Intensified demand brought about by an influx of tech companies
has pushed Toronto’s office market towards becoming one of Canada’s
premier investment destinations, according to a CBRE Group
The vacancy rate of the office sector fell to 2.7% during the
fourth quarter of 2018, leading to commercial rental rates reaching
an average of $35.37 per square foot.
This far outstripped Montreal’s figures, which posted a median
rental rate of $22.76/sf on a 9.4% vacancy rate during the same
quarter.And Vancouver, while having a higher average at $37.20/sf,
did not command the level of Toronto’s demand, with a 3.8%
Even intensified development offered only the most minimal of
respites for the overheated market.As of the end of 2018,
approximately 14.2 million square feet of new commercial space was
under construction nationwide, with most of this situated in
Toronto, Vancouver, and Montreal.
This was the strongest development activity since the first
quarter of 2016, the CBRE noted.
commercial investment to intensify this year
CBRE added that despite the 7.3 million sf of space still under
development in Toronto, “chronic shortage” will continue to
characterize the market for the foreseeable future.
For perspective, this greatly exceeds Vancouver’s 2.86 million
sf and Montreal’s 954,510 sf.This also continues the
The real estate investing gurus behind Keyspire are coming to a
city near you.
Michael Sarracini and his partner Scott McGillivray—who’s also
the star of Income Property on HGTV, a hit television show in 43
countries—are touring the
country to teach both seasoned
and neophyte investors the ins and outs of the business with
information sessions and workshops.
According to Sarracini, Keyspire’s CEO, at the two-hour and
three-day in-depth workshops, the tenets of Information Education
Implementation—the same technique used on Income Property—will be
The first tenet is about active and passive income.Instead of
merely buying to flip, investors are encouraged to build a strategy
and then a portfolio.Active income is the process whereby a
property is flipped or used as a rent-to-own, but passive income is
the turnkey rental property that’s buoyed by a plan to support the
That’s supported by what Keyspire refers to as tools and
techniques, one of which is called Flipping to Yourself—a staple
strategy on Income Property that McGillivray and Sarracini
implemented while the latter worked as a project manager during the
show’s first two seasons.
“We do rentals and we do them right,” said Sarracini.“When we
realized that flipping wasn’t for us, and not the same in Canada as
it is in
Much attention has been devoted to the feverish pace of housing
construction nationwide, although whether this has successfully
addressed the problem of supply remains an open question.
However, a recent study published by the Housing Policy
Debate journal argued that these inventory injections have in
the past few years tended towards being valued at market prices, a
fact that will still exclude a considerable number of would-be
The report stressed that governments at all levels should
“ensure that supply is added at prices affordable to a range of
“The challenge in housing affordability is to ensure that new
housing is built to meet the shelter needs across the income
spectrum and not just for high-income earners.It is true that even
housing built to draw market prices and rents over time, through
market filtering, will improve affordability for low-income
earners.However, the filtering process takes time.”
waning of Vancouver and the waxing of Toronto
A recent heavy influx of asylum-seekers has only complicated
matters.In late January, Canadian mayors urged the federal
government to do its part in addressing the supply shortages
brought about by this immigration volume, as the problem exceeds
the capabilities of just the municipal or provincial levels.
“[The federal government] makes the
Latest numbers from the Canadian Real Estate Association showed
that home price growth in Ottawa stood at a robust 15% average from
2016 to 2018.
This translated to a $56,300 increase in the average home price
during the time frame, reaching $433,500 as of December 2018.
The trend also represented a considerably accelerated pace from
2016, as the gain from December 2013 to December 2018 was around
$82,000, the Ottawa Citizen reported.
Much of this can be attributed to the market’s relatively high
average income, which pushed the city towards becoming one of
Canada’s most active sellers’ markets last year.
management firm closes $186-million transaction in
“Homes that come on the market are quickly sold, with multiple
offer situations often present,” according to John Rogan, broker of
record and branch manager of Royal LePage Performance Realty.
“Overall, healthy employment and wages are propelling higher
housing demand in the region.This increasing demand, coupled with
Baby Boomers remaining in their homes longer than previously
expected, is putting pressure on all housing types and fueling
As of Q4 2018, Ottawa’s aggregate housing price in the city went
up by 9.3% year-over-year to reach reached $475,831.
CREA’s figures indicated that Ottawa’s pace was noticeably
Several pressures have led Toronto’s condo market to a hotbed of
volatility, if new data from the Altus Group is any indication.
Transactions in the asset class fell by 38% year-over-year to
reach 21,330 sales.Although the total number was only 4% below the
10-year average, another report by Urbanation pointed to more
potential issues ahead, with supply-side problems taking center
“The slowdown in activity last year can partly be attributed to
less demand from investors, who typically represent the largest
component of new condominium purchasers [in Toronto],” Urbanation
The market insights firm emphasized that competition for condos
will be intense, as 98% of new units are already pre-sold, and more
than half of the new supply has been purchased for investment
Urbanation stated that the total number of condos scheduled for
completion this year is 21,991 units, representing a record
high.This will also be 29% greater than 2018’s completions.
gov’t should do more to address shortages – mayors
Toronto’s single-family properties, on the other hand,
experienced a significant 50% year-over-year fall in sales
activity, down to 3,831 transactions – fully 74% lower than the
“Real estate investment in general had a bit of a quieter year
after an exceptional 2017,” Altus
As every landlord surely knows, running a credit check during
the tenant selection process is paramount.However, not every
landlord realizes what to do with the information the credit check
“Every independent landlord knows that to screen a tenant, you
have to look at their credit, but a lot of them have no idea how
credit relates to a tenant’s ability to pay rent on time,” said
Jerome Werniuk, director of sales at Naborly Inc., which runs free credit
and background checks.“Ninety-five percent of landlords have
tenants show up with their own credit file, meaning they go to
Credit Karma or Equifax, but when we hear professional tenant
stories, these people come with doctored credit checks.
Doctoring a credit check is as easy as finding a template online
and filling it in as one wishes.It’s what Werniuk describes as a
huge problem within the industry.
While savvy landlords realize they can obtain credit checks from
Equifax or TransUnion, many still don’t know, nor have time, to
mine the information therein to decipher a tenant’s capacity for
prompt rent payments.
“To get a credit file from either of the credit bureaus, they
have to pay for it and a set-up fee for the individual’s report,
but there’s a heavy credentialing process
Rising interest rates and strict mortgage qualification resulted
in fewer Canadians seeking homeownership than rental accommodations
last year, and 2019 will bring more of the same.
“It’s going to continue,” said Marcus &Millichap’s Vice
President and Broker of Record Mark Paterson.“People will continue
renting rather than dealing with residential mortgages.The rental
market right now can barely keep up with the vacancy rate in
Toronto, for example, being around 1%.”
Competition for rentals will be even fiercer this year in urban
centres and that will push rents upward, creating a spillover
effect into satellite markets.
“The rental market will see an increase of 8-10% because of
demand,” said Paterson.“Unfortunately for people trying to find
affordable housing, they’re looking elsewhere in secondary
markets.They’re priced out of city centres, and that means the
talent pool for jobs will end up in secondary markets.”
The Marcus &Millichap’s 2019 Multifamily Investment Forecast
Report notes that apartment projects have become more financially
viable, as evidenced by 60,000 units in the pipeline
countrywide.However, that’s little relief given how few vacancies
“The number of occupied units grew by 50,000 last year,
outpacing supply growth nationally just as 37,000 new apartments
came online,” read the report.“The national vacancy rate declined
to 2.4%, the lowest reading since 2002.A shortage of construction
Vancouver’s affordability saga continues unimpeded as the city’s
single-family homes are now priced considerably above the median
household income, according to a recent study by the National
The analysis uncovered that the average monthly mortgage payment
for a median-price single-detached residence in the Vancouver CMA
was around 101.5% of the region’s average household income.
National Bank stated that this was an unprecedented high,
representing increases of 2.7% quarterly and 6.4% annually,
Business in Vancouver reported.
Falling salary growth combined with recent increases in interest
rates were cited by the study as the main contributors to the
trend, despite the fact that the median price of Vancouver’s
single-family homes during Q4 2018 went down by 0.7%
quarter-over-quarter, and had only a modest 1.8% year-over-year
Condos experienced a similar cooling, with the mortgage for an
average-priced unit in the Vancouver CMA accounting for 49.2% of
household income during the fourth quarter, increasing by 1.3% from
Q3 2018 and 6.3% year-over-year.
young professionals are packing up for greener pastures
A January report from Altus Group warned that there seems to be
no relief in sight for would-be home buyers in Vancouver, as the
market is “exhibiting the most potential for downside risk,” Altus
Aside from pricing issues,
The mayors of Canada’s largest and most in-demand housing
markets called on the federal government to do its part in
addressing the housing supply shortages brought about by the recent
influx of asylum-seekers.
Toronto mayor John Tory stressed that solving the issue goes
beyond the reach of just the municipal or provincial levels, and
argued that the Liberal administration should also “share the
“[The federal government] makes the decisions about what happens
at the border and Toronto is very supportive, for example, of
admitting refugees,” Tory said, as quoted by CBC News.
“We’ve had a historically compassionate approach in this country
which we support.But the federal government, who admits refugees to
the country, also has to take a hand in helping to house and settle
Ottawa mayor Jim Watson stated that in 2017 alone, his
jurisdiction spent around $5.7 million in refugee housing costs,
and noted that the city might have had a similar expense volume in
“Toronto received $11 million in July to deal with refugee
claimants.Our city has received nothing,” he admitted.“What often
happens is a government will make a decision at a senior level and
the consequences trickle down to us.”
waning of Vancouver and the waxing of Toronto
Choosing the right property in which to invest is only half the
battle—the other half is ensuring that it’s renovated to full
But what if there were somebody to do both for you?
In 2013, Magellan Wealth Advisors was founded by Carlos
Rodrigues, an erstwhile advisor for Freedom 55 Financial who
realized that his personal real estate investments produced vastly
superior yields to what he was contractually obligated to sell his
clients.While still a fine wealth advisor, Rodrigues considers
himself an even more astute real estate investor.
Magellan buys single-family houses and converts them into
multi-family homes, and in doing so pumps their values through the
roof.Operating on either joint ventures, or accepting up to five
investors at a time, Magellan finds properties, renovates and then
manages them from start to finish.
“The investor puts up capital and, typically, we’ll be on title
of the mortgage to qualify for it,” said Rodrigues.“We take care of
all the work but we take half the risk off of the investor’s
shoulders.We find that people want to get into real estate but
don’t have the time because when something is being renovated, you
need to be present.
“Right from the beginning, we have our own real estate agent
who’s in-house and who can
Montreal has become a highly-desired seller’s market, mainly due
to mounting home prices brought about by feverish competition and a
“This is especially true in the single family home segment,
where bidding wars are increasingly common and offers are more
likely to be accepted above the original asking price,” according
to a fresh analysis by professional services firm Shupilov Real
Earlier this month, the Quebec Federation of Real Estate Boards
announced that 2018 sales volume reached 46,753 completed deals,
representing a new high and marking the 4th straight year of
“Generally speaking, 2018 ended with market conditions clearly
in favour of sellers for single-family homes, condominiums, and
plexes.The scarcity of supply of single-family homes as compared to
the demand is undeniable on the Island of Montreal, where the
number of months of inventory is slightly less than five,” the
The 2018 numbers are expected to impart momentum that will last
for much of this year, the Federation added.
leads country’s metro areas in price growth
The Shupilov report found that some of the greatest
sales-to-new-listings-ratios (SNLR) in Montreal were in communities
hosting high-demand single-detached properties.
Q4 2018 Centris data showed that Montreal’s top sellers’ markets
for this property type are Pointe
With unpredictability characterizing much of the asset class
this year, potential investors would do well to reconsider
investing in Canada’s retail property segment, according to Avison
Young’s 2019 North America, Europe and Asia Commercial Real
In the mid-January report, Avison Young cautioned that vacancy
in retail “remains in flux.” The chaotic conditions mainly arose
from major failures among some large-scale retail chains, with a
considerable proportion of the closures stemming from the
ever-growing influence of e-commerce.
“The focus on creating memorable consumer experiences will
endure across the Canadian retail landscape in 2019.Significant
investment in technology to track millennial behaviour is being
made by retailers developing and enhancing their physical locations
and online market shares while seeking the correct balance in the
symbiotic relationship between bricks and clicks,” Avison Young
principal and practice leader of research (Canada) Bill
commercial investment to intensify this year
In a study released late last year, Morguard Corporation noted
that leasing performance in retail has indeed become erratic
recently, but added that the sector would still enjoy good
performance despite these risks.
A large contributor of this predicted strength will stem from
the increased purchasing power inherent in a steadily recovering
“Sustained economic expansion over the next few years bodes
If you’re torn between investing in either RRSPs or real estate,
Calum Ross, a leverage wealth expert and VERICO broker with
Mortgage Management Group—and author of The Real Estate Retirement
Plan:An Investment and Lifestyle Solution for Canadians—says
Canadians should invest in both.Ross will be discussing that and
more at this year’s Investor Forum on March 2 at the
International Centre in Mississauga.
“People have a tendency to think of either RRSPs or real estate
investing for their retirement plan,” Ross told CREW.“The reality
is that consumers need both.”
The reason is that, in addition to diminishing rates of return,
a growing number of Canadians these days don’t have defined
contribution plans, which still don’t even give guaranteed
payouts.Consequently, they need higher amounts of forced
“When you consider the vast majority of Canadians’
wealth is tied up in their homes, the only solution to RRSP,
TFSA, RESP, or investment savings catch-ups is essentially in the
home equity of their property,” continued Ross.“When you consider
the fact that life expectancies now are moving towards 90 years
old, the probability that your registered savings account lasts a
lot longer than your mortgage is very high.What we’ve been doing is
engineering investment products to ensure that the rate of return
exceeds the cost of
With a $26-million federal investment, 14-storey Arts District
will soon arise in Winnipeg.
The project, announced last week by the federal government and
local officials, will help relieve some of the pressure for more
space that caters to the city’s affordable housing needs.
Arts District is designed to provide 119 units for struggling
middle-class families.Approximately 10% of the units will also be
designed as barrier-free layouts.
“This investment is wonderful news for the Winnipeg
middle-income families that will move into these new affordable
rental housing units.It will contribute to build a foundation for
their social and economic success as well as help create new jobs
and stimulate our local economy,” according to Robert-Falcon
Ouellette, Member of Parliament for Winnipeg Centre.
of Canadians still hold on to dreams of home ownership
In Q3 2018, the median price of a condo unit in Winnipeg fell by
2.1% on an annual basis (down to $240,933).Despite this,
affordability has been impaired by a considerable increase in condo
fees, stemming from regulations mandating reserve fund studies for
“Demand hasn’t been strong enough to keep up as those units come
onto the market, and this has caused some downward pressure on
condo prices,” Royal LePage Prime Real Estate managing partner
Multiple analyses have indicated that Canadian seniors are among
the most active borrowing demographics, but a considerable number
of them have in recent months expressed worry for the eventual fate
of their home equity.
This is despite the national reverse mortgage load reaching an
unprecedented $3.48 billion outstanding in November 2018, roughly
31.68% annually and 1.85% higher on a month-over-month basis.
The latest MNP Consumer Debt Index conducted by Ipsos found that
41% of Canadians are anxious about their current debt levels, and
43% are regretful over the amount of debt that they have taken on
in their lives.
“Seniors are usually on a fixed income, meaning a big loan isn’t
likely to be paid quickly.At that age, they also aren’t likely to
find new additional income streams either.That adds up to borrowers
that will rack up interest for a very long time,” Better
Dwelling stated in its analysis of the data.
number of PEI, BC locals burdened by insolvency
The OSFI noted that if the borrowing trend among seniors
sustains itself, reverse mortgages will only become more popular
over the next few years.
A study by TransUnion in Q3 2018 reported that during the first
quarter of that year, approximately 63% more