From the Desk of Faisal - Real Estate News for the period of Mar 27th - Apr 2nd

Welcome to Properties Ontario’s weekly real estate update. Our team goes through numerous articles and summarize them for you! Please do not hesitate to contact us if there are any topics you would like to discuss further. If you have any questions about buying, selling, or leasing residential or commercial space, we’re the team for you. For current listings in the marketplace, check out our website www.propertiesontario.com 

Bank of Canada Green Iniative

• Bank of Canada has signed up for a global initiative called “Central Banks’ and Supervisors’ Network for Greening the Financial System” (NGFS)
• This initiative was set up after the Paris Agreement on climate change
• Bank of Canada aims to build climate related risks into the financial system review process, operate with LEED certification, reduce waste and develop a multi-year research plan focussed on climate related risks to the macroeconomy

Fairview Mall Revitalization

• Property developer Cadillac Fairview and asset manager TD Greystone Asset Management have announced plans to revitalize North York’s Fairview Mall
• The developer has put aside $80 million to revamp 230,000 square foot of existing retail space, create a new row of restaurants and improve access to Don Mills subway
• Completion for the project is slated for 2023

Debt Service Ratio in Canada

• Debt Service Ratio (DSR) is the percent of disposable income used for loan payments
• DSR reached 14.87% in Q4 2018, a 1.22% quarterly increase
• Compared to Q4 2017, the ratio climbed 5.46% and is 0.01 points below the all-time high hit in Q4 2007
• The DSR for interest only segment represents 7.34%, up 1.94% monthly but a massive 8.9% increase from the same time last year
• The mortgage portion of the DSR represented 6.69%, up 0.75% quarterly and up 3.56% on an annual basis
• The growth of DSR during periods of low interest rates is not a good sign and with future interest rate cuts being a possibility, may indicate a slow down of the economy

Canadian Construction GDP

• Statistics Canada stated the construction sector GDP increased monthly by 1.9% in January 2019, snapping 7 months of consecutive declines
• Residential construction gained 3.1% monthly with increased home alterations and improvements, multi-unit construction and single and semi housing construction
• Non-residential construction sector posted a 0.7% monthly gain in GDP
• Real estate brokerages had 4.1% monthly gains as housing resale activity rebounded
• Across the whole Canadian economy, real GDP expanded 0.3% in January with 18 out of 20 industrial sectors posting monthly gains

ATTOM’s Home Affordability Report (USA)

• According to ATTOM’s report, about 71% of wage earners (335 out of 473 counties) were unable to afford the median home price
• This study was done for the first quarter of 2019 and measures the amount of income required to make monthly house payments for average wage earners

Total Canadian Mortgage Outstanding

• Institutional lenders held $1.55 trillion of mortgage debt in February 2019
• This represents a monthly increase of 0.19% and an annual increase of 3.2%
• According to the Bank of Canada, the annual increase of 3.2% is the slowest growth experienced since 1982-1983
• The three-month annualized trend is 3.7% which makes it the second consecutive month the three-month is larger than the 12-month growth
• What this means is if the three-month growth rate continues to stay above the 12-month growth rate, it could mean the market is slowly recovering

CBRE Commercial Quarterly Report

• The CBRE report stated Canadian office markets continue to gather momentum due to growing tech and co-working sectors
• Downtown Toronto office vacancy rate dropped to 2.6% in the 1^st quarter of 2019
• National industrial availability rate dropped to a record low of 3% in Q1 2019
• There is currently 22.6 million square feet of industrial space under development, mostly in Toronto and Vancouver
• In Toronto, 77.6% of the 9.58 million SF under construction has already been leased
• Toronto’s industrial market has had 16 consecutive quarters of positive net absorption and saw the vacancy rate hit an all-time low of 1.5% in Q1

Canadian Effective Borrowing Rate

• Effective borrowing rate uses posted and discounted mortgage and consumer rates to establish what consumers really pay in interest
• The effective rate reached 3.97% in the week ending March 29^th, down 0.25% weekly
• Even with the weekly drop, the rate is 9.67% higher than the same week last year
• Borrowing rates typically fall closer to spring as sale volume picks up but we will not know if this is a seasonal drop or credit weakness