All posts for the month July, 2020

The Likely Myth of ‘Soon to Be’ Falling Real Estate Prices in Canada

Published July 27, 2020 by Real Estate Leads

Having a health perspective on anything tends to usually involve looking and listening to both sides of an argument, and finding the happy medium based on the usually-accurate insistence that the truth is usually in the middle. There have been all sorts of people insisting that the real estate market in Canada is about to see epic crashes, while on the other side of the coin there’s been many economists and the like who’ve had a not-so-fast response to those kinds of assertions.

Now one of the things that really needs to be said is that many of the doom n’ gloom forecasters is that you shouldn’t expect a whole lot of objectivity on that side of the fence. We won’t go into a lot of detail, but the expression ‘wishful thinking’ is really applicable here. Would-be homebuyers who are hoping for mammoth price drops so they can afford to buy a home without doing anything to increase their ability to afford a home are bound to be disappointed. That is what it is.

Alternately, there’s so much in the way of concrete evidence (and not an ounce of wishful anything, as it is in the real working world) to suggest that house prices are going to dip temporarily, but that’s it. That also means that real estate likely isn’t going to become a less competitive business either. With that understood, our online real estate lead generation system here at Real Estate Leads does wonders for allowing realtors of all sorts to get so much more out of their client prospecting efforts.

But back to topic, as always – let’s add some meat to the sandwich here about why house prices aren’t going to plummet in Canada as this COVID-19 pandemic continues to move along.

Not So Fast Now

CHMC is an acronym for the Canadian Housing and Mortgage Corporation, and it was early last month that these folks suggested home prices in Canada would be falling over the next year. Everyone’s entitled to their opinion, but it’s better to have something backing yours up if you’re going to have one. Similarly they’re free to restrict lending standard on insured loans and lower debt service ratio caps and make higher credit scores a must, but the fact of the matter is the reported demise of a healthy housing market in Canada is premature.

Numbers, Numbers

The reality is that despite one of the worst economic slowdowns in the history of our nation, housing prices across Canada are doing quite fine for the most part. Yes, the number of transactions decreased considerably from April to late May, but after that the decline has been fairly small no matter which angle you want to look at it from. Yes, there were 56% fewer houses sold across the country in April of this year compared to April of last year.

But the fact that many who want to fit a narrative might not want to acknowledge is that the average house in Canada costs 5.6% more at this time than it did exactly a year ago, even if that’s not supposed the way it’s supposed to be with people locked down and losing employment, etc.

Now we’re not suggesting these realities didn’t factor in, and they still do but after seeing that virtually no homes were put onto the market in April, it was interesting to note that the few who did remained very firm on the prices they wanted for their homes. That’s not surprising, because no matter the climate if you’re in a supply & demand sphere where demand outstrips supply – which is probably always going to be the case in most of Canada – there’s always going to be a buyer who’ll pay that price.

They might not come along right away, but they will.

The Here and Now

So then we fast forward to today and we’re obviously see a very different picture and one that counters what the CHMC had envisioned. The Canadian real estate market is recovering better than expected based on surprising economic resiliency, desires to move that have been augmented by being cooped up in the same home for months, and dirt-cheap interest rates.

In addition, many Canadian realtors are reporting sales rebounding much faster than anticipated and the sum of it all is a real estate market in Canada that’s not mortally wounded at all and is trending towards getting back to what it needs to be.

And when we say ‘needs to be’ it’s important to remember that for many provinces and cities the activity in their real estate market is a source of their favourable GDP.

Some Reasonings

The CMHC definitely has some interest in forecasting the way they have, and without going into unnecessary detail it’s related to how they are in competition with privately held mortgage default providers. These competitors are going to be underwriting changes to their processes just as soon as CMHC announces some new rule or change.

Yet here we are and for the first time in history these competitors are keeping their lending standards the same and not following the CMHC.

Why would they make such a radical departure from the long-standing ‘way it is’? Well, to put it plainly they disagree with CMHC’s assessment on the market. Read into that what you will.

Some Truth on Canadian Real Estate Prices

If there’s one primary understanding to take away from all of this regarding real estate in Canada it’s that the economy has been far more resilient than most predicted. That’s good for real estate prices, because with a sufficiently healthy economy comes a sufficient number of qualified buyers who will buy homes for what they’re worth in ANY environment because they know demand outdoes supply many times over in Canada and they continue to have the financial means of putting a roof over their head.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are sent to you exclusively and for the region of any city or town in Canada you’re working in. It’s a proven-effective way to be put directly in touch with individuals or couples who have indicated their likelihood of making a move in the real estate market in the near future.

Subleasing an Increasingly Beneficial Arrangement During COVID-19

Published July 20, 2020 by Real Estate Leads

Being successful in business – any business, and that includes real estate – requires you to be nimble on your foot and able to ‘roll with the punches’ as the expression goes. Well, here in the summer of 2020 we are definitely rolling with the quite the collective barrage of punches known as COVID-19 and businesses of all sorts are having to do what it takes not to get knocked over. One thing we’re seeing in commercial real estate in Canada is that subleasing of commercial properties is becoming a viable option for companies looking to right-size their workspaces.

Most real estate agents in Canada works exclusively on the residential property side of things, but many may still have investor clients investing in REITs or similar investments where the commercial market is a very real part of the picture. Attracting and retaining clients is difficult at the best of times, and now even more so than perhaps at any time previous. Here at Real Estate Leads our online real estate lead generations service is an excellent way to put the power of Internet marketing behind your efforts to meet prospective clients who are genuinely ready to make a real estate move in the near future.

But back to topic, it’s an interesting development to see the idea of subleasing commercial properties gain traction the way it has, and it’s yet another way to see how the real estate industry is perhaps more resilient than people give it credit for in light of what’s happening in our world today.

Subleasing has the potential to be beneficial for both the sublandlord, subtenant, and landlord. Here’s how:

Workspace Adjustment with Relocation or Vacating

It’s probably fair to say that right now we’re seeing the largest work-from-home experiment ever, and with each instance where it’s proving to be doable we are learning that a good portion of the workforce could continue to telework post-pandemic. A study in May indicated that approximately four-in-10 Canadians have jobs that lend themselves to being done from home online.

That goes along with another report saying four-out-of-five employees would like to work remotely at least one day per week after all of this passes. Where we’re going with this is that if company owners and their HR directors see the potential in having a smaller needed workspace because of fewer people working in that space, the savings that will come from leasing a smaller office space is going to be appealing.

However, what if they’re quite happy with they are and would rather keep the space while still gaining the benefits – both for themselves and their employees – that come from having many working from home. In this instance subleasing becomes an option. Subleasing allows you to offload the space you don’t need and stay at the same address, while also offsetting total rent costs.

What are the benefits for the Sublandlord? These ones:

Retain control of the space and relationship with the landlord

A sublease arrangement makes it so that a new landlord-tenant relationship is established with the subtenant and it controls all interactions pertaining to the sublease between sublandlord and subtenant.

Relationship with the head landlord is similarly maintained

Depending on your sublease terms and any requirements the head landlord may have for a direct agreement with the subtenant, the subtenant may not have any direct interaction with the head landlord.

Retaining of Space Flexibility

The tenant may need less square footage but still retain a level of space flexibility, and in this instance the property owner may arrange a sublease for half the space for a short term and create the separated office or production floor workspace by installing a demising wall separating the existing space from that of the new subtenant.

Should more space be needed at the end of the sublease term, the leasee can reclaim the sublet portion of their workspace for the balance of the head lease term.

Reduce Costs

Paying rent has been such a challenge for businesses during the pandemic that the government has had no choice but to offer a commercial rent relief program. It’s estimated that 21 per cent of Collier’s International’s 7,100 commercial tenants across Canada requested rent relief in April.

Affected businesses’ inability to pay rent is expected to remain an issue following the reopening of provincial economies, and without going into unnecessary detail for anyone who’s in the situation and is in a lease for a commercial space then subleasing with a subtenant can greatly mitigate their costs.

Subtenant Benefits

  • Moving into a fully built-out space at a fraction of the cost, plus enjoying a sublease agreement that allows them to go right ahead and occupy a pre-finished, move-in-ready premises, saving them customization or repair costs.
  • A space likely maintained in good condition.
  • Limited transaction costs.

Subleases are typically conducted on an as-is basis without landlord’s work or inducements, lowering sublease rental rates for these individuals as well. Plus, the sublease may be for furnished premises or the subtenant may have the option to buy existing, tailored workspace furniture and further reduce reorganization costs associated with all of this.

Lastly, they may also be possibly paying lower rent too. Anyone who is a business owner needing to relocate to a smaller space and would prefer to avoid a long-term lease now has more options to secure the workspace they need and at more favourable terms nowadays.

Landlord Benefits

First of all, landlords maintain their cash flow, and in particular subleasing allows them to maintain cash flow by retaining the original face rates on their head lease. Should an original tenant experience financial difficulty and can’t pay rent then presenting a potential sublease agreement and having it accepted assures them of monthly rent payments from the subtenant.

The landlord is also kept safe from exposure to vacancy costs, which can be very problematic in a time like this when new qualified tenants may be hard to come by. Many businesses are vulnerable to financial difficulty now, and rent is too often an obligation they cant’ fulfill.

By permitting existing tenants to enter into sublease arrangements, these landlords protect themselves from vacancy costs and other transaction costs related to backfilling and releasing empty space. The space remains occupied, costs are better controlled and finances are afforded more overall security.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and only you – for the region of any city or town in Canada where you are operating your personal real estate business. It’s a dynamite way to supercharge your prospecting efforts and bring new clients into the fold – something that is a priority for every realtor!

Condo Development in Toronto Booming Despite COVID-19

Published July 13, 2020 by Real Estate Leads

There are many people – real estate agents in Canada among them – who question why anybody would want to live in a ‘glass box in the sky’ as condos in Canada’s major metropolitan cities are often referred to. What’s important to understand, of course, is that nine times out of 10 it’s not that the person necessarily chooses those accommodations. Rather, it is more that such accommodations fit their urban lifestyle and more often than not it’s primarily a case of what they can realistically afford.

Now if you’re a real estate agent practicing the business in any of Canada’s larger urban centres, the way new condominium builds in Toronto are booming is definitely something you want to take note of. Supply is usually created in response to demand, and whether that demand is actualized or anticipated. In Toronto it’s definitely actualized, as these are the homes people in the city want and can afford for the most part.

Now if only this reality could be paired with an adjacent one where there’s fewer realtors practicing in the city, but obviously that’s not the case. This continues to be as competitive a business as ever, and it’s for that reason that using an online real estate lead generations service like the one we have here at Real Estate Leads is something that all realtors should consider if they’re looking to get more out of their client prospecting efforts.

But back to topic – there’s such a flurry of activity with new condo builds in ‘The Big Smoke’ as it’s called that it has some very real potential for revitalizing the real estate market in the city sufficiently enough until normal returns after this pandemic.

A Reshaping of Downtown T.O.

Despite all the fallout from the coronavirus pandemic, Toronto’s mega-development boom does indeed continue to reshape downtown Toronto – and vertically in particular. Construction sites are getting back up to speed in a hurry and it is definitely a full-steam ahead approach with condo developments as the warm weather of summer arrives.

What is a constant at all times is real estate developers looking ahead for new, innovative ways to incorporate new realities and consumer wishes – from green space to working from home arrangements, and catering to new buyer prerogatives that are coming into existence in the face of these times is a way developers are even further promoting continued investment in these types of projects.

The demand has always been there, but what’s being done very smartly now is developers are fine tuning that demand even more. It’s a very positive development for the condo real estate market in Toronto, and yet another example of how not every corner of the real estate market in Canada is in the perceived moribund state that some think it is.

Post-Pandemic Sensibilities

Many of the new design principles and approaches being seen with condos in Toronto may well be similarly incorporated elsewhere in the country. They include wider sidewalks at street level and incorporated green spaces inside of the building in order to promote social distancing and healthy living.

Others are health and gym areas that are designed to promote social distancing more naturally and some are even going to have thermal scanners for fever detection in the public areas of the building, built into the security cameras.

Luxury Real Estate Market Remains Strong

Despite the pandemic, demand for luxury real estate hasn’t missed much of a beat in Toronto. One reason is that supply and demand for luxury living has not been altered. This is of course in large part attributable to the fact that Toronto is still one of the foremost destinations for immigration in Canada, to the tune of over 125,000+ immigrants arriving in Toronto each year and higher-end condos make for ideal living arrangement for these newcomers – many of whom have the pockets required to purchase them!

Expanded immigration and a growing tech industry are the leading factors fueling this current condominium boom in Toronto, and if you’re a realtor who needs further convincing of that it’s now know that there are 400 proposed high-rise projects in the pipeline for Toronto.

Get while the getting is good as they say, and get more of that getting by signing up with Real Estate Leads here. You’ll receive a monthly quota of qualified buyer and / or seller leads that are delivered only to you, and with them you’ve got bonafide opportunities to do what you do best and convince these prospective clients as to you being the best choice to help them navigate such a major purchase decision in their lives.

Winnipeg Well Positioned for Commercial & Industrial Real Estate Market Strength Following Pandemic

Published July 6, 2020 by Real Estate Leads

This week’s post will continue with what’s been a theme here with our blog for some time now. That being the projections for what the real estate market will be once this global pandemic begins to die out and some ‘normalcy’ returns to live in Canada. As to when that happens is anyone’s guess, and it’s safe to say that it’s likely going to take a long time after that to see the market return to its previously vibrancy. But that will happen, and what everyone who make their living in the real estate business needs to do is just weather the storm.

Part of weathering it for a lot of realtors is going to be working harder, both in the general sense and when it comes to doing what it takes to ensure there’s a sufficient amount of new clientele being brought into the business. Here at Real Estate Leads our online real estate lead generation service in Canada is an excellent way to get more out of your efforts there and it comes highly recommended from growth-minded realtors just like the majority of you will be.

Which leads us to today’s take on the recovery-to-be in the Canadian real estate market. With all the talk about Vancouver, Toronto and other bigger metropolitan areas, not enough is said about Winnipeg. The city that is the gateway to the West has long been one of the places where you can get the best bang for your buck when it comes to housing, and it is now becoming clear that may be equally true for commercial and industrial real estate in the not too distant future.

Repeat Performance Possible

Winnipeg’s economy bounced back from the ‘08-’09 recession in quite good shape, and it seems it may well be able to repeat that success following COVID-19. This is particularly noteworthy when you look at the neighbours to the West and markets like Alberta that have struggled with cratering oil markets manifesting themselves in the poor health of the economy and the real estate market along with it.

What we will be looking for is for owners to be divesting very good assets in Winnipeg, and if they do there’s going to be a ready list of buyers who see the opportunity with buying real estate in Winnipeg. Further, there is enough local and regional capital willing to take up opportunities to acquire these assets, and that’s not to mention qualified real estate investors from out of Province who should be taking a similar interest.

Industrial Sector Standing to Benefit

There is every reason to see Winnipeg’s industrial real estate market being particularly well-placed right now, and seeing more in the way of increased warehousing requirements is going to be a positive. There is also the possibility of more on-shoring playing a market-changing role (particularly if the move to reconsolidate manufacturing in North America takes hold as many expect it may) and Winnipeg is ideally situated to benefit from any such trend.

A new 250,000-square-foot package sorting facility being built for FedEx Ground and some 25 commercial condominium units under construction in South Landing Business Park are good examples of new and promising commercial development builds in Winnipeg.

Office Vacancies and Rents

Greater Winnipeg has the largest office inventory among Canada’s medium-sized cities, with almost 12.4 million square feet as of the first quarter of this year, and in drastic contrast to what we’re seeing in Calgary the first-quarter vacancy rates were 7.4% for class-A, 7.7% for class-B and 6.7% for class-C downtown buildings. This is an indication that businesses ARE setting up shop in Winnipeg, and with a revitalized commercial market comes a revitalized residential housing market.

Winnipeg Commercial Leasing

We may be able to safely assume that the Commercial Rent Relief benefits are not as urgently needed in Winnipeg as they are elsewhere in the country. We do know that there aren’t any data points indicating industrial or office buildings are worth less now than they were at the beginning of the year.

Interesting to note the major success story Skip The Dishes has chosen to consolidate its Canadian headquarters in the East Exchange district of Winnipeg, and speaking to a Commercial real estate expert in Winnipeg we’ve been informed that new offers from interested parties were coming in for retail properties for pre-COVID-19 market rents in mid-April and lease signings were taking place in shopping centres in early May.

Winnipeg’s downtown class-B office market has seen consistent demand and that continues to be the case right through the heart of the COVID economic slowdown, so this bodes especially well for what will the situation after we come out of it. There is reason to believe the greater general affordability with land values here will also apply to the next biggest city as you head west – Saskatoon – and that this is all a part of a general fairly positive outlook for commercial real estate in Canada outside of the major city centers in the country.

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