Posts Tagged ‘condos’
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.
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.
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.