News: Competition Drives High Suburb Prices & Rents Rebound

In this week's Industry News (Week of 27 Sep 2021).

‘It is quite fierce’: Competition pushes prices higher in Toronto suburbs | The Globe Toronto’s housing market is heating up, with resales climbing for the first time in five months as “fierce” competition for houses in the suburbs pushes prices higher. With more companies embracing a flexible work model and allowing staff to work from home part of the week, home buyers continue to seek bigger properties outside of the downtown core, according to realtors. Following a short-lived plateauing of home prices in the GTA and surrounding regions, price appreciation is back due to strong demand. This articles highlights more flexible work schedules as one of the many trends supporting continued demand for suburban living. With permit and building data pointing to a continued lack of new supply to meet this demand, home price appreciation is anticipated to stay the course. Full press release available here.

Investors are gobbling up multiple homes in Canada's hot housing market | Financial Post Rising home prices, falling mortgage rates have boosted people's ability to borrow against one property to buy a new one. The people piling into Canada’s red-hot housing market fastest already own a home — or in some cases three or four. Article content In the 12 months through June, the number of people adding a fourth mortgage or more surged 7.7 per cent, more than doubling the increase for first-time borrowers, according to data from consumer credit reporting firm Equifax Canada Inc. Canada’s housing market has been about as hot as any in the world. And while people with more than one home loan account for only about 16 per cent of the mortgage market, purchases by those borrowers have accelerated quickly. That’s because rising home prices and falling mortgage rates have boosted their ability to borrow against one property to buy a new one. “There is a population that is taking advantage of the current housing market situation to use it as an investment for their retirement instead of traditional routes,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax. “There is a definite growth in terms of people with multiple mortgages.” Investor ownership of homes in Canada is not a new trend. Konfidis is excited to offer Canadian investors new and improved tools to support better investment decisions utilizing technology and big data. Konfidis removes the emotion from residential real estate investing and presents the top investment property prospects across Ontario. Full press release available here.

[Housing] Rents rebound as office workers and students return | The Globe and Mail The COVID effect is over. Rental housing markets are on the rebound in major cities across Canada this fall, steadily rising as workers come back to the office and universities and colleges resume in-class learning. Service-based industries such as restaurants are opening up again too, requiring in-person employees to brew your dark roast. Everyone needs somewhere to live, preferably near their job. “The rental market is trending upward, shifting from being rather a tenant’s market a year ago – unusual for our large cities – back to a landlord’s market,” says Ben Myers, president of Bullpen Research and Consulting Inc., a residential real estate advisory firm in Toronto. “It was probably the shortest little period where tenants had some control.” ”I thought we were going to see two or three per cent rent growth in 2021, but we essentially got that in the last couple of months, so it’s coming back faster than I anticipated,” says Mr. Myers. “We’ll probably get back to the peak rates we were seeing in 2019 by the end of 2022.” ”We’re actually building fewer homes than in 2002,” says Mr. Myers. “We’ve also shifted to building vertical properties with smaller units, so someone who needs more space or three bedrooms for a growing family has to bid up for the few existing properties out there. Shaun Hildebrand, president of Urbanation, a real estate consulting firm focused mainly on the GTA and Hamilton, says nothing changed fundamentally in the rental market, aside from a very brief exodus of renters from the downtown core, which has reversed itself. Life started getting back to normal, and the underlying trend is that there still isn’t enough rental supply to satisfy demand. In fact, it’s worse. “It was a tenant’s market during the pandemic until about 10 weeks ago, comparable to the financial crash in 2008. Now it’s reverted and things are getting much tighter, faster. For sure, it’s a landlord’s market now.” Full press release available here.

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Konfidis is pleased to share our weekly real estate investing industry news piece herein. We love connecting with our members. Reach out with your questions to hello@konfidis.com.

Shael Soberano, CFA Konfidis Inc. Chief Investment Officer

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