The Bank of Canada deciding to hold its overnight lending rate at 5% may have compelled sellers in Canada’s largest metro region to delay listing their homes in anticipation of ameliorated conditions this year. With rumblings south of the border that the Federal Reserve is poised to drop its policy rate, which would moved the Canada’s central bank to respond in kind, sellers are confident that market conditions will improve in 2024.

At 65,982, total sales in 2023 marked a 23-year low, declining by 12% year-over-year from 74,047, and falling well below the record high of 121,712 achieved a couple of years earlier when the BoC’s quantitative easing regime plunged its policy rate to 25 basis points.

Still, there were signs of improvement as the curtains drew on 2023. In December, sales rose by 11% on an annual basis to 3,444, despite still being 27% below the 10-year average. However, that could preponderantly be explained by new listings decreasing year-over-year in December to 3,886 units—17% below the 10-year average, and the second lowest level for the month in 2022 years—leading to speculation that sellers are taking a wait-and-see approach to the market.

Active listings in the GTA declined by 19% year-over-year in 2023, and despite being 20% over the decade-long average, at about three months of supply (down from four months in November), they were 11% lower than the 20-year average.

The price of a GTA home increased by 3.2% in December to an average of $1.084 million, marking the seventh straight month of year-on-year growth. Despite finishing the year on a high note, home prices declined by 5.4% last year from 2022. Moreover, that was the first time GTA home prices declined since 2018, when they fell by 4.2% following the Kathleen Wynne government’s Fair Housing Plan, which included, among other things, a 15% tax on foreign buyers.

Still, home price appreciation in the GTA has averaged a robust 8.3% over the last 10 years, and 7.1% over the last two decades.

In December, appreciation was strongest for homes $700,000 and higher, even increasing by 17% for homes in the $1.5-1.749 million range. But for 2023 in its entirety, prices declined for everything above $600,000—which was particularly acute for homes priced at least $1.25 million, decreasing by 20%. That was a marked contrast to the year-over-year spike in sales (+33%) for homes below $600,000, no doubt a result of higher mortgage rates.

Despite decreasing by 10% year-over-year in 2023, condo sales have been among the best performing asset class over the past three years. That isn’t too surprising considering sales surged by 51% in 2021. Condo inventory in the GTA declined from 5.4 months in November to 4.8 months in December.

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

Housing starts declined to 90,000 in 2023 from 96,000 a year earlier, and that’s problematic because an average of 150,000 are needed annually if there’s any hope of achieving the lofty target.

In order to make housing in the province affordable, OREA has made 105 recommendations.

Among its flurry of recommendations, OREA has advised limiting exclusionary zoning, which limits the development of certain types of land uses through municipal ordinances or binding provincial legislation. Last year, the City of Toronto voted to end exclusionary zoning and allow multiplex construction in every one of its neighbourhoods.

The real estate association also advised allowing as-of-right conversion of underused commercial property to become mixed-use residential buildings. Additionally, OREA believes that permitting as-of-right multitenant housing and as-of-right secondary suites, garden suites and laneway houses across the province will substantially boost the number of units and help quell rapid price growth, which is driven by excessive demand relative to paltry supply.

Increasing density will also be key to helping Ontario meet its target of building 1.5 million homes in the next seven years, posits OREA. To that end, incentives are encouraged for municipalities with excess school capacity to augment density, while height and density restrictions should be rescinded for buildings situated around transit stations, provided municipal zoning isn’t already sufficient.

Underdeveloped land has also been identified as a way to improve density in a bid to meet the 2031 target. Developing infrastructure inside and outside municipal boundaries would support “reasonable housing growth,” OREA says, including high-density housing and “complete communities.”

The planning department has long been the source of complaints from the real estate industry, and OREA recommends creating “a more permissive land use, planning, and approvals system,” as well as tapering municipalities’ abilities to request or host additional public meetings beyond what the Planning Act already mandates. Doing so should truncate construction timelines.

By creating so-called “approvals facilitators” who will act as arbiters during conflicts between government officials and developers, OREA suggests adherence to construction timelines will improve. Moreover, mandating pre-consultations, at which binding application requirements will be clearly stipulated, at the outset could be a preventative measure for timeline overruns.

A key facet of this particular recommendation is prohibiting the municipality’s ability to overrule members of regulated professions, such professional engineers, who have stamped applications. Moreover, additional stamps from municipal governments wouldn’t be necessary.

The association has also called on permitting wood-frame buildings up to 12 storeys, while looking for ways to prevent abuses of the Ontario Land Tribunal.

Ontario saw 100,000 housing starts in 2021—a 30-year high—and 285,37 as of the beginning of 2024, comprising 19% of the target.

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

But Bill 23, the More Homes, Built Faster Act, which passed late last year, also presents landlords with a unique opportunity to augment the value of their homes should they decide to list it at a later time.

That begs the question: which upgrades add the most value?

“If you’re renovating to maximize the value of your home, the scope of work will likely be different than renovating to suit your specific needs. Not all upgrades are created equal. Size, laundry, and fresh finishes will help increase income potential in a rental,” Megan McMurray, general manager of Billdr, told CREW.

McMurray added that she’s duplexing a single-family home in Toronto right now.

“One of the challenges of this project is finding ways to accommodate the main amenities in both units. You need to consider providing a functional laundry setup, full three-piece bathrooms, and bright kitchens in both units. This ultimately will impact the income potential.”

Bill 23 makes sound cases for basement and laneway units, especially the latter.

Billdr, an online platform that functions as a marketplace for consumers, helping them get quotes and track the progress of their renovations on a dashboard, has noticed, however, that the current economic climate has poured cold water on Canadians’ willingness to invest in home renovations.

In tandem with record inflation, the Bank of Canada has undertaken an aggressive interest rate-hiking campaign, having recently increased its overnight lending rate to 4.5%.

“That said, although property values may plateau, the market will continue to increase in value, so investing in your property one way or another makes sense,” McMurray said. “In the renovation space, my domain, we know reno projects will continue, but the scope and size might be smaller as a result of the current state of the market.”

Ryan Coyle, a Toronto-based real estate investor and founder of Connect.ca, says Bill 23 certainly won’t help solve the GTA’s chronic undersupply of housing, however, every additional unit should be treated as precious, and the government’s legislation will help homeowners struggling with mortgage payments in a rising interest rate environment carry their mortgages.

He added they will even be able to turn a profit every month.

“We’re seeing rents at the highest level they’ve ever been at,” Coyle said. “Rental supply in Toronto is below one month and there’s a lot of tightening in the rental market. There’s an opportunity for a substantial return on investment, and obviously, it depends on the magnitude of the dwelling that you add, but if you’re simply renovating a basement and adding a new entrance and finishing it, there’s a huge ROI in doing that.”

In fact, according to Coyle’s calculations, a basement rental suite in downtown Toronto can command $1,200-2,500 in rental income, especially if the ceiling is already relatively high. Moreover, the suite will require a finished kitchen and bathroom, as well as some new flooring, the totality of which will cost $15,000-25,000 in renovations.

“If somebody refinanced with a HELOC [home equity line of credit], which most people should do to add these rental properties—and let’s say the renovation is $25,000, the high side—at today’s three-year fixed at 5.59%, amortized over 25 years, that’s going to add $162 to your monthly bill, and if you’re building a suite that’s going to generate even $1,500, it’s a no-brainer.”

Coyle says there’s a major squeeze that low supply has put on renters, who he says is, in many cases, willing to pay top dollar for nicer apartments. And although an estimated 32,000 condo completions are slated to hit the market in 2023, a heavy chunk of which are destined for the rental market, similar prognoses hit the news cycle every year only to fall well short of such lofty figures.

“It’s important to note that number has always been a big number when it’s released in December, January,” he said, “but it’s never accurate because of delays, and due to current supply chains and the limited workforce, we will probably see even more delays than we have in the past.”

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

Multi-storey buildings made of wood, a renewable material, reduce carbon dioxide emissions by 40-50% and considering Canada’s 2030 Emissions Reduction Plan—which is targeting a 40% decrease below 2005 levels—mass timber construction is growing in popularity. The timber doesn’t just create a warm ambiance; it interacts with the interior climate, so when humidity decreases throughout the year, the timber absorbs and releases it.

In Toronto, mass timber residential buildings are slowly growing in popularity, however, little attention has been paid to the positive impact such buildings will have in the commercial real estate sector.

For evidence, look no further than the 300,000 sq. ft Sara Kulturhus cultural centre in the northern Swedish town of Skellefteå recently reviewed at the Green Building Festival sponsored by Sustainable Buildings Canada in Toronto. At 20 storeys, Sara Kulturhus is one of the tallest mass timber buildings in the world, and its impact locally has been immeasurable, rejuvenating the town square with a theatre that can be reconfigured to hold anywhere from 300 to 900 spectators. It also houses a library, a youth centre, and two visual art galleries.

There’s also a 205-room hotel on the premises, as well as a spa, gym, and restaurants, all of which have garnered Sara Kulturhus, awards the world over.

Oskar Norelius, an architect and partner at White, the firm that designed Sara Kulturhus—he was also co-lead on the project—told CREW that the project was germinated by a desire to meaningfully lessen environmental degradation—a problem as serpentine as they come—and, by extension, to create something that would be impressionable on a global scale so that it may inspire similar projects.

“We started using mass timber because of the environmental issue. Over these last years, we’ve learned more about how the real estate and construction industries affect the climate,” Norelius said. “Real estate and construction account for 40% of emissions in Sweden, and it’s similar in other European countries. To reach the ambitions of the Paris Accords, we have work to do.”

A crucial facet of the sustainable development approach to Sara Kulturhus was sourcing wood—which Skellefteå has an abundance of—locally. Moreover, the project’s construction created a slew of jobs in the green economy and even catalyzed additional activity with Europe’s largest battery factory being built in Skellefteå.

“People are really happy about that,” Norelius said. “It was our idea to give them a public living room in the cultural centre.”

Norelius added that one of Sara Kulturhus’s ambitions is to rejuvenate the town centre and demonstrate a model for inciting growth in secondary and tertiary cities instead of large urban centres like, as has been the case in Sweden, Stockholm, Gothenburg, or Malmö.

And it seems to be working.

“Whenever I go there, I meet so many people in the main entrance of the building, and that design was specifically the idea, to get people to gather,” Norelius said. “We’re being invited to design competitions all over the world now. We won a project in the Baltics where we are doing a transformation of a brewery into a cultural hub and timber structure office building, and there we are showing this realized building to authorities to get officials to push timber further than is allowed there.”

Toronto Keen On Mass Timber

The city council in Canada’s largest city has shown a willingness to increase density for residential mass timber construction, but in the commercial sector, there are already exceptional examples demonstrating the potential for scaling.

Hines has developed the T3 brand after watching tenants gravitate towards commercial buildings that have a vintage feel of exposed brick and beam. However, Hines is taking it further and spending a couple of years on research and development with an eye on next-generation office space, says Myles Millard.

“Our impetus for moving into timber was pretty simple when you boil it down: we saw what our tenants wanted, and that was these authentic spaces with brick and beam-style warehouses, but they lacked new building amenities and building systems that competitive tenants now demand,” the director of Hines said. “We set out to create this hybrid structure that’s a mix of that old authentic feel by bringing wood into the building and pairing it with a modern set of amenities, modern technology, modern parking, a gym, lounges, HVAC systems.”

Another crucial aspect of Hines’ foray into mass timber construction was sustainability, Millard added.

“It was huge for us and we know it’s critically important for our tenants as well, so that combination made it a perfect match for what we wanted to do with a lot of our buildings here,” he said.

Hines is building two T3 buildings in Toronto, one downtown in East Bayside and the other on Sterling Rd. near Roncesvalles Village.

The former is comprised of two 10-storey mixed-use towers with 251,000 sq. ft of office space and 110,000 of ground-level retail, and it will include a condominium component courtesy of Tridel. Millard says it will be among the tallest commercial timber buildings in North America when it’s completed.

The two-phase Sterling Rd. development, which will be eight and six storeys, respectively, is under construction and will feature 275,000 sq. ft of office space, while an eight-storey third phase will offer about 115,000 sq. ft. of the same.

The T3 brand has had success in American cities. In Minneapolis, Amazon is a tenant at T3 North Loop, while Facebook has set up shop at T3 West Midtown in Atlanta. The brand has proven so successful, in fact, that there are projects underway in Vancouver, Austin, Denver, Spain, and Australia. In Toronto, Millard says East Bayside is already proving a hit with the city’s tech community.

One of the reasons mass Timber is gaining popularity is because of how unique and evocative building interiors can be.

“The bio-select design is new school thinking where it is understood there are certain reactions in your body when exposed to nature, with the effects that people sleep better at night, blood pressure is lower and cognitive function improves,” Millard said.

“It’s like being in a forest or working in a park and you get the same knock-on health benefits with improved cognitive abilities, and people feeling better when they’re in the building. That’s why we love running tenants through the buildings; there’s this initial ‘wow’ moment. Nobody touches concrete in buildings, but every person touches the timber in our buildings. We build them with very large windows so that a lot of natural light comes in and we marry that with the design component so you feel like you’re in nature while working in an office setting.”

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

“There are a couple of reasons we decided to go with Alberta as our market of choice,” he said of the couple’s decision to purchase six doors in Leduc, just outside of Edmonton. “One is the cost to acquire a property alone is lower than it is in British Columbia or Ontario, and in Ontario, you pay the Land Transfer Tax—and in Toronto, you pay two LTTs; one is municipal and the other provincial. In B.C. you have an LTT too, so the cost for investors could be much higher.”

The Staceys purchased three two-storey townhomes totalling six units, which were brought to them by Alberta on Fire, an Edmonton-based firm that recommended the properties after studying the Staceys’ investment goals.

“While you’re not looking at the same capital appreciation as you are in some other markets, you’re looking at higher cash flow, which is more important to us in our lives right now, so it made more sense to go for a cash-flowing investment as opposed to something that was just a capital appreciation play,” Stacey said. “There’s no rent control in Edmonton, so when your lease is up with a tenant, you can adjust the rent however you want, and obviously as a landlord, you want to be mindful of how much you’re adjusting your rent by because when you have a good tenant, you want to keep them, so it’s nice that way. 

“What’s also favourable in Alberta is if you have tenants who are non-paying, it’s somewhat easier to evict them than it is in B.C. or Ontario. There have been some nightmare stories over the pandemic with non-paying tenants and trying to get them out of properties.”

As out-of-province landlords in Alberta, the Staceys are far from unique. According to Luc Cote, a sales representative and operations manager of Alberta on Fire, most of the brokerage’s clients are from Ontario, and echoing Stacey, Cote says the LTT is highly dissuasive—doubly so in Canada’s largest city.

Moreover, markets like Toronto and Vancouver only make sense if investors can absorb annual losses in pursuit of the capital appreciation play Stacey alluded to, but for mom-and-pop investors that simply isn’t feasible.

“In Edmonton, the dollar goes farther. It’s a third of the average price in major Ontario cities and we don’t have any rent control. Rents increase here by as much as the market can take, and that’s what’s exciting,” Cote said. “Although interest rates are going up, so are rents. Alberta’s on fire for a reason.”

In Toronto, for example, interest rates have made home purchases financially prohibitive, and while the city benefits from surging migration—the federal government announced early last month that Canada will target 500,000 newcomers per annum starting next year—rent control stymies landlords’ abilities to cash flow positively. And because landlords typically prefer variable-rate mortgages, a rising interest rate environment compounds the problem, however, in Alberta rents can rise as much as landlords need them to carry their mortgages.

In other words, the free market reigns supreme in Alberta, unlike in Ontario and B.C. where it’s shackled by the latter provinces’ regulatory regimes.

“Our Ontario-based clientele are struggling to find anything that cash flows near where they live and that’s why they come out to Edmonton where they get more doors with their capital, and these doors carry themselves in cash-flowing income, so it’s a nice compliment to their portfolios,” Cote said.

The Canada Mortgage and Housing Corporation’s MLI Select program, which was created to incite heavier investment in the country’s multifamily sector, makes investment in both existing and new-build multifamily properties simple in markets like Edmonton, Cote noted in stark contrast to, say, Ontario or B.C. MLI Select rewards investors with favourable financing conditions depending on how well they adhere to a point system that prizes affordability—which Edmonton has in spades—energy efficiency, and accessibility.

“As far as purpose-built rental in Ontario goes, the numbers don’t typically work for MLI Select, however, in Edmonton we can build new construction,” Cote said. “The scorecard places a lot of importance on energy efficiency, which is more of a green model, and that helps with financing.”

Taking into account that Canada has insufficient rental stock to house current and future Canadians, Edmonton is destined for a more prominent national role going forward.

“Alberta is a great market to invest in,” Stacey said. “Whether we put all of our resources there or not is up to what opportunities arise and where the deals are. We’re happy to invest anywhere as long as the returns are good. For what we’re doing right now, Alberta is a market that suits our strategy, and that’s why we’ve invested there and why we’ll continue investing there, but we’re always open to looking at any market whether in Canada or outside of the country.”

As things stand today in Canada’s real estate market, only Alberta is on fire.

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

However, mentorship and guidance are the difference between longevity as an investor and making decisions so ruinous that you’re out of the game before you ever really start. 

That’s where Calgary-based Mark Verzyl, a realtor and investment expert at eXp Realty, which is part of the Greater YYC Group, comes in. With over 20 years of experience as an investor, he cautions that investors make common mistakes, chief among them being poor strategists.

Investors often assume that existing home equity can be equivalently leveraged towards an investment property, however, lenders are inherently conservative and fastidious to bet all their chips. For example, lenders might make only 80% of $100,000 in equity available for an income-producing property, and while that could be enough to scuttle to poorly laid plans, the investor should still be able to ask themselves, “How do I manoeuvre?”

Verzyl says this is where due diligence is paramount.

Years ago, as a high-producing local broker, Verzyl began working with Mattamy Homes, which suggested he focus on Airdrie, located just outside of Calgary, and though initially circumspect, Airdrie is where he began heavily investing. He recounts how Airdrie was, in fact, bolstered by desirable school catchments, accessible parks, and some of the best walkability scores in the region outside of downtown Calgary, and thanks to easy airport access, which a local rental pool largely comprised of out-of-province workers relied upon, there was strong rental demand. The result was Verzyl flipping those properties in as early as four years for 30-40% above what he’d paid to buy them.

“I bought these at the height of the market before the oil and gas crash of 2014, but they still cash flowed, and while the market was down I was still able to find good renters,” Verzyl said, adding that robust rental demand insulated his investments from economic headwinds and helped him sell high when the market eventually started picking up.

A lot of investors, unfortunately, hadn’t done their due diligence and purchased rental properties in areas that couldn’t withstand those same headwinds. Verzyl says that highlights the importance of investing in can’t-miss properties, which brings Verzyl to his next piece of advice for investors: don’t make emotional decisions. 

This one, he says, includes investing too heavily in condominium features and finishes that can ultimately cut into profits by spending too much money upfront.

Verzyl explains that many novice investors, having already purchased, or even built, a home for themselves, often make the mistake of buying rental properties as if they themselves would in them, but those extra features eat into their short- and long-term profits.

However, a short-term rental accommodation downtown could attract higher-end tenants, Verzyl noted.

“From an investment standpoint, they choose luxury finishes—or finishes that are a notch or two below luxury—and that eats into their overall investment,” Verzyl said. “If the rental property is going to be an Airbnb, that’s another story because, if it’s in the right area, it can attract executives who are willing to pay more for their accommodation. But if it’s a long-term rental play, obviously you don’t want to the place to look too cheap, but if it’s not too expensive by loading it with features, it’s easier to flip when the time comes to cash out.”

If investors are purchasing condos for long-term tenancy, they should pay attention to developers’ price schemes because there are usually major variances.

“If they decide they’re going to buy in a 20-storey mid-rise and they buy on the 18th floor rather than the 12th, in most cases the developer sets it up where there’s a big price difference between floors,” Verzyl said. “Earning $100 more in monthly rent for a unit that costs $50,000 more to buy doesn’t make sense.”

Verzyl’s next morsel of advice is especially pertinent today because, while central bank policy at the beginning of the COVID-19 crisis resulted in money being essentially borrowed for free, the Bank of Canada has hiked its overnight lending rate quite dramatically in recent months. Consequently, investors who haven’t been in the game for very long have demonstrated a propensity to panic and hastily offload their investment properties.

Verzyl reminds us that investors’ average horizons are 10 to 15 years, during which time markets have high chances of falling, sure, but also rebounding. This is also where locking in the investment at a lower rate early on hedges against said vagaries.

“If somebody is looking at it right now and they have other upcoming debts to consolidate and the variable rate is high on their investment property, right now the bond market is dropping, therefore, fixed rates are too, and the horizon looks like fixed will drop a little bit more, so that’s something they should remember. High-interest rates are probably going to persist for the next two or three years, but we’ll see them drop again, so is there a perfect solution? No, but if you can ride it out a little longer and see where rates go, get something in the 4% range and lock it in for four or five years, and then lock in a lower rate after that.”

Market downturns are also when investors can find better deals because they have less competition—a trick deployed by savvy investors.

“Buy in a market where the masses aren’t buying, like now, because interest rates are going up and there’s an expected drop in home prices, so if you buy pre-construction today, by the time you the building is registered and you pay your closing costs in four or five years, interest rates will have dropped,” Verzyl explained of buying and closing at below-market prices.

“Right now, all you have to do is put your deposit down. That’s why seasoned investors love the strategy of buying something three, four, five years out, and that’s why downtowns are so popular.”

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

Maybe they should.

Babcock Mills in Loyalist Township outside of Kingston is a housing development comprised of single- and semi-detached homes that can easily be duplexed to capitalize on the area’s high rental demand, much of which is supported by Queen’s University. 

According to Shaminder Gogna, broker of record and founder of Condoville Realty Inc., a Toronto-based firm, the pool of renters in major Canadian cities is slated to billow as a consequence of housing affordability woes. Moreover, properties with rental suites offer homeowners a way to maintain their mortgage payments while also making a small profit every month.

“We are getting attention from Toronto because appreciation in secondary markets is higher than in primary markets,” he said. “Because the prices are lower, you’re either cash flowing positively or you’re very close to cash flow. This is a situation where you get appreciation and positive cash flow, whereas in primary markets you’re nowhere near cash flowing, and when prices drop, it tends to happen in those same primary markets.”

“We’re tackling affordability and offering more rental supply now that homeowners will have a duplex working for them instead of just single-use homes. This is a unique offering from a new builder’s perspective.” 

In particular, rental units at Babcock Mills will be attractive to graduate students, most of whom prefer not to live in university ghettos with their younger, rowdier peers.

“Renter demand is high. Kingston has one of the highest increases in rent, so for a landlord, it’s a great thing,” Gogna said. “Rental numbers have increased substantially in Kingston and the surrounding areas. We’re about a 10-minute drive from Queen’s and we do anticipate a lot of grad students don’t want to be in the university ghetto, so we anticipate having all kinds of renters.”

The development is part of a master-planned community in Loyalist Township, which falls between Kingston and Quinte West, and with a lot of young families in the area, the blend of singles and semis was a no-brainer.

Single-detached units range from 1,400-2,200 sq. ft and start from $709,000, while semis begin at $649,000, will be 1,450-1,650 sq. ft, and have a 2.5% mortgage buy-down for purchasers who qualify for it.

Upper-level units will have three bedrooms, 2.5 bathrooms, and a family room, while lower-level living spaces come with a kitchenette, bedroom, and bathroom. In taking advantage of a new provincial government plan to encourage more secondary units in a bid to attenuate the province’s burgeoning rental crisis, the houses will option separate entrances.

The development is quite flexible, Gogna added, in that the deposit structure is $60,000 which requires only $10,000 for six months.

The development is slated to close in 2024.

“Kingston has access to more 14.5 million people within a three-hour radius between Toronto, Ottawa, and Montreal, with Kingston right in the middle of that,” Gogna said. “That’s why there’s so much growth happening along the 401 in that area.” 

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

That’s because multifamily properties with at least five units may qualify for insured commercial mortgages, which are tied to the bond yield rather than the central bank’s overnight lending rate, says Calgary-based Natasha Phipps, founder of the Phipps Real Estate Group at CIR Realty in Calgary.

“In the commercial space, many investors want to go for the Canada Mortgage and Housing Corporation’s insured commercial mortgage financing because of favourable loan-to-value ratios that go as high as 95%, leaving only 5% equity in the property,” Phipps said. “The bond rate is significantly lower than the overnight lending rate.”

In a bid to help solve Canada’s housing crisis, the federal government created the MLI Select program through CMHC, which uses a point system predicated on affordability, energy efficiency, and accessibility to reward investors with better financing.

Phipps says Calgary in particular is an ideal market for MLI Select because there are a lot of multifamily dwellings in need of redeveloping, making it easier to satisfy the program’s criteria. She suggested there are paths to take advantage of this program. First, is purpose-built buildings that are designed to meet the criteria for energy efficiency and accessibility. Second, for existing properties, multifamily buildings that need a revamp are an opportunity to improve the building’s energy efficiency, and then designating a portion of the units as affordable can get you the points needed to obtain this desired financing structure. 

“The program is set up to incentivize investors, developers, REITs, and other groups to provide the type of housing that these cities need to make housing affordable, reduce carbon footprints, and provide more accessible housing in these communities,” she said. “And CMHC is definitely favouring these types of properties.

“You can increase net operating income where the market allows it and in turn, you increase the value of your property.”

Additionally, the property’s amortization could increase to 50 years, stretching out investors’ payments and creating affordability for them, too.

Existing buildings will likely need to rely heavily on the affordability scale and lock these units in as affordable, however, Phipps noted that it would still be quite a high rent yield in Calgary because the city has Canada’s highest average household income.

“Buying a building that needs improvements and doing the work would improve the tenant profile, help you raise the rent while remaining below the affordability metre,” Phipps said. “And once you have completed that, you can access the CMHC-insured mortgage product, refinance, access the equity you have built, and implement a loan that will set you up for the long term.”

Focus On Mission

Phipps says the entire ring around downtown Calgary is replete with multifamily opportunities, but certain pockets like Mission, Mount Royal, and Bankview are all located in the southwest of Calgary, which is where investors will typically find a bright tenant profile. As a result, one-bedrooms in Mission rent for $1,500-1700 a month and two-bedrooms go for $2,000-2,200, depending on the age of the building, size of the unit, and amenities.

“If you’re looking for higher rent and an A-quality tenant profile, typically the southwest of downtown is really, really popular. A good example is a community called Mission that’s very desirable from a multifamily perspective because there are plenty of older buildings that need attention and a lot of redevelopments actively taking place. Demand for that area is high, so a lot of buildings are being either torn down and new ones going up or they are being renovated and refinanced .”

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

But all things being unequal, Albertans are faring much better than the rest of their homebuying compatriots.

According to Mark Verzyl, a realtor and investment expert at eXp Realty, which is part of the Greater YYC Group, Calgary’s residential real estate market is poised to continue its balanced ways, and while prices are indeed increasing, the pace of growth isn’t enough to make buyers chary, as evidenced by condo sales surging by over 27% from a year ago. Verzyl says affordability is the name of the game, and because Calgary’s home prices have spades, a rising interest rate environment hasn’t ground activity to a halt like it has in the rest of Canada. 

“When the rate hikes started, Ontario cratered fast,” Verzyl said. “It went down very, very quickly, and for us, we were doing incredible business; it was historic, but it needed to slow down a bit, and it did, which was good. Seeing prices go up is good, however, you don’t want them off the charts for too long, otherwise, you’ll feel pain later, which we have experienced in this city, and that’s why our prices are so low compared to other major markets in Canada.”

Verzyl is referring to the oil and gas plummet of 2014, which haunted Calgary for years after the fact, and while the city is enjoying a revival, the Bank of Canada’s decision to keep increasing its overnight lending rate might have curtailed a repeat of years past when economic headwinds tanked the housing market.

However, market fundamentals, the most salient of which is surging immigration to Canada, have ameliorated dramatically in the last few years. Verzyl noted that the average number of annual newcomers has grown from 280,000 a few years ago to 415,000 through the next few years, and as he says, everyone needs a place to live.

“Calgary is on the map with Toronto and Vancouver, of course, because it’s half the price of those cities. In fact, taxes in Calgary are less, as are the living expenses. You get to keep more of your money,” he said. “Migration to Calgary is very, very heavy right now, and going forward it is predicted that Alberta’s GDP will be topping Canada over the next three or four years. Ontario and B.C. may experience a full-on recession, but Alberta will only get sideswiped by one.”

Indeed, a forestalled recession will entice even more newcomers to choose Calgary as their adopted home instead of perpetuating the decades-long trend of settling in Toronto, and that’s auspicious news for the city’s real estate investors. Among the casualties of the economic crash in the city nearly a decade ago was the condo market, but while a glut of inventory sat desperately on the market for years, today there’s a voracious demand for vertical living, in part, because of a shift towards affordability in the city. 

In fact, even Torontonians are choosing Calgary over Toronto.

“Why would you live in a $600,000-700,000 one-bedroom in Toronto or Vancouver when you can come to Calgary and get a rental for half to two-thirds of what you’d pay on a mortgage in those cities, or you can even buy a house instead of an apartment,” Verzyl said. “Everyone who comes out here from Toronto says they had no idea how great it was.”

Even the provincial capital is demonstrating many of the same propitious signs that have renewed domestic and international interest in Calgary.

“There is typically always a bit of a difference in price, which is something from $30,000-40,000, between Calgary and Edmonton, although the gap is a little wider right now, Edmonton is a fairly stable market. You have an armed forces base, and because it’s the capital, there are lots of government jobs, plus a pretty big workforce in the oil fields in Fort McMurray. While Calgary leans more towards head offices and white collar jobs, Edmonton is still doing well.” 

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

Exorbitant housing prices are hammering major cities across Canada, but not in Edmonton—a city whose reputation for affordable living is attracting people from far and wide.

A much smaller percentage of an Edmonton resident’s income can service a mortgage than in the rest of Canada, enticing people to move to the city, but so is its diverse economy. And with a recession looming, that kind of security is becoming scarcer by the day in Canada’s biggest cities, where mortgage payments and rents make job precarity a wholly unnerving prospect.

“The percentage of your income required to service a mortgage or rent is far less than in any other major city in the country, so you have more disposable income at the end of the day which is attractive to young people who find it difficult to make the numbers work right now,” said Warren Pratt, a realtor and owner of Alberta on Fire Investor Team.

“That income stability has become very important as a possible recession looms, and as inflation keeps rising. Edmonton has a huge oil and gas market; it’s a large part of our economy and that will always be the case. A lot of people don’t realize this either, but there are a lot of jobs in government, tech, manufacturing, and construction. It’s a city that’s expected to experience significant growth over the next 10-20 years.”

Commodities are another robust sector of Edmonton’s economy, Pratt added.

The result of fortuitous economic developments, namely the recovery of oil and gas, and its population growth, which had been lagging for much of the past decade, make Edmonton a high contender for real estate investing. However, rising interest rates and inflationary consumer goods prices are taking their toll on real estate markets across the nation. Edmonton is no different, as home sales decreased by 12.2% in September from a month earlier, and by 15.7% year-over-year. But with listings increasing during those periods by 1.7% and 3.7%, respectively, investors and end-user purchasers have plenty of reason to dive headlong into the city’s housing market.

For example, single-family home sales fell by 13.5% on a monthly basis in September, and by 21.9% from a year earlier, meaning investors should be able to find some good deals around the city. Transactions in the condo market also declined by 13.2% month-over-month and by 1.5% year-over-year, while sales in the duplex/townhouse segment dropped by 4.9% and 7.2%, respectively, during that period.

“Canadians can buy homes for under $400,000 in Edmonton. Other communities’ housing prices climbed significantly, but as that happened, oil and gas pulled back and that curtailed any rises in Edmonton’s housing market,” Pratt said. “That’s why investors still see it as a relatively affordable place to purchase. There’s the diverse job base, and because tenants have disposable income, they can pay their rent on time and homeowners can pay their mortgages while still comfortably affording their other expenses.”

One- and two-bedroom units rent for $1,000 and $1,500 respectively, in Edmonton, Pratt says, adding that the city is attracting skilled labour from around the country because of its job market and affordable cost of living. In particular, West Edmonton and areas located around the South and SouthWest attract a lot of tenants, including young families.

Moreover, the federal government is trying to solve Canada’s housing affordability problem, which could mobilize investors.

“We do a lot of multi-family properties for investors looking for larger projects and it seems to be a perfect time for them,” he said. “The government wants to provide Canadians with affordable housing, and in order to do that they need to incentivize investors to build, renovate and provide good-quality and energy-efficient housing.”

Investors in the city are securing commercial financing, which can be much less cumbersome if the plan is to purchase a large multi-family building than it is for a single-family house.

“The way the market has shaped up with the incentives provided today, the government is trying to cool the market on the residential side but they still need to provide quality housing on the commercial side.”

Neil Sharma

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.