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[URBAN NOTE] “In many Canadian cities, unsold condos are stacking up”

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Tamsin McMahon’s article in The Globe and Mail noting how the condo boom is starting to bust in Canada outside of Toronto and Vancouver makes for worrisome reading. What will happen to the Canadian economy?

When the federal government tightened mortgage rules in 2012, overheated condo markets in Toronto and Vancouver were widely seen as the main target. But little more than two years later, it’s many smaller cities that are bearing the brunt of stricter regulations.

Winnipeg, Montreal and Moncton are grappling with a surplus of unsold condo units driven by a surge in new construction and a dwindling supply of first-time buyers in the wake of Ottawa’s decision in June, 2012, to limit mortgage insurance to amortization periods of 25 years or less from 30 years.

[. . .]

The downturn has been most painful in Quebec, where the boom in condo construction started in 2011 and 2012 as young buyers, armed with cheap mortgages, flocked to the housing market.

Roughly a third of Quebec buyers had taken out mortgages with 30-year amortizations – and that number rose to 40 per cent in Montreal, Mr. Cardinal said. He calculated that the change was the equivalent of raising interest rates by one percentage point.

Similar problems have plagued markets such as Moncton and Halifax, according to a recent housing market forecast from Re/Max. In Regina and Saskatoon, the number of unsold housing units hit a 30-year high, Canadian Mortgage and Housing Corporation said, the majority of them condos.

Winnipeg has also seen a surge of new condo construction since 2012 as builders rushed to cater to new immigrants under Manitoba’s provincial nominee program and retirees looking to downsize and spend their winters down south.

Written by Randy McDonald

February 24, 2015 at 10:59 pm

[BLOG] Some Sunday links

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  • blogTO notes plans for building a new condo complex at Front and Spadina.
  • The Dragon’s Gaze links to a paper simulating the emission spectra of super-Earths.
  • The Dragon’s Tales suggests that the emergence of continents was crucial for the Great Oxidation Event and claims Mars took longer to lose its atmosphere than many people think.
  • Joe. My. God. notes that the Archbishop of San Francisco is, among other things, strongly anti-masturbation.
  • Language Log notes the death of feminist, linguist and science fiction writer Suzette Haden Elgin.
  • Lawyers, Guns and Money makes a case somewhat in defense of Brian Williams.
  • Spacing Toronto makes the case that lovers should buy Valentine’s Day gifts at its store.
  • The Tin Man considers his complicated relationship with the musical Falsettos.
  • Torontoist looks at the evolution of CAMH over the years.
  • Towleroad notes the active support of Pope Francis for an anti-gay referendum in Slovakia.
  • Transit Toronto notes the steady expansion of the TTC’s WiFi network throughout the subway system.
  • The Volokh Conspiracy considers the challenges facing a Lohan family lawsuit against Fox News.
  • Window on Eurasia suggests that Ukraine can’t accept Russian demands because they’ll keep coming, argues that Russians are noticing domestic incompetence, and notes internal border changes in Russia.

[BLOG] Some Friday links

  • The Big Picture shares photos of the falling shoreline of the Dead Sea.
  • blogTO shows the heritage buildings that have survived condo development at Yonge and St. Joseph.
  • Crooked Timber wonders at the threat of anti-vaccination people.
  • The Dragon’s Gaze notes that red dwarfs might help produce abiotic atmospheric oxygen comparable to Earth on some worlds and suggests that certain low-mass stars which produce abundant extreme ultraviolet radiation may dessicate their potentially habitable worlds.
  • The Dragon’s Tales links to a paper examining the ancient likely shorelines of Mars.
  • Joe. My. God. notes a Christian activist’s takeover of the microphone at a Muslim event in Texas.
  • Language Hat links to a paper that finds weak links between language and genetic history.
  • Marginal Revolution notes a robot-run hotel in Japan and suggests Sweden is overrated.
  • Spacing calls for much-improved mass transit in Halifax.
  • Torontoist wonders about possible improvements in snow removal.
  • Towleroad notes a legal challenge mounted by an American dismissed for anti-gay attitudes.
  • The Volokh Conspiracy notes that Herbert Hoover’s vice-president, Charles Curtis, was an American Indian.
  • Window on Eurasia looks at Russia’s turn to fascism and examines how Russian Internet trolls are recruited by the state.

[LINK] “How Oily Is Canada’s Housing Bubble?”

Bloomberg’s Megan McArdle suggested that the bursting of Alberta’s oil boom is not likely to lead to a general collapse in the Canadian housing market. I’m skeptical of her assumptions that Alberta’s shock won’t be transmitted elsewhere in Canada, and not only on account of the dependence of economies and labour markets elsewhere in Canada on Albertan prosperity. You?

If you watch any amount of HGTV — which is to say, if you are a middle-aged married person — then you’ve probably noticed something funny: A lot of the people on shows such as “Property Brothers” seem to have Canadian accents. And you’ve probably noticed something else a bit funny: Those people are paying a heck of a lot for claustrophobic rowhouses on so-so streets.

Canada is one of the few Western nations that survived the financial crisis nearly unscathed. My working theory has long been that this is because the Canadian banking system is run by Canadians, a very sensible people. But it’s reasonable to ask whether Canada’s relative stability might not have something to do with the price of oil, because Canada is sitting on a large supply of “nontraditional” (read: “expensive to extract”) petroleum, mostly in Alberta. And as David Parkinson, economics reporter at the Globe and Mail, has written, their economic growth has been substantially goosed by those deposits[.]

How much does Alberta matter? Well, as with any good native Albertan (full disclosure – born and raised), my knee-jerk tendency is to say “way more than the rest of you bastards combined.” But in the current Canadian economy, that’s alarmingly close to accurate. Alberta contributed one-third of Canada’s economic growth last year, and is by far the fastest-growing province in the country again this year. Since the beginning of 2013, nearly half the jobs created in the country were in Alberta. . . .

The oil sector has not only been leading the way in Canada’s export recovery, it has also been the big driver in business capital investment in the country. That means the sector has been leading the way in the two key areas that the Bank of Canada has repeatedly identified as critical to sustaining Canada’s recovery. Lower prices could stifle energy’s contribution on both fronts; they are not only an automatic drag on the value of exports, they are also a notorious capital-spending killer.

Canadians have been worrying more and more about a housing bubble. In that context, it’s worth examining whether the fall in oil prices will be what finally causes the bubble to burst.

Written by Randy McDonald

January 29, 2015 at 11:48 pm

[URBAN NOTE] On the increasingly unaffordable nature of rent in Toronto

My attention was caught this morning by Abrey Jax’s blogTO post entitled “Many Toronto renters spend half of pay cheques on rent”. Oh, I empathize.

One of Toronto’s clearest class divides can be visualized quite succinctly by reaction to a new report from TD Economics regarding the housing market in the city. Camp A is shocked to learn that, instead of following the handy “30%” rule of income-to-rent ratio, Toronto renters are donating an average of 50% of each pay cheque to their landlord’s designer dog + Muskoka cottage lifestyle. Camp B, on the other hand, is saying “duh” and getting on with their seven day work week.

According to the report, the renters’ statistic applies to non-one per cent (actually non 60%) of workers, while those in the upper bracket are bleeding cash at similar volumes to mortgages and other home owning fees that people like myself can’t even begin to comprehend. The heart of the matter is that if you’re only paying half your income on housing, the landlord hasn’t left you without heat for weeks at a time, and you don’t have bed bugs, congratulations, you’re doing okay in Toronto. For now.

Right now, there are 101 comments at the site. (The Toronto Dominion report mentioned is here.)

CBC has more.

While about one quarter of the city’s new jobs created over the past ten years can be credited to the housing boom, certain dynamics have resulted in less affordability for a growing number of people and a drastic decrease in the diversity of housing options.

Construction of condo units has skyrocketed while other forms of housing has remained stagnant, presenting a potentially serious economic quagmire when the boom inevitably ends since condos are generally considered lower quality housing stock than, for example, semi-detached homes.

“A healthy economy should have a good degree of mobility and a good degree of housing choices,” said deputy chief economist and vice-president at TD Bank Derek Burleton in an interview with CBC’s Metro Morning on Monday.

“What we’ve seen in the past ten years is this affordability challenge has spread to the middle class and even to other, higher income levels,” says Burleton.

[. . .]

Among other recommendations that include easing regulations on landlords looking to rent property, Burleton said the GTA’s staggering lack of regional transit is exasperating the problems.

“Transit is key … Transit system helps to direct residents to where land costs might be a little bit cheaper, for example. It’s not so much about building along corridors as it is about building more transit corridors.”

I have no idea where I would find an affordable apartment in Toronto if I had to move. This all is a terribly upsetting economic dynamic for me.

Written by Randy McDonald

January 20, 2015 at 9:17 pm

[BLOG] Some Friday links

  • blogTO notes that crowd-funded transit might be coming to Toronto’s Beaches.
  • The Broadside Blog’s Caitlin Kelly describes her favourite shopping experiences in Paris.
  • Centauri Dreams considers the question of how to name planets.
  • Crooked Timber discusses predictions for the coming year which descend into Bitcoin debates.
  • The Dragon’s Gaze links to a paper suggesting that giant stars tend not to have giant close-in planets.
  • The Dragon’s Tales links to a paper noting the complicated entry of maize from Mexico into the United States.
  • Livejournaler jsburbidge notes the serious costs associated with a public housing problem for the homeless of Toronto.
  • Marginal Revolution notes that many Poles hold mortgages denominated in Swiss francs, and have thus been hit by the recent currency fluctuations.
  • Otto Pohl describes his writing project on the 1966 coup in Ghana.
  • The Power and the Money’s Noel Maurer notes the problems with inexpensive manned spaceflight.
  • Torontoist and (again) blogTO and their commenters react to the end of Target Canada.
  • Towleroad notes that anti-gay American Roman Catholic cardinal Raymond Burke is also a misogynist.
  • Window on Eurasia argues that a Belarusian revolution would lead to a Russian invasion of that country, and wonders about European Union policy towards Crimea.

[URBAN NOTE] “Toronto condo rentals increase 15% in 2014″

CBC Toronto notes that the condo boom in Toronto is continuing, even as condo sizes shrink.

Toronto’s condo boom showed no signs of slowing in 2014, as the number of units rented last year across the GTA increased by 15 per cent from the previous year’s level, market research firm Urbanation said Monday.

According to the company, 22,765 condos were rented out across the city via the MLS website — and that figure doesn’t include rentals that are arranged privately or through websites such as Craigslist and Kijiji.

The yearly figure is up by 15 per cent from 2013’s level, but it’s well over twice the level seen as recently as 2010, when there were only about 10,000 condos rented in the city.

That healthy demand for rental units is also pushing up rents, but not by nearly as much. The average rate for a condo rental in the city is now $2.39 per square foot. That’s higher than 2013’s average of $2.37 but only by about 1 per cent. That pace of growth is well down from the growth of at least four per cent per year seen every year since 2010.

[. . .]

“Over the past year, the average size of units rented has fallen by 1.5 per cent, or 12 square feet to an average of 761 square feet,” Urbanation said in a release.

Written by Randy McDonald

January 14, 2015 at 10:25 pm

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