Our panel of ex­perts share their pre­dic­tions and in­sights as we head into the fall mar­ket and touch upon ev­ery­thing from the re­turn of bid­ding wars to the growth of rent strikes

North Toronto Post - - Contents -

Why ex­perts Danielle Bryk and Brad Lamb are bullish on the fall hous­ing mar­ket

POST: What are your pre­dic­tions for Toronto’s real es­tate mar­ket come fall?

BRAD LAMB: Prices have risen fast, and there is cur­rently some price re­sis­tance. In the cur­rent eco­nomic en­vi­ron­ment, I fore­see these in­creases be­ing more eas­ily ab­sorbed. In strong economies, it’s hard not to see prices ris­ing.

TIM HU­DAK: Any time you see more and more peo­ple chas­ing fewer and fewer homes, the cost of home own­er­ship is go­ing to in-

crease. Sure, you may have short-term fluc­tu­a­tions, but you just can­not ar­gue with the ba­sic eco­nomics over the medium and long term. We have more peo­ple com­ing to the Greater Toronto and Hamil­ton Area (GTHA) hous­ing mar­ket as a re­sult of mil­len­ni­als get­ting pro­moted and start­ing fam­i­lies; a stronger econ­omy rel­a­tive to the rest of Canada; en­hanced im­mi­gra­tion; his­tor­i­cally rel­a­tively low mort­gage rates; and a wealthy boomer gen­er­a­tion help­ing their kids get into the mar­ket, via the Bank of Mom and Dad.

JAN­ICE REN­NIE: The real es­tate mar­ket con­tin­ues to ex­pe­ri­ence de­mand pres­sure un­der $2,000,000, with not enough sup­ply and mul­ti­ple of­fers. The dif­fer­ence I am see­ing now is that buy­ers are put­ting more rea­son­able ceil­ings on their pur­chases as to how much over the ask­ing they will pay (note, still go­ing over the ask­ing, though), and sellers seem to be the side with un­rea­son­able ex­pec­ta­tions. The re­sult is ei­ther sales at more rea­son­able prices or sellers tak­ing the prop­erty off the mar­ket, relist­ing at higher price and then not selling.

BARRY CO­HEN: While I be­lieve that TREB sta­tis­tics re­leased for the re­main­der of the year will show marked im­prove­ment over 2017, cer­tain seg­ments of the mar­ket will per­form bet­ter than oth­ers. We are see­ing good de­mand for af­ford­ably priced sin­gle de­tached homes close to the city core, but neigh­bour­hoods fur­ther afield and in the 905 area code are still strug­gling. The av­er­age price of a de­tached home in the GTA is down about 11 per cent over­all.

Up­scale homes over the $2 mil­lion price point re­main well off last year’s pace. How­ever, July was some­what of a turn­ing point, with sales post­ing a year-over-year in­crease of 21 per cent. As sta­bil­ity re­turns to the mar­ket, home buy­ing ac­tiv­ity at this price point and higher is ex­pected to climb. The stress test for mort­gages that was im­ple­mented this past Jan­uary damp­ened the mar­ket. How much of an im­pact has it had, and is it time to re­visit? LAMB: The stress test is bad for young peo­ple and pun­ishes them un­fairly. This is a ter­ri­ble re­quire­ment that must be re­versed. In light of the higher rate en­vi­ron­ment, this test is be­com­ing re­dun­dant.

HU­DAK: Eight months later, it’s clear the stress test is a case study in gov­ern­ment reg­u­la­tory overkill. We all want to in­cen­tivize re­spon­si­ble and sus­tain­able bor­row­ing, but govern­ments should take a more thought­ful ap­proach. Es­ti­mates sug­gest that the stress test pre­vented 50,000 to 100,000 peo­ple from across Canada from buy­ing a home. Think for a mo­ment who those peo­ple are: young fam­i­lies, new Cana­di­ans and en­trepreneurs. The rate of home own­er­ship is ac­tu­ally in de­cline, down from 69 per cent in 2011 de­spite record low in­ter­est rates.

When did the pub­lic de­cide that we wanted to make homes harder to buy for the as­pir­ing mid­dle class?

All lev­els of gov­ern­ment need to pump the brakes on reg­u­la­tory in­ter­ven­tions and start look­ing out for the mid­dle class and the hard-work­ing peo­ple who want to join it. The stress test is too ar­bi­trary, too harsh and needs to be re­placed with a more bal­anced ap­proach. What are the two big­gest im­pacts Doug Ford and the new On­tario provin­cial lead­er­ship could and should have on the Toronto and area real es­tate mar­ket? LAMB: Re­verse the mad­ness ini­ti­ated by the pre­vi­ous ad­min­is­tra­tion. CO­HEN: New provin­cial lead­er­ship cer­tainly has a dif­fer­ent take on busi­ness, and real es­tate is ex­pected to ben­e­fit from the change. Doug Ford’s pre-elec­tion plat­form in­cluded re­vis­it­ing the le­git­i­macy of the for­eign tax, which has sparked an up­swing in buy­ers re­turn­ing to the mar­ket. How­ever, given past per­for­mance of gov­ern­ment over­all, it’s un-

likely that they will re­peal the tax in its en­tirety.

HU­DAK: Fo­cus­ing on af­ford­able home own­er­ship by re­duc­ing costs, de­lays and run­away red tape that drives up prices and lim­its choices. This in­cludes pre­his­toric zon­ing rules that limit the build­ing of miss­ing mid­dle hous­ing.

And low­er­ing the tax bur­den. To his credit, while on Toronto City Coun­cil, Doug Ford op­posed the Toronto Mu­nic­i­pal Land Trans­fer Tax (MLTT). As a provin­cial party leader, he has op­posed spread­ing the tax out­side of Toronto. It is en­cour­ag­ing that Premier Ford has a bias to­ward low­er­ing the pun­ish­ing taxes on home own­er­ship rather than in­creas­ing them. While the fis­cal chal­lenges may limit broad-based hous­ing tax re­lief, the premier could fo­cus on an im­pact­ful break for first-time home­buy­ers of mod­est means try­ing to get into the mar­ket. POST: More peo­ple are mak­ing the de­ci­sion to stay put and get more out of their cur­rent space. What home de­sign trends have you seen that sup­port this?

DANIELLE BRYK: I’m see­ing more peo­ple stay­ing in their cur­rent homes and ren­o­vat­ing as op­posed to mov­ing. This of­ten means mak­ing the most of your space rather up­grad­ing to a larger one. Peo­ple are tap­ping into ev­ery avail­able inch they have, whether that means adding an ex­ten­sion to their home or sim­ply im­ple­ment­ing small space liv­ing philoso­phies. In this lat­ter sense, spa­ces need to be de­signed to ac­com­mo­date mul­ti­ple func­tions. For ex­am­ple, a kitchen ta­ble may also have to act as the fam­ily desk or the home of­fice. Stor­age needs al­ways seem to be the big­gest chal­lenge — no mat­ter what the size of the build­ing. I think there is a mind set that needs to be adopted where we just have less “stuff.”

Large, pop­u­la­tion-dense cities around the world are quite ahead of us. I see a lot of in­no­va­tive multi-func­tion fur­ni­ture com­ing form Asia and Europe. Things like stor­age beds or Mur­phy beds — these things are an in­vest­ment — they are not cheap. I of­ten find my clients want them un­til they see the price tag. In some sense, if you see your­self com­mit­ting to a smaller space for the long haul, it is a nec­es­sary in­vest­ment. POST: What about the trend that sees some older res­i­dents open­ing up their homes to younger gen­er­a­tions in­stead of down­siz­ing and hit­ting a condo? On the other hand, I see a lot of se­niors de­cid­ing to stay in the fam­ily home rather than down­siz­ing. Be­cause of the cost of real es­tate now, it is of­ten more ex­pen­sive for them to buy a con­do­minium and take on the monthly main­te­nance fees than to stay put. One thing I hope to see is the rise of multi-gen­er­a­tional fam­i­lies liv­ing to­gether. There have been so many stud­ies that ex­plore the ben­e­fits of this sit­u­a­tion. Ob­vi­ously, there are fi­nan­cial bene- fits if a young fam­ily does not have to buy/rent/main­tain a prop­erty of their own.

The younger mem­bers of the fam­ily are of­ten in their prime earn­ing years and can con­trib­ute fi­nan­cially, and there are added ben­e­fits for every­one’s well-be­ing. Se­niors ben­e­fit from the com­pan­ion­ship and stim­u­la­tion of hav­ing more peo­ple around, and the younger mem­bers of the fam­ily can help with the main­te­nance that is phys­i­cally tax­ing. For fam­i­lies, it of­ten helps lower child care costs, and for those chil­dren who are raised in close prox­im­ity to el­ders of their fam­ily, they of­ten have lower stress lev­els. It’s not some­thing that many of us in North Amer­ica find ap­peal­ing, but again, it could be just a mat­ter of mind set. POST: A mid­town coun­cil­lor is at­tempt­ing to se­ri­ously cur­tail mid­town de­vel­op­ment un­til in­fra­struc­ture catches up. Is this a good idea? LAMB: Our lo­cal gov­ern­ment has been asleep for 30 years. How could they have missed the de­vel­op­ment tak­ing place in front of their eyes? It’s shame­ful. REN­NIE: Freez­ing de­vel­op­ment or al­low­ing it con­tin­gent on build­ing the un­der­ly­ing in­fra­struc­ture is a very good idea. The beauty of liv­ing in the cen­tre of the city is the ease of hav­ing schools, trans­porta­tion and ser­vices at your doorstep. This is es­pe­cially true as more

fam­i­lies are liv­ing in con­dos and yet their chil­dren can't get in to the lo­cal schools. Yes, this is­sue ab­so­lutely needs to be ad­dressed, and I'm not sure how the city plan­ning has missed this fea­ture.

HU­DAK: Well that’s pretty ridicu­lous, isn’t it? When it takes 10 years to get some de­vel­op­ments through the snail-like ap­proval process, you’d think that was slow enough al­ready. Here’s an idea: why don’t we speed up ap­provals and in­vest­ments in schools and in­fra­struc­ture, in­stead, while us­ing in­no­va­tive part­ner­ships to do so like they do in other ma­jor ur­ban ar­eas.

CO­HEN: In­fra­struc­ture is an is­sue through­out Toronto proper, not just Yonge and Eglin­ton. As the pop­u­la­tion in the GTA rises, lo­cal gov­ern­ment is scram­bling to ac­com­mo­date the in­flux. It starts with hous­ing and rolls out from there. Per­haps it’s time for de­vel­op­ers to par­tic­i­pate in the up­grade of ex­ist­ing in­fra­struc­ture (wa­ter mains and such), the con­struc­tion of new schools and ameni­ties and con­trib­ute to tran­sit and gov­ern­ment to en­sure that their in­creased tax base is re­flected in the dol­lars sup­port­ing in­fra­struc­ture. POST: Doug Ford hinted at open­ing up parts of the Green­belt to de­vel­op­ment, then back­tracked and pledged that he

would not. How likely is it that we will see some kind of de­vel­op­ment in that pro­tected area in the next four years?

LAMB: I think what he’s talk­ing about is in­creas­ing the growth that’s al­lowed in the 905 but not yet re­leased for de­vel­op­ment. A sim­ple al­ter­ing of the Places to Grow strat­egy will solve the is­sue. There is plenty of land avail­able out­side of the Green­belt cur­rently that is frozen to de­vel­op­ment. We don’t need to worry about an­nex­ing the Green­belt for 20 years, if ever.

REN­NIE: I hope we won’t see de­vel­op­ment of the Green­belt. I think it is an as­set to the GTHA, and if it in­creases the den­sity in the core so be it. POST: What ex­cit­ing new ar­eas are catch­ing your eye in the city this fall: Geary Av­enue? the neigh­bour­hoods such as Lit­tle Ja­maica im­pacted by the Crosstown LRT?

CO­HEN: Af­ford­able sin­gle de­tached hous­ing and close prox­im­ity to tran­sit and the core have se­ri­ously con­trib­uted to the up­swing in pop­u­lar­ity of Lit­tle Ja­maica — the area along Eglin­ton from Mar­lee to Duf­ferin — in re­cent years. Like many other ar­eas of the city un­der­go­ing gen­tri­fi­ca­tion, the area bor­ders hot pocket com­mu­ni­ties — in this in­stance, Cedar­vale to the east and Wy­ch­wood Park to the south. Young fam­i­lies are driv­ing de­mand for the neigh­bour­hood’s bun­ga­lows and two­s­torey homes on gen­er­ous lot sizes. Tear­down ac­tiv­ity is also ram­pant, with many new, cus­tom-built homes pop­ping up.

BRYK: Scar­bor­ough has so many cute, fam­ily-friendly ar­eas with great schools and neigh­bour­hoods. I know the west end is al­ways de­sir­able, but I also like the east side and the de­vel­op­ments there like River­side, Re­gent Park, Les­lieville. POST: Rent strikes are now hap­pen­ing in Toronto, in ar­eas such as Park­dale and Thorn­cliffe Park. Peo­ple are get­ting fed up with rent in­creases. Could we start to see rent strikes in other, more cen­tral ar­eas of Toronto? What can be done?

LAMB: No. Rent is a le­gal con­tract be­tween a land­lord and a ten­ant. Le­gal con­tracts gen­er­ally stand up to court chal­lenges.

HU­DAK: I wouldn’t be sur­prised, and I can’t blame them. Lis­ten, the On­tario gov­ern­ment’s rent con­trols im­posed in 2017 have back­fired. Rents are higher than ever and avail­abil­ity is in­creas­ingly scarce. Sure, rent con­trols may give a tem­po­rary freeze for cur­rent ten­ants but ul­ti­mately cause limited choice and limited mo­bil­ity when you want to move or when you want to en­ter the mar­ket. Se­ri­ously, why would a mom and pop land­lord or mid­dle-class in­vestor get into the land­lord busi­ness when re­turns on in­vest­ment are se­verely capped and the red tape bur­den and has­sle make you won­der each day why you both­ered in the first place?

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