TORONTO

REAL ESTATE

A SPECIAL REPORT

 

 

This month the spotlight will be on Toronto or should I say GTA real estate. This great behemoth has a multitude of opportunities with its’ 205 neighborhoods, roughly 6 million people (Toronto region), multimillion dollar development projects and its global CMA status. However, it is not without its challenges as it is burdened with debt, has income disparities with respect to new immigrants and high taxes.

We will explore the GTA’s economic fundamentals, peruse current (and not so current) events, and touch upon the real estate market as well as major development projects.

It is our hope that this insight will assist investors in their decision making process when they are hunting for opportunities and deciding upon where and how to invest.

The next reports will be on the following cities (areas); Windsor, London, Waterloo, Hamilton, Durham, Barrie, Cornwall and Ottawa. 

 

 

 

 CURRENT NEWS 

 

The Conference Board of Canada ranks Toronto #8, in an international business study.

The Toronto Board of Trade examined 24 international cities and compared their economies and desirability as places to live and work. Toronto was ranked #8, which is great news for Torontonians and for people who have decided to move there. However the down side is that it is congested and economically suffers from poor productivity and low GDP.

For the full story click here                                 

 

 

  

CURRENT NEWS   (continued)                                                                             

 RBC economic update: Toronto’s housing affordability is getting worse.

Rising house prices and increasing mortgage rates mean that it will be more difficult to afford a home. The housing affordability index for Toronto rose by 0.8%. What that means to purchasers is that now 47.5% of their household income is now required to service housing costs such as monthly mortgage payments, property taxes and utilities.

So combine that with the average price of a bungalow being $486,900 and there is enough motivation to continue renting rather than owning a home.

For the full story click here                               

 

 

  

ECONOMIC INDICATORS

Economics is not everyone’s cup of tea. So if you are into the ‘numbers, facts and figures’ then click here for the full report.

Continue reading If you want the quick Coles Notes version and my analysis on The Toronto Economic Development & Culture’s report.

 

• Unemployment rate in Toronto decreased at almost the same rate as Ontario and faster than Canada.
• Both the average and median wage increased over last year
• Full time employment increased since last year this time
• Most retail sales figures increased (i.e. new car sales, electronics, clothing, etc.)
• Building permits took a huge hit as the number of permits for Residential, Commercial, Industrial and Institutional decreased dramatically
• New home sales decreased (no doubt due to the HST)
• Housing starts in Toronto have increased since this time last year
• Houses that are selling for $750k + have the highest demand however even these sales are down since last year
• TTC ridership is up (great for the environment)

Real estate sales dropped (residential, industrial, commercial & investment), as people spent more of their disposable income on retail items in 2010.

 

 

ECONOMIC INDICATORS  (continued)

The Economic Development Committee conducts studies on the city’s economic performance as well. Here are some of the highlights. 

• ·         The number of high rise buildings under construction has increased

• ·         The City of Toronto’s unemployment rate is higher than in any of the other 905 municipalities, Ontario and Canada

• ·         Vacant office space is the greatest downtown and vacancies are the lowest in West Toronto

• ·         The average house price has steadily and continually increased to over $400k

• ·         The Toronto region is forecasted to experience a higher real  GDP growth than  Ontario and the rest of Canada

For the full report click here                                  

 

 

BUSINESS NEWS

Here are a couple of interesting highlights from the Toronto Economic Development Department’s report on the Toronto Business Investment Climate.

You can read on for my summary or click here for the original links

• Benjamin Tal, Senior economist at CIBC world markets reported that Toronto’s performance is strong, the diversity is growing and the population is growing quickly

• Toronto and the Golden Horseshoe Region launched a $1.77 billion investment bid for the Pan American Games in 2015 and were successful. This has the potential to attract $2 billion through tourism, new jobs and event support

  

  

 

MAJOR DEVELOPMENTS  

Here are a few brief highlights of major developments that are going on in the city (from 2009 – present)

• Waterfront Toronto: 800 hectares of land near the downtown core will be transformed into 40,000 residential units and more...

• West Don Lands: 32 hectares of land will be transformed into 6,000 residential units, parks, school, etc. The athletes from the 2015 Pan American Games will stay in a new development there.

• George Brown:  Almost $92 million dollars went to fund the expansion of the college's footprint by 300,000 square feet. The expansion will lead to more students and jobs.

Click here to see the full report to find out about the other neighborhoods, towers, hotels and businesses that are expanding the Toronto real estate market.

 

 

CRIME

The following statistic by the Geographic Reference Report reflects your likelihood of being murdered or robbed in several North American cities.

Click here  to read the full report or read on for the summary.

 

“Ontario's communities are safer than many North American cities” Toronto, Canada's largest urban center, as well as, other Ontario communities, have lower crime rates than many U.S. cities. Source: The Geographic Reference Report 2008 (5/2008)     Crime Rates - Selected North American Cities (per 100,000 population) Cities Homicides Robberies Detroit, MI 47.3 818.6 Baltimore, MD 43.3 663.3 Washington, DC 35.8 552.3 Philadelphia, PA 27.7 749.1 Atlanta, GA 25.8 609.1 Chicago, IL 16.4 558.0 Minneapolis, MN 15.2 806.8 Dallas, TX 15.0 553.9 Boston, MA 13.3 479.7 San Francisco, CA 11.5 517.1 New York, NY 6.9 315.2 Ottawa, ON 3.0 68.0 Vancouver, BC 3.0 153.0 Calgary, AB 2.5 107.0 Toronto, ON 2.0 116.5 Montreal, QC 1.5 149.0 Guelph, ON 1.5 86.0 Halifax, NS 1.5 169.0 Hamilton, ON 1.0 108.5 Sudbury, ON 1.0 74.0

Source: The Geographic Reference Report 2008 (5/2008)

     

 

TRANSPORTATION

The 407 Highway is slated to be extended east to highway  35/115  by 2020. This massive construction project will help communities, connect residents and grow businesses. Not to mention what it could mean for savvy investors.

For the full story click here                               

 

 

JOBS

Construction season not only means delays it also means 17,000 new jobs this summer and new jobs help the rental and/or housing markets.

So, smile and wave to the work crews on the 401, 427 and QEW because they could be your potential renters, buyers or investors.

For the full story click here                                 

 

 

IMMIGRATION FORECAST

According to the Ontario Population Projections update (2009- 2036), the GTA is projected to have the fastest increase in population. They are forecasting an additional 3 million in the GTA by 2036. The other regions of the province will grow more slowly.

click here for the original links.                          

  

 

 

IMMIGRATION  

A few permanent resident landing statistics according to Citizenship & Immigration Canada are listed below:

• Approximately 80% of all new landed immigrants in Ontario go to Toronto (2004-2008)
• The majority of new immigrants came from India, China & Pakistan
• The most common professions that they were qualified to do in their country were engineering, accounting and engineering technicians & technologists

For the the full story click here                          

 

 

THE FUTURE OF TORONTO

The FDI (a division of the financial times) created a report called “American Cities of the Future 2011/2012”, and ranked Toronto #4 out of 10 cities. They based their criteria on economic potential, cost effectiveness, human resources, quality of life, infrastructure and business friendliness.

 

 

CONCLUSION

Economic research is much more sophisticated than reviewing a few articles, checking a few statistics and reading synoptic reports.

 However, in answering the fundamental economic questions "is immigration enough?", "is job growth enough?", "are low housing prices enough?" establishes the first step which is to determine the economic climate.

After that you have to consider the strategy, property, tenants, etc. However, those topics are not the focus of this report.

So, in a broad sense economics helps to answer the why? when?, where?, who? And what? Then the tenant or buyer will help to narrow it down even further and the how will be up to you.

 

 

  

RECOMMENDATION  

Our analysis of this report would suggest that lease options, sandwich lease options, assignments and ‘group’ buy and hold strategies would prove to be very lucrative for investors.

Doing lease options and sandwich lease options can be lucrative in areas where employment is high, properties appreciate, incomes are high and credit is an issue.

The ‘smart money’ is buying properties below market value in good areas, forcing the appreciation, refinancing and holding for the long term. In essence they are taking advantage of the 6 profit centers of real estate which are equity, leverage, appreciation depreciation, cash flow and tax deductions.

Then they live off of the (relatively) passive income that comes in monthly.

 

 

 

DISCLAIMER

The information in this report was gathered from municipal, provincial and federal departments of the government. It was also obtained from reputable third party sources and investors. Care and due diligence were undertaken to verify the information in this report. We are not responsible for any errors, omissions, mistakes or misinterpretations conveyed directly, indirectly or implied in this report or the original sources. The author and the Real Estate Investment Club of Ontario are not liable for any damages that may be the result of actions taken by reliance of the information and content or context therein. It is the responsibility of the reader to verify all information as well as seek legal, financial, tax and realty council before investing in real estate.

 

Hot Toronto Neighbourhoods

http://www.theglobeandmail.com/real-estate/

 

Toronto Neighbourhood Maps

http://www.toronto.ca/demographics/profiles_map_and_index.htm

 

Toronto Housing Market Information (Market Watch pdf)

http://www.torontorealestateboard.com/consumer_info/market_news/index.htm

 

CMHC Mortgage Loan Insurance (typically if you put less than 20% downpayment when buying a home)

http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_010.cfm

 

Additional Costs When Buying a Home

http://www.torontorealestateboard.com/consumer_info/buying_selling/addit...

 

Real Estate Forms

http://www.torontorealestateboard.com/consumer_info/forms/index.htm

 

To calculate the total Toronto residential land tranfer tax

http://www.nohomebuyingtax.com/

http://www.torontorealestateboard.com/LTT_splash/ltt_calculator.htm

 

Land Transfer Tax Rebates (Provincial and Toronto)

http://www.torontorealestateboard.com/consumer_info/gov_programs/ltt.htm