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Property investment in Canada still showing robust activity, demand

The latest Investment Trends Survey by Altus Group found that investment activity in Canadian real estate remained strong in the second quarter of this year, a trend fuelled by robust demand with investors predicting that “overall cap rates will remain flat with a modest decline for specific markets and assets.”

This despite prevailing uncertainty over global trade and the Canada-U.S. tariff tit-for-tat, as the study established that Canada’s property markets are still seen as prime destinations by both domestic and foreign investors.

“Quarter-to-quarter, Toronto’s cap rates for suburban multi-unit residential and industrial products are anticipated to push downwards,” the report noted. “Tier 1 Regional Malls and downtown Class ‘AA’ office cap rates remain steady, following a slight uplift in retail and a cap rate compression among offices in the previous quarter.”

Meanwhile, “Vancouver’s average overall cap rates for industrial and multi-unit residential moved down slightly from Q1, while Vancouver’s Tier 1 Regional Malls have gently climbed and downtown Class ‘AA’ office remains stable,” Altus added.

And amid the intensified demand for Alberta properties, “survey respondents anticipate that cap rates will continue to compress for suburban multi-unit residential product in the Edmonton market and for industrial product in the Calgary market. There has been a rise in office cap rates for Calgary and Edmonton, and Tier I Regional Malls remain flat for both markets.”

As for Montreal, investor intentions in the market’s office segment “continue to grow as office cap rates decreased moderately from the previous quarter. Retail and industrial cap rates remain unchanged.”

The Altus report also noted that while Q2 2018 exhibited a slight decline in the average Overall Capitalization Rate (OCR) at 5.07% (compared to the 5.10% of Q1 2018 and the 5.15% of Q2 2017), first-quarter national investment activity volume stood at $13.2 billion, up year-over-year from $12.7 billion.

Overall, “Investor appetite in real estate remains strong and with a rise in employment and a healthy labor market, demand for office in major urban centres continue to witness moderate growth.”

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Getting TOP Dollar for your property even when the market is slow

With more and more people decided not to sell their home. Many opt for home renovations to improve their home value. Many home improvement projects don’t add value to the home, especially in a down market. In fact, some improvements can even detract from the asking price when you decide to sell. On the other hand, some projects can add significant value to your home.

Remodeling the Kitchen

Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to HGTV, you can expect to recoup 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard.

Bathroom Addition

If your home only has one bathroom, you can recoup a large chunk of your investment by adding another one. HGTV estimates that you can recoup 80%-130% of whatever you spend adding a bathroom.

Deck Addition

Adding a deck increases the value of your home. Outdoor living spaces have become more desirable, especially since more people stay home for vacation. If you make your deck and your backyard more appealing, your house will be more appealing to prospective buyers when you decide to sell. HGTV claims that homeowners recoup 65%-90% of their investment by adding a deck.

Finishing The Basement

If I were to interpret these results with my real world experience: I think it would be safe to say that if you own a home with 3 or 4 bedrooms, and are spending about $40,000 on a basement renovation with functional layout; quality materials and workmanship.A 2010 study completed by Remodeling Online found that, on average, 74% of the cost of remodeling a finished basement is recovered when the homeowner sold the home.  That was as we were in a downward slide of housing prices throughout most of North America.  The return on investment may be much higher, depending on your part of the country.  Additionally, energy savings from a remodeled basement can pile up to around $400 dollars a year.  Overall, these factors make remodeling your basement a very sound investment, even in a rebounding housing market.

Flooring

Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

Fixtures

Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

Are you looking to invest in property? If so, you can invest with us, and become an IREP. Few features of our plans are Secured Investments with Easy Investment Plan and attractive annual return rate.
Click here to get help choosing the best Investment Plan.

Could Canada’s Housing Market be heading for the “BIGGEST BOOM”

Could Canada's Housing Market be heading for the "BIGGEST BOOM"

 

With a strong economy and the ongoing trade war could a lead a path to make Canada stronger economically and a very viable option for investors.

According to Lynnette Ong, a University of Toronto expert in Canada’s trade relationship with China,

“If China cannot export its products to the U.S., it may strengthen bilateral trade relationship with Canada and other nations.”

How will Canada benefit :

  • U.S. President Donald Trump’s plan to impose tariffs on up to US$60 billion of Chinese imports could help Canadian retailers by further easing cross-border shopping.

  • U.S. tariffs that would raise the prices of Chinese consumer goods, such as electronics, sold in the United States could prompt more Canadians to shop at home, hence more business for Canadian retailers.

  • Canadian Association of Importers and Exporters president Joy Nott also thinks higher prices for goods could encourage more Americans to shop in Canada.

  • Further retaliation by China could open the door for more Canadian exports to replace higher-priced American goods, particularly in agriculture.

  • Canadians could end up replacing the U.S. as a supplier to China if China imposes restrictions on U.S. products.”

  • Canadian market outperformed most major developed markets by rising more than 6% overall. If that’s any indication of things to come, strategists say Canadian equities could bounce back despite fears of a trade war.

  • Poloz might not be raising rates later this month, as the economy suffers from a tariff and trade war. A slowdown in rate hikes would be good for Canadian borrowers and homeowners worried about rising mortgage payments.

  • Meanwhile in Canada, Trump’s latest tough trade talk is already giving us an international trade advantage as the U.S. dollar rises on world markets and the loonie falls.

  • S&P/TSX composite index closed up 80.56 points at 16,452.34, its highest close on record.

  • A cheaper loonie, for example, is great news for exporters, because their products suddenly look much cheaper to foreign buyers.

  • After the U.S. signaled two weeks ago that it would take a harder line against Iranian oil exports and would push for ‘zero’ oil exports from Iran, Asian buyers have stepped up efforts to diversify their Middle Eastern crude oil imports and look for alternatives to crude oil from Tehran.This could open the door for more international trade of crude oil and petroleum gases. The positive cash flows indicate Canada’s strong competitive advantages in raw resources segments of the energy market.

  • After a rough start to the year, it seems as though the Canadian housing market may have finally adjusted to a range of new policy measures, and could start to rebound in the second half of 2018.The recovery will be led by some of the country’s biggest housing markets, according to a new report from Scotia Bank Economics. “We look for the pace of home sales to recover in the second half of this year and continue on an upward trajectory in 2019,” writes the Scotia Bank Economics team. “The rebound is expected to be led by developments in and around the Greater Toronto and Greater Vancouver areas, which continue to witness healthy economic expansions, and…Montréal, where the local market remains tipped in favor of sellers.”

Are you looking to invest in property? If so, you can invest with us, and become an IREP. Few features of our plans are Secured Investments with Easy Investment Plan and attractive annual return rate.
Click here to get help choosing the best Investment Plan.

 

Majority Of Toronto And Vancouver Real Estate For Sale Sees Bidding Wars

Majority Of Toronto And Vancouver Real Estate For Sale Sees Bidding Wars

 

FOMO

Toronto real estate may not be what it was one year ago, but it’s still a battle for home buyers. In fact, it’s often a war. A bidding war. This is not just in Toronto, it’s happening in Vancouver too.

Canada Mortgage and Housing Corporation (CMHC), the Crown corporation in charge of mortgage liquidity, recently conducted a massive survey of 30,000 recent buyers in Toronto, Vancouver, and Montreal. It found that 55% of Toronto and Vancouver real estate buyers entered a bidding war. (Of note, Montreal buyers landed in bidding wars only 17% of the time.)

Why?

FOMO. The fear of missing out.

Buyers end up borrowing too much, blaming everything from land scarcity to foreign buyers. The survey asked questions to determine the buyers’ budgets and why they didn’t stick to them. Results indicate that buyers in Toronto and Vancouver saw a quick rise in home prices, which was followed by “excessive” expectations of price growth.

“It’s a hot market,” “I can’t miss out,” and “it’s really tight right now” are just three examples of why buyers cited busting their budgets.

FOMO.

According to the CMHC, this FOMO led to buyers’ willingness to enter bidding wars.

Toronto saw 47.79% of buyers pay more than budgeted. In Vancouver, 47.91% of buyers paid more than planned.

Montreal buyers had more restraint (and a different market to contend with), so only 23.67% of its buyers paid more than they budgeted.

While FOMO appears to be the main force behind breaching budgets, CMHC analysts believe that those who bought sooner probably lacked market information. This pushed their budgets higher. And those who bought later, did miss out and couldn’t find anything they wanted within their budget. This drove their budgets higher.

Are you looking to invest in property? If so, you can invest with us, and become an IREP. Few features of our plans are Secured Investments with Easy Investment Plan and attractive annual return rate.

Good News For The Canadian Housing Market

Good News For The Canadian Housing Market

Home building in Canada’s hottest markets remains strong. Toronto’s skyline is still a sea of cranes, and the ground is full of busy holes. According to recent research by the Canada Mortgage and Housing Corporation (CMHC), much of the increase in housing prices is due to a combination of strong demand and an inability of cities in the region to adequately respond with the construction of new housing units.

New Homes – Demand and Supply

Indeed, in the City of Toronto, new listings only stay on the market 16 days (on average) compared to 39 days in Calgary, The GTA is facing a generational challenge. Over the next 20 years almost 2.5 million new residents, or approximately 115,000 a year, will arrive in the GTA. Just to house them requires 55,000 new homes to be built every year. Not to mention the roads to transport them, the rapid transit to help with commuting, schools for education and the offices, stores and factories for all these new residents to work in. It is no secret that we have a very tight housing supply market in the GTA. It now takes on average 10 years to complete an average high-rise project, and 11 years to complete an average low-rise project. As a consequence, the building industry was able to construct only 44,000 new homes in 2017, falling behind demand. This is not a new problem, and it is one that is compounding.

Home Price Correction in Ontario

Prices have soared almost 60 per cent in the last five years in Canada’s biggest city, and are up another 3 per cent already this year. They’re not as high as Vancouver — one of the hottest real-estate markets anywhere — but among the world’s major cities, Toronto housing ranks as the fifth most unaffordable relative to income, according to consultant Demographia. The combination of stronger government spending and moderate interest rate increases suggests the Ontario and GTA economies are expected to grow more moderately but to continue to provide underlying support for provincial real estate prices in 2018 and 2019.

“The current home price correction in Ontario will likely not persist as it fails to resemble the more serious downturns observed in the past,” said Ted Tsiakopoulos, Ontario Regional Economist.

While imbalances continue to persist, fundamentals such as employment, growth in new households and slightly higher interest rates will support home prices. But the positive aspect is, sellers in Canada’s largest city have avoided listing their homes en masse in what could be a sign of confidence the market will come back. Also the outlook is comparatively favorable for Quebec and the Maritime provinces, where good affordability is leading to rise in prices & could lead the nation this year greatly limiting the impact of higher rates and the new mortgage rules.

Are you looking to invest in property? If so, you can invest with us, and become an IREP. Few features of our plans are Secured Investments with Easy Investment Plan and attractive annual return rate.
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