected to reverse quicker than initially anticipated and it is predicted that the provinces of Ontario and Quebec will lead the way in the coming year with the BC housing market catching up in 2021, according to the CMHC.
“Amidst persistent supply constraints in the entry-level price range, there’s evidence that high-end homebuyers are more active this fall. The average loan size for purchase applications increased to its highest level since May.”
As the median home price in San Jose, California is nearly one-million dollars and with the supply of housing failing to keep pace with demand, Apple is going to commit $1 billion for affordable housing, $1 billion to purchase mortgages, and open up 40-acres of land on property it owns in San Jose for affordable housing.
For a fifth time this year, not a single sale was made for properties priced over $10 million in Manhattan last week. This marks an 18 per cent decline over the same period last year.
An increasing number of Chinese cities have made it easier for works to obtain residency permits since September in a bid to prevent the real estate market from slowing down any further. The residency permit is requisite to buying property in China and it is expected that new residents will lead to a rise in sales activity.
There is a resounding cry coming from Dubai’s ruling family and billionaires to halt new real estate development. Developers have been focused on short-term interest by maintaining cash flows despite lower prices; however, they would also benefit from restricting supply to help bolster property values over the long-term. Property values have come down about 30 per cent in the past five years.
The great deluge of people and capital from Hong Kong has been greatly exaggerated. Residential sales of increased 16 per cent month-over-month. More dramatic is the increase of all building units, up 24 per cent over the month prior and an increase of 80 per cent in total value compared to September. “Most of the hard-hit industries in the riots are retailing and catering, but core industries such as finance and real estate are relatively tougher, since those industries usually operate with global capital instead of only local demand.”
A liquidity crisis is taking root in India as development loans approach their repayment dates in the first half of 2020. As of the end of June 2019, 421 developers are reporting bankruptcy, up from 209 as of the end of September 2018. This is impacting the ability for banks to continue to make loans.