Vancouver’s West Broadway is in the midst of a ‘land rush’

The building at 950 West Broadway in Vancouver is unremarkable, a two-storey concrete structure that is home to an IHOP, a Japanese restaurant and an insurance broker, among other things.

But it sold last May for a phenomenal $46-million, according to B.C. Assessment Authority records, even though it had been assessed at just $18-million. It was the latest record-breaking sale in what has been a year of high-water marks for commercial properties along Broadway.

Why so high? As Colliers, the agency listing the property, put it: “Without question, the highly anticipated UBC-Broadway Rapid Transit Line has placed a spotlight on West Broadway and amplified demand for land and investment assets.”

That sale and others demonstrate the impact that a future transit line – even one that has no confirmed funding or firm completion date – can have on an area.

The commercial building at 950 West Broadway sold last May for $46-million, according to B.C. Assessment Authority records. (Colliers)

“There’s been a land rush on Broadway,” says Jon Stovell, the chair of the region’s Urban Development Institute. “Developers have been purchasing with an expectation it will be one of the densest areas in the region.”

That’s all in anticipation of the extension of the Broadway SkyTrain line from Commercial Drive in the east to Arbutus Street in the west, a plan that has been talked about for a couple of decades.

If built, the line would serve a corridor that has been called Vancouver’s third downtown, a long strip that is already packed with medical offices, restaurants and stores. Some parts of it have office towers already, especially near Vancouver General Hospital, but much of it is unprepossessing and low-rise.

But hopes are high that the new transit line will actually happen this time, after Prime Minister Justin Trudeau made specific promises about transit funding for Broadway during his campaign last fall.

So far, only initial planning money has been committed. Everyone is now waiting for what’s called the second-phase funding, which is supposed to be negotiated this fall in anticipation of a much bigger commitment to transit projects across the country by the Liberals in their second budget next February.

Even when that comes through, though, it could be as much as a decade before the Broadway extension opens.

As well, it’s unclear at this point whether the city will rezone the area for more density. At the moment, much of the central corridor is zoned to allow for buildings that are equivalent to just three times the lot size.

A long-established Vancouver family, the Pappajohns, snapped up the Denny’s restaurant site on West Broadway this year for $26-million. (Colliers)

“Once we have confirmed funding and an annual project, we’ll engage in a planning process,” says Jane Pickering, Vancouver’s acting general manager of planning. “Around transit stations, it’s pretty clear there will be some densification.”

One area that does have the green light for greater density is around the existing Commercial-Broadway station, the second-busiest in the transit system. Increased density around that station was recently approved as part of the Grandview-Woodlands community plan, which is mapping out what services are needed as the neighbourhood grows by 10,000 people over the next 25 years.

There is a Safeway grocery store with a large parking lot next to it, where developer Ian Gillespie of Westbank Corp., who has worked with Safeway on other projects in the past, is in the midst of designing a new complex of towers with residential and office space.

Mr. Stovell says he’s certain the province, which has to commit to millions of dollars in funding, along with the federal money, for the project to proceed, will be pushing the city to allow more density.

Reliance Holdings acquired a large West Broadway site, which includes the current Mountain Equipment Co-op store that is due to move in a couple of years. Plans call for rental units on the site. (Colliers)

“Clearly, the province is convinced the Broadway line has to go along with densification. They’re not going to allow what happened on the Expo line again,” he says.

The city’s first transit line opened in 1986 – the Expo line ran from downtown Vancouver to Surrey – and is remarkable for the low density of development that still exists around its stations 30 years later.

But there are no firm guarantees on exactly what density will be allowed.

That’s not stopping property buyers, though.

The prospect of a new transit line along West Broadway has made commercial buildings more appealing to developers. (Colliers)

Mr. Stovell’s company, Reliance Holdings, acquired a large site eight blocks east of the IHOP restaurant, the current Mountain Equipment Co-op store that is due to move in a couple of years.

The property, currently valued at $47-million, was acquired by his company last June for a price that doesn’t appear in B.C. land records.

Another noted land deal along the corridor was the purchase by the long-established Vancouver family, the Pappajohns, of the Denny’s restaurant site on Broadway three blocks west of the IHOP site.

That was purchased for $26-million, double the 2015 assessed value, in February this year.

Besides those purchases, the City of Vancouver and TransLink, the transportation agency that will be building and operating the Broadway line, have bought pieces of land at key locations, several sources say.

But one problem with the early buying at high prices is that it may actually hinder development, at a time when Vancouver is suffering from a severe squeeze on housing. Both house prices and rents have been soaring in the past year, as existing and new residents, along with investors, have competed hard for the slow-growing supply of housing.

Some of the current speculation is “stripping more supply out of the market,” says Avison Young principal Mehdi Shokri. “Transit is supposed to be helping spur development, but we’re going to find we’re adding more pressure to the supply problem,” he says.

As a result, he says, sites west of where the new line is supposed to stop are seeing more development activity because builders there know there is likely to be no change, so they’re proceeding on the basis of the current zoning.

But in the hot new transit-line area, people are holding off.

For example, the buyer of 950 West Broadway is a company called Hometop Enterprises that was created just last February.

The company’s incorporator is Bao Meng Wen, with an address in the city’s upscale Kerrisdale neighbourhood. The company does not appear to have any development experience.

New purchasers like that feel that they can only get a return on the high prices they paid if they get considerably more density – and will wait however many years it takes to get that, says Mr. Shokri.

Mr. Stovell adds, “We won’t see a lot of projects breaking ground until there is clarity on the zoning.”

But he expects it will go quickly after that. He is hoping to build a large rental project on the MEC site and anticipates that others might do the same.

“One of the things I think you’ll see out of the gate is a lot of rental. Rental works in the current market.”

Courtesy: The Globe And Mail

Vancouver real estate vulnerable after tax on foreign buyers: Fitch

With a new tax on foreign homebuyers in Vancouver expected to slow purchase activity, there is a greater risk that the city’s lofty real estate prices would be vulnerable to a potential jump in local unemployment, Fitch Ratings said on Monday.

Earlier this month, Vancouver implemented a 15 per cent tax on foreign home buyers to try to address a lack of affordability for residents.

The new tax will likely be effective in tamping down buyer activity, Fitch analysts wrote, but with signs that the market may have begun to cool even before the tax, that leaves Vancouver home prices more exposed to potential changes in Canada’s economy.

“We feel that the foreign investors have been propping up real estate in Vancouver, creating more demand, which is raising prices,” said Susan Hosterman, director of U.S. structured finance at Fitch Ratings.

“With them potentially out of the picture, Vancouver is more susceptible to Canadian supply and demand behavior, which is mainly driven by employment.”

While Vancouver’s job growth has been strong, Hosterman said it was a question of how long that will last given lackluster job creation in other parts of the country.

Vancouver’s unemployment rate was 5.4 per cent in July, according to Statistics Canada, one of the lowest amongst Canada’s major cities.

The foreign buyers tax was the latest effort by authorities to reign in the housing market in recent years. Last December, the new Liberal federal government introduced measures requiring those who want to buy more expensive homes to provide a bigger down payment.

Some cooling in the Vancouver market may have already begun, Fitch said, pointing to recent data from the Canadian Real Estate Association that showed monthly sales have dropped 21.5 per cent since peaking in February.

Canada’s housing market has been robust in the years since the financial crisis, lifted in part by cheap borrowing costs. The national real estate landscape has become more fragmented recently with activity in oil-sensitive regions slowing and prices in Vancouver and Toronto accelerating.

The Bank of Canada has warned about possible speculation occurring in the two major cities.

Fitch estimates that national home prices are more than 20 per cent overvalued compared to long-term economic growth, with markets increasingly exposed to downside risk.

Fitch said it plans to publish updated overvaluation estimates for major Canadian cities by the end of the year.

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Courtesy: The Globe And Mail

‘Renting is a beautiful thing’: The case against home ownership

There’s a cure for this nation’s narrow-mindedness about renting instead of owning a home.

It’s a new book called The Wealthy Renter that will be published Sept. 10. The author is Alex Avery, who is well qualified to write on the topic of buying versus renting. He holds the respected chartered financial analyst (CFA) designation, he’s a licensed property appraiser and his day job is analyzing publicly traded real estate companies at CIBC World Markets.

The book arrives at a time when renting increasingly makes sense as an alternative to buying into the expensive housing markets in some cities. What’s holding people back? Mr. Avery and I discussed this in a Q&A this week. Here’s an edited transcript.

Why are Canadians so obsessed with home ownership? Is it just the way prices have soared in some cities?

Certainly there’s a positive feedback loop of people seeing the price of their houses go up and talking positively about home ownership. But it’s broader than that. Home ownership is widely regarded as being the only sensible choice. That view is pushed by real estate agents, by lenders, parents, friends, family. Even the government of Canada promotes home ownership. This really drowns out anyone who is talking about the positives of renting.

You say in the book that “renting is a beautiful thing.” But to many people, it’s financially repugnant. Why is that?

The real reason that Canadians have such a negative view of renting is the inaccurate characterization of renting as throwing your money away.

What’s your take on this common criticism of renting?

It’s true you’re not building equity in a home, but the cost of renting is significantly less than the cost of owning a home. Part of the gap between popular opinion and reality on renting is a lack of understanding of the cost of owning a home.

Can you give us an estimate of how much it costs to own a house, beyond the mortgage?

There’s the opportunity cost on the equity you have in your home [you might make more by investing money elsewhere], the cost of maintenance, the cost of property taxes and the cost of utilities.

What’s your best estimate of maintenance costs?

In the book, I use a conservative estimate of 1 per cent of the value of a home [on average per year]. But you might want to use 2 or 3 per cent, just to build in a buffer.

What about the idea of home ownership as a forced savings plan?

For 25 years, you will make a large payment toward paying down the balance on your mortgage. Ultimately, when you’ve paid off the mortgage, you own the house outright. The flaw in that strategy is that house prices have significantly underperformed the broadest investment index in Canada, which is the S&P/TSX composite index.

But you can sell a principal residence tax-free. Isn’t that a significant win for ownership?

If you own a home for 25 years, at the end of that period, you can sell it and you won’t be on the hook for any capital gains tax. But on most investments, you don’t pay capital gains until you sell them. If you wait 25 years, the impact of capital gains tax on your investment returns is actually a lot less than people expect it to be.

The subtitle of your book is How to Choose Housing That Will Make You Rich. What do renters have to do to become rich?

In a word, it’s discipline. They need to have the discipline to commit to a savings plan. If you have it, you can outperform the experience of a homeowner by investing. For Canadians who lack the ability and discipline to commit to a savings program, housing is a nice fail-safe for them.

One of the problems of renting is that low vacancy rates in some cities are making it hard to find affordable places to live.

That’s absolutely accurate, but it pales in comparison to the competition you’re seeing for home ownership.

Can you give millennials a smart, shut-them-down response to people who disrespect renting?

Tell them you invest the savings you get from renting, you have more money to enjoy life and you have less stress. Renting is clean, easy and affordable.

Finally, I have to ask this. Are you a renter?

I’ve been a renter, an owner and a landlord. My wife and I rented for 15 years and now we own. We bought after we had kids.

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Courtesy: The Globe And Mail

Ontario to introduce regulations for home inspections

Ontario said it plans to start licensing home inspectors in the province as part of legislation that could be passed as early as this fall.

Minister of Government and Consumer Services Marie-France Lalonde said the province plans to introduce laws that would establish minimum standards for home inspections, including the type of information that inspectors would be required to disclose to home buyers and the language inspectors are allowed to use in their contracts. The government said it also plans to create an independent administrative authority to licence the province’s more than 1,500 home inspectors.

“These changes would ensure consumers benefit from quality advice, are protected from surprise costs and aware of safety issues before buying a home,” the province said in a news release. “This will also create a level playing field for the home inspection industry, preventing inspectors with little or no training from competing with qualified professionals by offering lower rates.”

Home inspectors are one of the few professionals tied to Ontario’s real estate industry that are not licensed or regulated, even though nearly 65 per cent of all homes sold on the resale market in Ontario are inspected each year, according to government estimates.

Currently, home inspectors are governed by a patchwork of different industry organizations, each with their own training programs and accreditation standards, although industry associations have urged the government to introduce rules that would apply to all inspectors.

Ontario has been examining the issue of licensing home inspectors since 2013, when the idea was among 35 recommendations made by an expert panel the province created to study ways to strengthen consumer protection in the housing market.

Liberal MPP Han Dong introduced a private members’ bill in February that sought to license the industry, prompting the government to announce plans to draft its own legislation.

If the legislation passes, Ontario would join B.C. and Alberta as the only provinces in Canada to regulate the home-inspection industry. The B.C. government announced earlier this year that it planned to tighten its regulations governing home inspectors, including requiring inspectors to have liability insurance, introducing stricter rules around record-keeping and banning contracts that limit an inspectors’ liability.

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Courtesy: The Globe And Mail

At this Quebec condo, you won’t have to hide your Airbnb rentals

The Way Home is a series looking at the issues and challenges for people who are in the market for a home.

Airbnb’s rise to prominence in Canada shows no signs of abating.

A report this year, by the Ted Rogers School of Management at Ryerson University in Toronto and HLT Advisory Inc., revealed that the number of Airbnb listings in Toronto, Ottawa, Vancouver and Calgary has grown by 140 per cent since early 2015.

But while owners of detached, semi-detached and townhouses in areas zoned for residential and mixed use have happily cashed in, most condominium owners have been left out in the cold, or in the shadows. That’s not to say condo owners haven’t put their homes up for short-term rentals, but condominium bylaws generally prevent such rentals.

However, a new condo development in Quebec City may be about to change all that. Condos LB9, which is yet to break ground and started selling its units last June, is located in the Lebourgneuf area of the Quebec capital, about a two-minute walk from the Vidéotron Centre, which would be the home of the city’s hockey team if the National Hockey League decides to return.

What sets LB9 apart from every other run-of-the-mill condo development in this country is that it is using Airbnb and other short-term rental platforms to entice owners and investors, by writing it into the condo owners’ declaration.

“What we found in the past is that many times when you do buy a condo, your hands are tied,” says developer Denis Bolduc of Groupe Bolduc. “You’re never allowed to lease it on a short-term basis because of the way that the ownership of the condo is set up.”

The development will comprise three 12-storey towers, each with a specific target audience. One will offer 250 condos that are fully open to short-term rentals; another will be 198 units designed for owner occupation or short-term rentals; while the final one will be aimed toward retirees and snowbirds who like to spend chunks of time outside the country.

The building also offers buyers, particularly overseas investors, services to assist in the handling of the management of their units, such as concierge and cleaning. However, Mr. Bolduc points out that the owners will have to get the proper permits to rent their units and pay taxes on any income they receive.

For parents of students who are going to school in the city, for example, the opportunity to make added income over the summer months and Christmas is clear. At the end of the day, the concept offers owners true flexibility.

“Really what we’re promoting here is we want the people to be free to do whatever they want,” he says.

The units range in price from $159,000 to $660,000, and so far 40 to 50 units have been sold, with the developers looking to break ground later this year.

“I think it’s really interesting because I’ve sold a couple places in the last year where people had this specific request but it couldn’t work for them,” says Matt Parker, a realtor with Keller Williams in Puget Sound, Wash., and author of Real Estate Smart: The New Home Buying Guide.

“I’m seeing every condo buyer has this question which is: ‘Can I Airbnb it?’ Or whatever system you’re using.”

Though he says U.S. real estate laws wouldn’t allow this kind of development, he says for Canada, and especially in vacation communities, it makes perfect sense.

However, for potential owners or investors it comes with a caveat. One of the restrictions to allowing condo owners to put their units up for short-term rentals has been security of the other residents in allowing a constant flow of strangers into the building. As such, that may incur extra costs for owners and investors.

“It’s probably going to be more expensive because of the concierge you’re going to have to hire, security, security cameras, stricter means of getting in and out of the building,” Mr. Parker adds.

Zulfikar Jiwa, a Vancouver realtor who incurred the wrath of some condominium owners in Vancouver by renting out three of his own units in the same building on Airbnb while he waited to sell them a couple of years ago, says the concept could catch on nationwide.

“Vancouver right now is a hot market, there are no rentals and a lot of demand, so it would be a profitable venture here,” he says.

Michael Marini, a Toronto-based mortgage broker with Dominion Lending Centres, is no stranger to Airbnb and other short-term rental platforms. Mr. Marini owns a fourplex in the High Park area of Toronto, along with a four-season cottage in Orillia, Ont., and he also rents out the basement apartment in his home.

While he thinks the LB9 concept has potential down the road, he also cautions about getting involved in this kind of project from the ground up.

“Any building that’s not owner-occupied mainly or above 50 per cent [rentals], typically these buildings are a little run-down and shoddy,” he said, adding it might affect the equity value. “But in terms of cash flow, it’s insane. These Airbnbs make three times the amount of cash flow that you can on a regular investment property.”

Though Mr. Marini has so far invested only in houses, if the condo model made its way to Toronto, he’d be more than happy to get on board, though he wouldn’t necessarily buy into new construction off a floor plan.

“I’d want to see three years in what that building looks like,” he says. “If it’s deteriorated you’re not going to get Airbnb people wanting to go to that building. It’s going to get a bad rap on Airbnb or so that’s the only thing.”

Courtesy: The Globe And Mail

From digital skin care to pregnancy test apps: Is ‘smarter’ always better?

Earlier this week, researchers at MIT Media Lab, in collaboration with Microsoft, announced the development of DuoSkin, a temporary metallic tattoo that allows users to control their mobile devices. The “on-skin user interfaces” can be designed as fashionable, jewelery-like adornments, turning people into a glittery tribe of artfully tattooed techies. Swipe a finger across the metallic design on your forearm, and you can scroll through information. Or use your mobile device to read data stored on your skin.

And why not? Skin is such an accessible platform. And we all have plenty of it.

None of this should surprise us. Or freak us out. Such wearable technology is the natural evolution of the solipsistic nature of smart devices.

That smartphone in your hand is a tool for efficiency and convenience, sure, but it’s also a satisfying return to childhood when you did feel the world revolved around you. Who wants or needs to grow out of that illusion? Technologically armed, you’re the centre of your universe, using this app to beckon a ride or that app to bring dinner from your favourite restaurant to your front door or such-and-such an app to get a barista to make your coffee so you don’t have to wait in line or another app to remotely prepare your home for your arrival. They’re more reliable and obedient than a nanny or spouse.

Scrolling through the app store is like a trip to a candy store. So many things to tempt you! When I view them, I imagine all these earnest tech people wanting to revolutionize modern life, making us happier, healthier, fitter, thinner, more efficient.

So I tried out a few newly launched smart products with apps of their own: La Roche-Posay’s My UV Patch; First Response Pregnancy Pro; and Philips Hue White Ambiance lighting. Each of them use slightly different technologies, but all promise a better life. But do they deliver?

La Roche-Posay’s My UV Patch measures the risk you face from the sun, but can’t tell if you’ve been adequately protected by sunscreen.

The My UV Patch, billed as “the first connected stretchable UV patch,” will be available in stores next year. (As part of the company’s goal to help prevent skin cancer, next year will also see the roll-out of skin clinics that will allow people to have their moles checked.) I read the UV Patch instructions and placed the heart-shaped tattoo-like film on the top of my hand. I answered questions on the app about skin type, hair colour and eye colour, and whether I easily burn.

The idea is that you wear the patch, which is made with photo-sensitive dyes, and then scan it via the app on your phone when you’ve been outside in the sun. On a day last week in Toronto when the temperature was 30 and the UV index was 7, I held my hand out flat in the midday sun for about 30 seconds. Then I scanned the heart: “You have already used your daily sun stock for the next two days,” it warned me. “You’re now exposed at your own risk.”

Really? That was crazy. And alarming. I put some sunscreen on the hand, over a new patch. Same message. Was My UV Patch smart or kinda stupid? “The photo-sensitive dyes will change based on the UV in the environment and then, based on the information you inputed about your skin type, the app uses an algorithm to calculate your risk,” explains Kristen King, group product manager at La Roche-Posay, a company under the L’Oréal umbrella. “But it doesn’t measure risk protection.”

In other words, putting sunscreen on over the patch doesn’t help you know if you’ve being adequately protected. “The point of it is to help change behaviour. To act as a reminder of the need for sunscreen,” King says, explaining that research in 23 countries among nearly 20,000 people showed that while nine out of 10 consumers are aware of the potential for sun damage, only 27 per cent wear sunscreen (primarily on the face), less than 5 per cent wear long-sleeved shirts and only 20 per cent try to stay in the shade.

What the app will do is keep asking if you have applied sunscreen – a bit like an annoying, over-protective mother.

On to connected pee sticks. First Response Pregnancy Pro is promoted as the first and only pregnancy test with Bluetooth wireless technology that connects the test stick to an app on your smartphone. If the verdict is positive, you get calculations on your due date and a calendar to make note of obstetric appointments. And there’s “wait support” – meaning that you can be entertained (with “cooking tips and playful animals,” among other things) for the three minutes it takes to get your result.

Uh, who’s the baby in this scenario? This would suggest that a grown woman is in need of pre-programmed distractions just as you might provide for a toddler, waving a funny toy in his face while you try to shovel in some broccoli.

Philips Hue White Ambiance smart light bulbs allow you to program 50,000 shades of white via an app.

Next up, Philips Hue White Ambiance smart light bulbs. Philips is the world’s leading lighting brand and has the largest connected lighting system. It began selling Hue connected products in 2012. The new White Ambiance, which allows you to program 50,000 shades of white (“light recipes,” the company calls them) in order to “match the moment” in your life, launched this spring. Via an app, you can control or program the lights.

“We’re trying to move light from an on/off proposition, in which you replace the bulb when it breaks, to have light be a supporting part of your life,” explains Todd Manegold, connected home business lead, North America, at Philips Lighting. Maybe my life is boring, but it certainly doesn’t have 50,000 different kinds of moments. I can think of four, maybe five, off the top of my head. Might this be tech-nerdy overkill?

The smartest thing about this is the brilliance of the marketing idea. Manegold helpfully pointed out what every human knows – that “on a sunny morning, you feel more energized and ready to get on with your day versus waking up on a rainy, cloudy day. Lighting has a big impact on how people feel and behave.”

Big tick mark. And it’s kind of James-Bondy to surreptitiously press a button and change the mood of the room.

But with all these connected products, quite apart from their usefulness, there’s a dark, Trumpian undercurrent – and that’s about privacy.

With health-related apps, such as First Response Pro pregnancy and My UV Patch, experts are concerned about how information is used, including by third parties.

Ann Cavoukian, executive director, Privacy and Big Data Institute at Ryerson University, says: “The majority of the time, the lack of secure privacy protection is an oversight by the companies. They’re just eager to get it on the market. … You’re exposing yourself, and the information you provide could impact you with your employers, with insurance companies. You have no idea, no control.” Regulators in the EU have recently passed rules to help protect consumers, such as making privacy the default setting, embedded in the design of “smart” products, she explains.

Unfriendly intrusions from strangers who can access information or gain control of the devices remotely worry experts as well. “Hackers could examine when lights are on or off and could form predictions about when you’re away,” Cavoukian says regarding connected lighting.

Some experts are concerned about how information from connected products is used.

Paranoia is an unfortunate by-product of our hyper-connected world. But I’m probably like you in that I think more about apps’ advantages rather than their data risks. When I do hear the warnings, a part of me starts imagining someone with a dystopian view of the world and bad hair, thinking everyone’s out to get him.

That was, at least, until I read about smart, connected vibrators. At a recent DEF CON hacking conference in Las Vegas, two independent hackers showed that the We-Vibe 4 Plus vibrator – a type of sex toy called “teledildonics” – can easily be hacked. Not only could a third party seize control of the device – not your lover on the other side of the world who wants to remotely give you a little thrill – but the device “talks” to the manufacturer, Standard Innovation.

Consider this when you’ve dimmed your Hue White Ambiance lights to an appropriately sexy shade of soft white and are availing yourself of your teledildonic device. You may think it’s all very private and secret, but the company will not only know when you’re using it, it will know what temperature the device records as well as the level of the vibrator’s intensity.

Talk about childhood and having your mother watching over you. Not very sexy.

Courtesy: The Globe And Mail

Lack of supply driving GTA house price surge, studies say

Toronto is in the midst of a housing heat wave, with sales activity and prices both breaking new records in July. But one thing that seems capable of putting the brakes on the market is what the Toronto Real Estate Board has called the “troubling trend” of a shrinking supply of homes for sale, particularly detached homes.

Several new reports out Monday point to just how much the lack of supply – particularly of detached houses, townhouses and other so-called “ground-oriented” housing – has helped drive the region’s house prices into the stratosphere.

Frank Clayton, senior research fellow at Ryerson University’s Centre for Urban Research and Land Development, examined a handful of recent surveys of consumer housing preferences in the Greater Toronto Area (GTA). He found that despite provincial policies that have encouraged a dramatic shift toward building condos rather than houses, most prospective buyers in the region say they prefer a detached house or other low-rise properties, such as townhouses.

Millennial home buyers prefer condos in slightly higher numbers, but most also say they are looking to purchase a low-rise house, according to Mr. Clayton’s research.

House sales numbers back up his research. Low-rise houses made up 66 per cent of all homes sold in the region last year, compared to 34 per cent for condos. Detached resale home prices grew 12 per cent last year, even as resale condo prices rose just 5 per cent.

“Many households demand a single-detached house with a yard as their preferred abode,” Mr. Clayton wrote, warning that to restrict the supply of low-rise housing and encourage more high-rise condo construction “will lead to even higher house prices … and huge capital gain windfalls for the lucky owners of existing houses and vacant lands on which new ground-related homes could be built.”

Detached and semi-detached properties made up less than 27 per cent of new housing starts in the GTA last year, down from nearly 40 per cent in 2009, CIBC World Markets deputy chief economist Benjamin Tal and researcher Katherine Judge point out in a separate report.

While new home construction has picked up steam in Ontario this year, much of the growth has come outside of the GTA, in communities such as Hamilton, St. Catharines and London, says Bank of Nova Scotia senior economist Adrienne Warren.

Both Mr. Clayton and the CIBC economists point the finger at provincial policies aimed at curbing urban sprawl that have restricted the amount of new land available for low-density housing developments and driven up the costs of building new houses. The Ontario government recently proposed even higher density targets for municipalities, which will also add to the shortage of land for detached homes, the CIBC economists say.

At the same time, extended low interest rates have created an “affordability mirage” that has only fuelled demand, enabling more people to stretch themselves financially to buy into the GTA housing market, even in the face of skyrocketing prices.

With little room for new supply of low-rise housing, Mr. Tal and Ms. Judge suggest that financial regulators instead continue to target demand by tightening mortgage lending standards even further. They propose increasing the qualifying rate for borrowers who take on five-year, fixed-rate mortgages. Ottawa should also raise the minimum down payment on insured mortgages between $500,000 and $1-million above the current 10 per cent. Furthermore, regulators should keep a closer eye on the private mortgage industry that targets subprime borrowers, which the economists say has increased its share of the mortgage market to 6 per cent.

They also argue that Toronto should be active about stemming the tide of foreign money into the region’s housing market, which they estimate accounts for as much as 15 per cent of home sales, including locals who get money from family members abroad to buy homes. The CIBC economists propose a “flipping tax” on foreigners looking to speculate on GTA home prices, a tax on empty units and higher land transfer taxes for more expensive properties. Governments could also enact rules limiting international buyers to purchasing only newly built homes, similar to Australia.

But the most important changes will come from policies that encourage more people to rent instead of buy, Mr. Tal and Ms. Judge said. Too few people are opting to rent in Toronto’s increasingly expensive housing market, they said. A shift toward renting will be critical in easing Toronto’s affordability woes and preventing a house price correction when interest rates eventually rise.

“While we all hear about the tight rental market in the GTA, the reality is that the propensity to rent in the GTA did not rise in recent years in a way that is consistent with the rapid pace of house price appreciation,” they wrote.

The economists called on municipalities to provide more tax incentives to new rental housing developments, lower development charges for new rental buildings and find ways to encourage developers to build larger, family-friendly rental units.

Courtesy: The Globe And Mail

A healthy office is a happy office

In his film Playtime, Jacques Tati explores the modern office and its absurdities.

The open-concept space was a field of workstations.

Amid a grid of blind corners and flapping cubicle doors, there was the constant risk of colliding with another worker or losing someone altogether, while primly stylish Parisian women strode by with precision.

This 1960s, ultramodern office was French filmmaker Jacques Tati’s parody of workplace efficiency in his masterpiece Playtime, the joke being that efficiency immediately fails when an individual, with all his idiosyncrasies, is plunked down in the middle of it. Like any great parody (as This is Spinal Tap did to heavy metal), Mr. Tati forever made high-concept office spaces impossible to view without a slight smile and a little skepticism.

Yet planners are now embracing a new concept to correct the stultifying environment of modernism and blandness. They are emphasizing human needs, and are even welcoming human collisions (surreptitious collisions, they’re now called, to foster closer communication between workers). But the planning is still high-concept.

Toronto-Dominion Bank retrofitted a floor in its headquarters to provide workplace wellness features, from mood-boosting art work to centralized filing cabinets that encourage employees to get up and move around. The floor is WELL certified. (Toronto-Dominion Bank)

The WELL designation for buildings, recently introduced in Canada and administered here by the Canada Green Building Council, which also oversees the environmental LEED (leadership in energy and environmental design) certification, is positioning itself as a new seal of approval for wellness improvements.

Some features under the program are mandated, such as higher standards for water quality, as well as advanced lighting design that alters with daily circadian rhythms. And there are many optional initiatives, from sound masking for better acoustics to supplying basic bike tools for commuting cyclists. A WELL building not only mimics a more natural daytime experience, it tries to promote healthier living all day long.

Toronto-Dominion Bank has been an early adopter. It was first in the world to receive a formal WELL certification this year for its renovated 25,000-square-foot space on the 23nd floor, seating 170 employees, of its Toronto headquarters. Just one of the 50 floors it renovated was refitted to WELL’s stipulations.

The TD kitchen not only gives natural light and lots of seating but restricts its food and drink offerings to healthy options. (Toronto-Dominion Bank)

“At TD, typically when we enter into a new initiative like this – and this one being so new to the industry – we like to pilot things and do a gap analysis against our existing standards and projects and spaces to identify where this program specifically enhances our standards,” said Martha MacInnis, design director at TD. She is the bank’s in-house interior designer.

“So, that’s why we tested it on this one floor, and now we’ve expanded that to other projects,” she said.

Next are a TD bank branch in Bethesda, Md., in an already health-conscious neighbourhood, and a bank branch in Toronto’s new condo and multiuse Canary District, in the corner of the east side of the downtown in which the 2015 Pan Am Games athletes were housed.

TD’s tranquility lounge allows employees to take a break and rejuvenate the mind. (Toronto-Dominion Bank)

The wellness program has been a big hit so far with employees, surprisingly so, Ms. MacInnis indicated. “We were anticipating that there might be some hesitancy with some of the features, because they’re a little different. I’m speaking particularly about nutrition and what’s going to be in the vending machines, stuff that really affects people on a daily basis.”

One WELL prerequisite is that no beverage sold or distributed in the office can have more than 30 grams of sugar per container. (A 355-millilitre can of Coke, for example, has 39 grams.) There are a number of other rules about foods sold in the office needing proper labelling, with an emphasis on health.

TD workers have even been holding on-site health fairs and have had naturopathic specialists give health and wellness talks, Ms. MacInnes said. “People are really taking this from the workday into their personal life and building a culture in the office around health and wellness. That’s been exciting to watch.”

Real-estate service CBRE wanted its office near Pearson airport in Toronto to be a model for workplace wellness. (CBRE)

WELL stipulations go even further than improved ergonomics and adjustable-height desks. (Thirty per cent of all desks need to be adjustable from a sitting desk to a standing one.) WELL also goes into aesthetic prerequisites such as “beautiful and mindful design.”

And WELL buildings, according to its optional standards, should contain features “intended for all of the following: a) human delight, b) celebration of culture, c) celebration of spirit, d) celebration of place, e) meaningful integration of public art.”

The optional standards get particularly interesting when they start talking about organizational transparency as a wellness feature (to reduce stress and promote employee loyalty) and altruism (allowing paid time to volunteer with a registered charity).

The CBRE building has a mix of sit-down and stand-up desks. (CBRE)

Bean counters may scoff, but for companies spending most of their budget on employees, say, 60 to 70 per cent, it pays to keep workers happy and healthy.

So says the real-estate services company CBRE, which is registered for WELL certification for its Toronto West office near Pearson airport and its downtown Vancouver office. The aim was to demonstrate a better understanding of workplace wellness for its clients by adopting it themselves – as well as understanding the costs.

Wellness features were roughly 1 to 5 per cent of the cost of the new Vancouver office, which is in a building that was already a triple-A class and environmentally sound, LEED Gold office. Adding wellness features into the Toronto West office, in a lower end, class-B, suburban office block, cost more of the budget, about 10 to 15 per cent.

“We are not saying or promoting that this is what all companies should aim for, or that this is the new and only way to proceed,” said Ashley O’Neill, vice-president of corporate strategy at CBRE. Yet, this is a way for companies to show that they are part of the movement for office wellness and to communicate how much they value employees, she said.

Adding wellness features to CBRE’s office cost about 10 to 15 per cent of the renovation budget. (CBRE)

“It’s a way to certify and really walk the talk in terms of their values,” said Lisa Fulford-Roy, CBRE’s managing director of workplace strategy. “Those that are early adopters are going to adopt for a variety of reasons. But right now, at the core of every conversation is, how do we engage employees? How do we increase productivity? And how is that going to contribute more effectively not only to the employee, but to the business over all?”

But will WELL certification, like the LEED standard, create a new class of trophy buildings? What happens when some workers enjoy a WELL office, while others still have to toil in wellness-lacking back offices?

“I think the secret really is to address portfolios,” said Simone Skopek, program manager at real-estate service firm Jones Lang LaSalle.

Companies will have some of their buildings LEED- and WELL-certified, but “you’re not going to be able to do that across your portfolio [of properties]. You’ll have some employees in a spectacularly green and well building, but others that aren’t,” she said. Her firm has a detailed sustainability survey which Ms. Skopek developed for helping companies understand and isolate ways in which they can improve all their buildings and possibly focus on improvements that are most needed.

“Before you’re going to spend tens of thousands of dollars to fix a problem, make sure there is a problem,” Ms. Skopek said. “The point is, let’s not fix a problem because of certification. You’re trying to improve the building, improve the occupants’ experience. Wellness is for occupants, really.”

Yet, look at LEED, which has been around longer. Certification has helped to make environmental features regular practice with architects, engineers and planners. The hope is that WELL certification will do the same and become simply de rigueur, regardless of whether office planners seek official certification or not.

“The thing to remember is that WELL and LEED and most other ratings systems are not like a building code,” said Mark Hutchinson, vice-president of green building programs at the Canada Green Building Council. The requirements aren’t merely a set of prerequisites to be met, leading to certification.

“There are different levels of certification. You can aim high, or you can aim low. And while there are some things that you have to do – things that are prerequisites to be certified – those are generally relatively few. And then the way you’re evaluated is based on all the things you may choose to do,” from all the optional measures, Mr. Hutchinson said.

And this may include such esoteric options as surface design, which primarily concentrates on how much light is reflected from surfaces. Mr. Tati would have had fun with that one.

Courtesy: The Globe And Mail

Ottawa eyes ‘risk-sharing’ option for lenders in hot housing market

Ottawa is reviving a proposal that would force lenders to shoulder more risk in Canada’s heated housing market.

In a briefing note to Finance Minister Bill Morneau and released under Access to Information, department officials say they are studying an option to introduce “risk-sharing” for lenders, a move that would likely mean a deductible payable by the banks on the mortgage insurance provided by Canada Mortgage and Housing Corp. (CMHC) and its private-sector competitors.

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Vancouver, Toronto lift Canadian home prices to new all-time highs
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Courtesy: The Globe And Mail

Soaring Victoria and Toronto home prices led red-hot July market

Canada’s housing market had one of its strongest Julys on record, with national home prices rising 2 per cent.

It was the second-largest jump in July since Teranet-National Bank began tracking the market through its house price index in 1999, helping to push overall home prices up nearly 11 per cent from the same period last year.

In a trend that has dominated much of the year, prices soared in Toronto and Vancouver, along with neighbouring Hamilton and Victoria, while sinking in Alberta, Quebec and the Atlantic provinces.


Month over month, home prices rose 3.8 per cent in Victoria, 3.1 per cent in Toronto, 2.4 per cent in Hamilton and 2.3 per cent in Vancouver.

The Vancouver region booked its 18th straight month of price gains, with the housing market breaking new records every month. The strong sustained growth pushed prices up 24.3 per cent in Vancouver from July last year.


Prices have surged in Vancouver in July even as sales fell 19 per cent in the region from the same period last year. Some have pointed to the slowdown in home sales as evidence that the B.C. government’s July announcement of a new 15-per-cent property tax on sales to foreign buyers in Metro Vancouver will spark a price correction in a market that was already starting to level off. The new tax took effect this month.

National Bank senior economist Marc Pinsonneault isn’t so sure, pointing to a lack of available listings to meet demand, along with strong employment growth in the region as two factors that will continue to push prices higher. “The story is not solely about alleged foreign capital flows,” he wrote.

Beyond Vancouver, the red-hot July housing market also helped push up prices 14.7 per cent in Victoria from the same period last year and more than 13 per cent in Toronto and Hamilton. It was the third straight month of strong price growth for Hamilton. “Such a rate of growth in prices had not been observed before in that region,” Mr. Pinsonneault wrote.

Outside of Canada’s hottest housing markets, prices have been largely been flat for the past 12 months.

Monthly prices rose 1.7 per cent in Ottawa and 1.6 per cent in Winnipeg. In Montreal, a 0.6-per-cent monthly jump helped push prices above their previous peak in July, 2014.

It was a different story in Alberta and Atlantic Canada. Home prices fell 0.1 per cent in Calgary, and fell 0.4 per cent in Halifax. Prices also fell 1.6 per cent in Quebec City.

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Why should you put a 20% down payment on a house?
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Courtesy: The Globe And Mail