Real estate industry prepares for a battle

Seven years ago, an advertising executive wanted to experience the bright lights and excitement of competing in a boxing match. So he launched Agency Wars – an event specifically for ad execs who wanted to show off their pugilistic skills.

This year, that same man is bringing the sweet science to the real estate industry.

“Over the period of those years, we’ve perfected the methodology. We have two teams, red and blue; we train the boxers as a team. For a lot of these people it’s the first time they’ve ever been in a boxing ring or gym,” Michael Clancy, founder of Agency Wars and now Toronto Real Estate Rumble, told CREW. “It’s reality show stuff; it’s amazing the transformation and drama they go through. You get in a ring, people throw punches at you, and it’s a transformative experience. We want it to be a really rewarding experience.”

A total of 24 amateur boxers – all from the real estate industry – have been chosen, following a rigorous tryout period, to take part at the event, which takes place Wednesday, November 22 in Toronto.

Clancy, who got into boxing at the age of 50, founded the events as a way for industry professionals to experience the allure of a big ticket boxing event.

“We want you to have that feeling. It’s like the ultimate fantasy. It’s a fantasy camp for boxing – you are going to work and train like a boxer for 12 weeks. We’re going to give the whole experience of the fight as well; the entourage, the robes, 600 spectators, ring card girls, cameras,” he said. “When I first put the show on I wanted to feel how Floyd Mayweather feels. We carefully put together something that gives the full experience that you’ll want to tell your grandkids about.”

The chosen boxers are currently embarking on a 10-week training program, which includes numerous weekly training sessions, nutritional counselling, and world-class coaching from elite-level boxers and trainers.

The real estate combatants will become legitimate amateur boxers, and the event is properly sanctioned by the Boxing Canada to ensure the utmost safety.

Boxers wear headgear and oversized gloves and, according to Clancy, the worst injuries that have occurred over seven years of running Agency Wars were bloody noses.

As for the real estate industry’s own iteration of the event, Clancy says those particular professionals will make perfect boxers.

“It’s very metaphorical for real estate guys: It’s a hard, competitive business and you don’t win every day,” he said.

The event is also raising money for two good causes: The We Foundation and imagine1day. It’s supported by a number of industry partners, incuding Garrison Hill Developments, Foundry Mortgage Capital, Concrete Mortgage Capital.

To find out more about the event, to purchase tickets, or to become a sponsor, check out the website here.

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How housing policy is impacting one hot market

The Hamilton market is showing some signs being impacted by Ontario’s Fair Housing Plan, according to recently released statistics.

There were 1,638 residential home listings in August, up 6% year-over-year from 2016’s mark of 1,546. Those listings are 4.2% higher than the 10-year average. Sales, meanwhile, were down 18.2% with a total of 1,086 last month.

That didn’t stop price growth, though, with the median residential home selling for $485,450 – up 14% year-over-year from $426,000.

All of these stats together point to a balanced market, according to the Realtors Association of Hamilton-Burlington.

“The tendency toward a more balanced market that we have seen over the last few months has continued into August,” RAHB CEO George O’Neill said. “The sales to new listings ratio is at just over 65 per cent, which is still in the low end of a seller’s market, but much closer to balance than earlier this year.”

The median freehold home price jumped 13.2% year-over-year and the median condo home price increased 20.9%.

“The median and average prices continued to rise,” O’Neill said. “There had been speculation that with more listings on the market and fewer sales, prices would decrease as a result. That is not the experience in our market area – at least not so far.”

The average days on market increased to 33 days from 27 days for freehold homes and to 29 days from 27 days for condos.

Source: RAHB

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New home market unfazed by housing policies

The new home market continues to boom, despite efforts to slow down real estate in this one hot city.

New homes in Toronto continue to see strong demand from buyers – especially in the condo sector.

“We continue to see that the province’s fair housing plan in effect since April has had little impact on the new home market,” BILD President and CEO Bryan Tuckey said in the association’s latest report. “Unlike the resale market which experienced a slow down last month, the numbers reflected in the new homes market are quite different. Prices continue to rise and supply continues to be low.

“Three out of four of the new homes purchased in the GTA so far this year have been condo apartments. With condo prices continuing to escalate, this segment of the market is becoming out of reach for many consumers.”

Multi-family condo sales increased 59% in May, according to the Building Industry and Land Development Association.

New home sales jumped 23% year-over-year in June with a total of 28,889 sales sold this year so far.

According to BILD, over 90% of June home sales were for condo apartments in high-rise, low-rise, mid-rise, and stacked townhomes.

June also saw a record number of new condo sales with 5,495 total units sold – an increase of 89% year-over-year.

“The record number of condominium apartment sales in June was the result of a ‘perfect storm’ of factors”, Patricia Arsenault, Altus Group’s Executive Vice-President of Research Consulting Services, said in the report. “These factors include: the sizeable number of units in new condo projects opened in May and June (over 8,500); demand from end-user buyers who might have preferred a single-family home but have adjusted their expectations due to lack of affordable supply; and heightened investor interest due to the rapid price increases for condo apartments in recent months.”

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RBC raises fixed-term mortgage rates

Royal Bank of Canada has increased the interest rates on its fixed-term mortgage products.

RBC’s mortgage rates were all boosted by 20 basis points, up to 2.54 per cent (two-year rate), while 2.64 per cent (three-year rate), and 2.84 per cent (five-year rate). Said rates are for products with amortization periods not exceeding 25 years.

The rise came amid rising bond yields and enduring expectations that Canada’s central bank will hike its benchmark interest rate, which currently stands at 0.5 per cent. Should the Bank of Canada push through with the increase on Wednesday (July 12), it will be the first such movement in 7 years.

Manulife Asset Management senior economist Frances Donald told CBC News that the move by RBC is “another signal that economic and market agents are preparing for a rate hike next Wednesday… It also opens the door to a Bank of Canada rate hike because it implies that the economy is already going to absorb higher interest rates via the banks themselves.”

“We import higher rates via our bond curve from the United States, and the more we see higher rates around the rest of the world, the more the costs are going to rise for Canadian banks as well,” she explained, alluding to the recent boost in the U.S. Federal Reserve’s rates. More hikes are anticipated to come this year.

“We are clearly in the beginnings of a tightening cycle and these are not just influences from the Bank of Canada but from global sources as well.”

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Budget options for Canadian millennials in the age of soaring prices

With Canadian housing price growth having set new records this year, more and more millennials are branching out to other viable options aside from home ownership.

Among these alternatives, especially popular in red-hot Toronto, is cooperative purchases of homes between friends or relatives, The Canadian Press reported.

In its recent survey, RBC noted that co-ownership is a top choice among 24 per cent of millennials. HomeLife/Realty One Ltd. (Toronto) sales representative Alan Aronson said that a leading reason is that each of the buyers in a co-purchase can qualify for a larger mortgage, while sharing the remaining costs (such as land transfer taxes and insurance) among themselves.

However, Aronson warned that this route has its own share of risks, especially considering that relationships can and do become strained when it comes to money. For instance, if one party neglects their fiscal responsibilities, all the co-owners might be forced to sell the property early or might even lose it to the lenders.

Another option would be to rent, probably in perpetuity. Jason Heath of Objective Financial Partners said that this might indeed be the better choice in the most expensive markets, if one is willing to “ignore the practical and psychological benefits of home ownership.”

Instead of using one’s funds for down payment, one can instead invest it—and in the process avoid other, not initially obvious, expenses such as taxes and closing fees.

Earlier this month, Statistics Canada warned in its report that young workers nationwide are facing far worse conditions compared to professionals from older generations, with the youth unemployment rate over a period of 4 decades (from 1976 to 2015) being around 2.3 times higher than the rate among workers older than 25 years old.

This trend accompanied a severe decline in the take-home pay and the purchasing power of this demographic by the early 1980s, with young Canadian males (17 to 24 years old) experiencing a 15 per cent reduction in their real hourly wages, and young females suffering a 10 per cent drop.

Related Stories:

Young workers’ wage and job situation placing market at risk

Low down payments are ultimately detrimental to first-time buyers – CMHC head

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Home sales fall further in August: CREA

National home sales have declined for the fourth straight month, according to the Canadian Real Estate Association.

On a national level, sales fell 3.1% month-over-month in August. However, they were up 10.2% year-over-year.

Sales were down in 60% of the country’s markets, with the Greater Vancouver Area showing the most precipitous decline.

“The sudden introduction of the new property transfer tax on homes purchased by foreign buyers in Metro Vancouver has created a cloud of uncertainty among home buyers and sellers,” CREA President Cliff Iverson said. “That the tax applies to sales that had not yet closed shows how the details for a new tax policy can unnecessarily destabilize housing markets. More broadly, it speaks to the importance of evidence-based decision making to ensure that unintended consequences and collateral damage are minimized when new policies or tighter regulations affecting housing markets are being actively considered.”

Last month was the sixth month in a row sales declined in the Lower Mainland in B.C.

Again, CREA blames the newly-enacted foreign sales tax.

“Single family homes sales were already cooling before the new land transfer tax on foreign home buyers in Metro Vancouver came into effect,” Gregory Klump, CREA’s chief economist, said. “The surprise announcement of the new tax caused sales to brake hard.”

On the price side, August marked the seventh consecutive month of year-over-year price growth.

“Two-storey single family home prices posted a 16.3 percent year-over-year increase in August 2016, as did townhouse/row units,” CREA said in the release. “One-storey single family homes followed close behind with a y-o-y increase of 14.4 percent, while apartment unit prices rose 11.7 percent y-o-y.”

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In-depth look at BC’s latest housing forecast

It’s home to Canada’s hottest housing market, which is poised to break sales records this year. But how does the future look for the B.C. real estate?

“The BC economy is growing at a strong pace, with the resulting surge in employment inducing elevated consumer confidence,” the British Columbia Real Estate Association said in its latest housing forecast update. “Indicative of provincial economic performance, households are buying everything from apparel to real estate at above average levels.”

Housing market conditions vary in terms of expected performance, accord to CREA, with norther regions continuing to cater to buyers and the southern part of the province favouring sellers.

Overall, the province is expected to see 113,000 total homes sold this year before giving way to softer conditions in 2017, when 104,400 total home sales are forecast. That would represent a 7.8% total drop.

Starts, meanwhile, are expected to see an uptick of 31.1% this year – with 41,300 total homes expected to begin construction – before dropping 13.8% next year (35,600 expected starts).

The average price in British Columbia is expected to increase 11% year-over-year in 2016 to $706,900. Those gains aren’t expected to continue, with 2017’s average forecast expected to come in at $743,700 (+5.2%).

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DLC to sell majority stake

Dominion Lending Centres plans to sell majority 60% stake to Calgary-based FCF Capital.

“This is a tremendous opportunity for Dominion Lending Centres to continue to provide exceptional mortgage services for Canadians and expand our reach into other growth areas,” Gary Mauris, President and CEO of Dominion Lending Centres, said. “We will continue to operate under the DLC group of companies with the same values, principles and operating approach that has made DLC Canada’s number one mortgage company.

“I’m excited for our organization to join forces with such a dynamic organization as FCF that will benefit our customers, our network of accredited mortgage professionals, our partners and our corporate team. This partnership will allow us to grow as a company in the markets we serve and both Chris and I look forward to leading the next chapter of DLC’s growth and expansion.”

DLC will continue to operate independently; Gary Mauris, president and CEO, and Chris Kayat, executive vice president, will carry on in their respective roles.

It’s another big move for the network, which earlier this year acquired rival Mortgage Architects.
The investment by FCF can be viewed as a vote of confidence in the brand and, indeed, the mortgage broker industry.

“FCF is delighted that the acquisition of a majority interest in DLC could form FCF’s first investment under its new investment thesis,” Stephen Reid, president and CEO of FCF Capital. “DLC represents excellence in the mortgage brokerage and leasing industry and our majority interest in it provides our shareholders with an opportunity to participate in this success story.

“We believe DLC’s highly committed and motivated management team will continue to grow the DLC brand.”

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Toronto sales set record

One of the nation’s hottest housing markets just broke a record in April.

There were a reported 12,085 home sales in Toronto last month, according to the Toronto real estate board, who argues that figure could have been even higher had there been more supply.

“While April’s sales result represented a new record for sales, that number could have been even higher if we had benefitted from more supply,” Toronto Real Estate Board President Mark McLean said. “In the City of Toronto in particular, some households have chosen not to list their home for sale because of the second substantial Land Transfer Tax and associated administration fee.

“The lack of available inventory, coupled with record sales, continued to translate into robust annual rates of price growth.”

Sales increased 7.4% year-over-year in April, according to TREB, which set a monthly sales record.

“As we move into the busiest time of the year, in terms of sales volume, strong competition between buyers will continue to push home prices higher,” Jason Mercer, TREB’s Director of Market Analysis, said. “A greater supply of listings would certainly be welcome, but we would need to see a number of consecutive months in which listings growth outpaced sales growth before market conditions become more balanced.”

The lack of supply is likely one reason prices continue to sky-rocket as well.

The average price in the City of Toronto increased from $690,058 to $766,472 over the past year.

Prices in the GTA also saw an increase, settling in at an average of $739,082 – up from $636,094 a year ago.

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Canada markets are facing a turbulent 2016

With oil dropping to less than $30 per barrel and the Canadian dollar reaching its lowest levels in 15 years, the beleaguered Canadian economy is struggling to achieve stability this year despite the continued dynamism in the country’s real estate markets.

Housing prices will rise by nearly 10 per cent this year, TREB predicted. Surging demand in high-volume locales like the Greater Toronto Area will play a crucial part in this significant increase, the same projections noted.

Analysts point at the continued downturn of Canada’s energy sector as a main driver for real estate trends this year.

“Certain oil producing countries and companies have flooded the market with a surplus of supply, driving down the cost of crude. As a result it’s been a downhill slide for the Canadian energy sector that plays a huge role in the national economy,” the Rent Seeker Team wrote in their analysis piece published by The Huffington Post.

“When Canadians lose jobs, the real estate market suffers,” the authors added.

Complicating matters is the increasing presence of foreign capital, especially since a weak loonie fosters exchange rates that make domestic markets attractive to international investors.

“For those who own property, increased foreign investment has been welcomed as they have seen their own property value increase. However, for the majority of Canadians who rent, foreign investment means increased real estate prices that were already unaffordable,” the analysts warned.

All of these developments amid a backdrop of historically low mortgage rates, which are stimulating greater transaction volume.

“As long as borrowing money is cheap, real estate prices won’t be. For those who are priced out of the housing market, while rents have also risen across the country, it is the only option for many,” Rent Seeker said.

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