Housing is heating up Federal politics

MP Pierre Poilievre is the leading (and only) Conservative leadership candidate in the fallout of former Opposition leader Erin O’Toole’s removal. The bilingual Ottawa based MP who served as a junior Minister in the Harper Government has been relentlessly focused on linking growing inflation and BOC intervention with ever higher housing prices and housing insecurity. He is the dominant voice on inflation, high prices, and housing shortages in Federal politics. Several weeks ago Poilievre cited a Parliamentary Budget Office (PBO) report outlining that house prices have doubled nationally since 2015.

The report cites an average national house price figure of $413K that rose to over $811K by late 2021 – the apex of the COVID crisis. The report also makes the point that average prices in much of Canada and especially Ontario were over 50% above ‘affordable’ levels. The impact of the pandemic was monumental, as figures show that prices only rose by 37% from 2015 to 2019 ($413K to $565K), still a significant jump, but underscoring the growth of the last two years. While the PBO’s report comes as no surprise, it highlights the extent to which housing equity has surged in such a short period of time. Tembo can help you take advantage of this historically unprecedented surge in housing equity to consolidate and streamline your debts.

Through a Tembo Financial debt consolidation loan, you have the option of accessing an easy, quick, and cost-effective service to free up cash flow and improve your credit score by combining different high interest debts into one simple payment. Take advantage of your increased housing equity to consolidate your debts, pay down liabilities fast, and simplify your payments – please visit www.tembofinancial.com and give us a call at 1-844-238-6717!

 

The Feds are Getting Involved in Plans for Highway 413

As Tembo has reported, the Ontario government’s language towards a proposed GTA West highway route (Highway 413) has become increasingly bullish, suggesting that the highway will be a long term infrastructure priority for the Ford government. The route of the proposed highway stretches from Highway 400 in Vaughan west to the southern edges of Bolton, southwest across Brampton’s northern boundaries, and then south toward Georgetown, gradually meeting the junction of Highway 401 and the 407. This general ‘preferred route’ has already been confirmed by the province. The highway is seen as a long term imperative given the enormous population growth of the area, and of the need to expand the GTA’s highway system (where few major additions have been completed in the last 20 years). With GTA population growth forecast to be steady over the coming decades, the GTA West will help to serve the ever greater number of cars to be added to our roads. The highway will cost billions and take years to build, but Brampton City Councillors in particular have come out in favour of the highway, saying it should have been built 15 years ago.

However, the Highway is also the source of increasing opposition. Environmental groups, activists, and even many City Councils in the GTA (Mississauga, Toronto) feel that the Highway is unnecessary, will destroy sensitive and valuable green space, and will cost too much. Recently, federal environment Minister Jonathan Wilkinson effectively came out opposing the project also by making it clear that the project will have to undergo a federal environmental assessment. This move will delay the project, and seriously complicate efforts to build. An E.A. will take years, and will duplicate municipal and provincial assessment procedures. Media analysts are suggesting that the federal move is designed to pick up green votes in the GTA and southern Ontario and to shore up the Liberals’ left flank.

Toronto Homes Are In The gold Standard of International Real Estate

Demographia, a U.S. based consulting and research firm, just released some data on urban real estate markets. The data was used by the Visual Capitalist in one of their sleek graphics. What it showed was Toronto remaining as one of the world’s top ten expensive real estate markets. Canada’s biggest city ranked 7th on the world’s most expensive housing markets, ahead of tech mecca San Francisco (famous for extremely high rents), London, and Adelaide (an Australian city that’s seen some incredible price growth in recent years.) Toronto was beaten by Sydney, Melbourne, Vancouver, Los Angeles, and Hong Kong. Marking the huge economic and real estate disparities between upstate New York and Ontario, Buffalo NY was listed as a city with one of the lowest real estate values in the 8 countries and multiple cities listed in the Demographia study. Demographia’s data is from the third quarter of 2019, and there’s been even more price growth in Toronto since then.

One of the interesting areas of investigation for the report was land containment and regulatory regimes for house building. Not illogically, the study showed that the cities with the highest priced real estate were those with the most land and geographic constraints to building. Toronto was high up on the list given the large amount of green space, protected areas, national parks, and the Greenbelt in the vicinity of the GTA. The report noted that Toronto real estate prices rose from 4 times median annual earnings in the early 2000s to almost 10 times median annual earnings in 2019. While the overall focus of the report was on the unaffordability of housing, it shows just how valuable Toronto and southern Ontario real estate is in an international context – proving its utility to homeowners, and its growth potential and desirability for those working on getting into the housing market. What is unaffordable for some is a huge source of equity for others, and an opportunity for prospective buyers.

Demographia emphasized that the first order of demand preference in Toronto and across Canada was detached homes and not apartments or condos, pushing the demand for these types of housing up and placing pressure on available land for building. Demographia notes what Tembo has reported on in the rental sector: a recent surge in building, but noted that many of these new units are still too unaffordable for people. Finally, the report notes that London, ON has some of the most affordable housing in southern Ontario. This report is another indicator of the value of our real estate, as recognized internationally, and the strength of our real estate market compared to our counterparts and neighbours.

Mapping Ten Years of Incredible Price Growth

blogTO, always a purveyor of excellent real estate articles, released a relevant and very interesting piece outlining property appreciation in Toronto over the last ten years, from 2011 to 2021. The story starts off with a powerful graphic outlining the price growth of different categories of real estate borrowed from homing.ca. Detached homes tripled in value, rising from $450,000 to over $1.2 million. Semi detached homes almost tripled, rising from $360,000 to almost $830,000. Townhomes doubled from $355,000 to $768,000. Single unit condos also well over doubled from $285,000 to $600,000. Condo townhouses did a little better, going up from $280,000 to almost $670,000. These are historically unprecedented examples of price growth. They also mirror the proportionate decline in interest rates, which fell from 4.5% in early 2008 to their present near zero value.

The article includes a concise and incredible statement from realtor Graham Rowlands worth repeating: “Long story short if you bought any property in Toronto 10 years ago, you’ve likely more than doubled your money, built a fair amount of equity and likely have a mortgage payment well below the average rental price in the city.” This is testament to our property market and what many have gotten out of it in these incredible times. For those of you who fall into this category, enjoy, and for those of you who wish you were in the 2010 buyer’s shoes, we wish you all the best in fulfilling your real estate hopes. If you believe in our long term fundamentals then there’s no reason why you shouldn’t continue working to join this fulfilling and rewarding club.

Affordable real estate communities in the GTA are few and far between but Tembo suggests taking a good look at Oshawa, Peterborough, eastern Durham region, and even Windsor, where real estate for a first time home buyer looking to build equity is relatively cheap. As long as rates are low, global capital continues to flow, and we have a stable economy, Toronto real estate will keep increasing in value – for better or worse. To those who cashed in, we say congratulations, and to those who haven’t, we say there’s always opportunity out there.

Tembo Financial for Business Owners and Entrepreneurs

During uncertain times, Tembo Financial understands that businesses and personal matters may be affected.

Many businesses are currently facing struggles that were unanticipated, and extremely sudden. Having to close, or operate from home for some is extremely tricky for several businesses.  

How are you going to pay rent? How can you continue to pay your employees? Will your business be able to survive the ongoing and uncertain changes happening? Many new questions arise as different life events take hold of what was your successful and growing business.  

It is in times like this where Tembo Financial may have the product and solution for you, to help you save your business with little risk. Tembo Financial is offering business loans against your personal property, to ensure that you can keep your business afloat. With flexible solutions, this product can assist you in getting your business back up to full speed. Our loans are simple, registering against your personal property, and releasing funds to keep your business the way it was moving before it slowed down.  

Interest will be deferred or prepaid so that you don’t have to come up with the payments until you are ready to pay off your short term, 4-6 month fully open loan. If 4-6 months isn’t suitable for your business, Tembo Financial can assess if your business would be right for a 1-year term.  

If you are a business owner, with equity in your personal home and are looking to tap into the equity in your home to save your business, contact Tembo Financial today to find out more information on how we can help you keep your business afloat!  

What is bridge financing and how does it work?

In the simplest terms, bridge financing is a short-term lending option that helps homebuyers bridge the gap between their old and new homes. It is often a short-term solution for the buyer in order for them to arrange the mortgage for their new purchase.  

Recently, conventional banks have released guidelines, which make it increasingly hard to qualify for a bridge loan.  

The advantages of bridge financing are that you can get the funds you need before your home sells. This can give you the ability to purchase a new home and have some liquid money before your sale closes. The bridge may also give you some money to do some touch-ups or renovations to your home before listing for sale. See our blog on home renovations and increasing your property’s sale price before listing by visiting our blog: https://www.tembofinancial.com/2020/03/03/5-ways-to-increase-your-home-value-before-listing-for-sale/ 

How does it work? 

At Tembo Financial bridge loans are offered to clients without a lengthy list of criteria. We are able to assist clients with the funds that they need to bridge the gap between their purchase and their sale. Bridge financing works by putting a mortgage on your current property and sometimes your new property also, and only pay us back once your property has sold and closed! With flexible payment structures available, you may not have to make any monthly payments! 

 Need more of an explanation? See the example below:  

You are currently a homeowner at 12 Oneway Avenue and have just accepted an unconditional offer from a buyer for your current property, which has a closing date of September 18th. The purchase price was $700,000.00, and after paying off your mortgage, closing costs, and other costs such as moving or renovations, your net proceeds will be approximately $300,000.00. 

You’ve already placed an offer on a new property at 32 Ridgeway Crescent for $500,000.00, which is accepted, and your new property’s closing date is August 29th, 20 days before the closing date of your existing home. 

On your purchase, you’ve made a $25,000.00 (5%) deposit, and have decided to use $300,000.00 of your net proceeds from your sale towards your purchase. You’ll need that $300,000.00 on your closing date (August 29th), however, you won’t receive the proceeds from your sale until September 18th. What do you do?  

This is where bridge financing would be used, as you would take out a short term $300,000.00 loan for the 20 interim days between your purchase closing (August 29th) and your sale closing (September 20th). Although this situation is quite common, as exact closing dates aren’t always possible, such financing can be difficult to obtain from a bank, especially if the gap is greater than 30 days. 

Getting a loan for a house deposit

Getting a loan for a deposit on a new home is very common. The equity or savings that many people do have for a deposit is tied up in their current home. Luckily, there is an option for you to get a loan and put a deposit on a new purchase before selling your current home. 

Tembo Financial offers deposit loans to clients looking to sell, but wanting their deposit money sooner. The way that they can do this is by confirming that their home will be sold in the next few months, and with just a few documents, Tembo Financial can release funds.  

Best of all this loan often requires no monthly payments and no credit checks! 

In uncertain times, when you aren’t sure when your home will sell, don’t worry about not having money in your pocket. Tembo Financial is able to release your funds when you need them the most.  

Regulators are concerned about the real estate market – again

The activity we’re seeing the real estate market is raising red flags with federal regulators and the Bank of Canada. When the 2016-17′ boom reached its peak governments at all levels rapidly intervened to cool activity.

We all remember the introduction of the foreign buyers tax, tighter mortgage approvals, the mandating of mortgage insurance at certain levels, etc. These government interventions succeeded, eventually precipitating what was effectively a flat-lining of prices and a slowdown in demand. Once the shock subsided and the market adjusted, the recovery kicked in though, rendering the government action a grand delay. We’re now not far off from the 2016-17′ boom peak. The boom is back, and the apprehension is back with it.

Bank of Canada Governor Stephen Poloz summed up his opinion on the present status of the housing market with one word – “froth.” The BOC (Bank of Canada) notes that the rise is unsustainable and expects the market to naturally self-regulate if the rise in prices becomes excessive for prospective buyers. As always, the BOC is standing by to raise rates in the event that inflation and housing price growth becomes excessive. This is a worst-case scenario, and in many ways, softening national economic growth would spur the BOC to cut rates instead. The BOC will definitely monitor real estate stats closely in Q1 & Q2 2020 and will review its options if the housing momentum we’ve discussed intensifies. 

As for the provincial government in Queen’s Park, it is unlikely to interfere in the housing market in any way other than stimulating the growth in supply (cutting developmental approvals). The federal government is also limited in its capacity to address a hot market as it must balance affordability with controlling demand. A federal election is also soon on the horizon, which will see activity designed to increase supply and facilitate easier buying of housing, not the opposite. At the end of the day, if regulators and bureaucrats feel that the housing market is getting out of control they will move rapidly in concert with the BOC to add new measures, despite any political pressures. 

Galleria Mall is in the dustbin of history

The corner of Dufferin and Dupont is a working class, generally blue collar area not far from the mid-Toronto rail track. The area has always been busy, heavily transited, and Dufferin St. has continuously grown as a major north-south thoroughfare of the city.

The Dufferin bus route is one of the busiest in Toronto and use continues to grow. Two decades ago, houses in the area were extremely affordable and the neighbourhood was a major magnet for new immigrants while also being home to more established Italian, Portuguese, and Anglophone communities. Dufferin-Dupont was served locally by Galleria Mall, a 5 acre patch of retail and shopping locales. Galleria was built in the early 70s, and while regarded with affection by many locals, had a reputation as being run-down and outdated. The mall was a shadow of Dufferin Mall’s scale and shape just south of Bloor. Dufferin-Dupont’s close proximity to the Bloor subway line and the downtown and midtown cores and the Annex have benefited it greatly, and equity in homes in the area has soared, especially in the last 10-12 years. The gentrification of the area has been ongoing for some time, and young professional families have been moving in. But all of that is now intensifying.

Galleria Mall was bought in 2015 by Freed Developments and ELAD Canada, by September, ELAD took over total control of the site. The new owners spent years consulting the community and trudging through the regulatory, zoning, and approvals processes to have an ambitious and bold plan prepared. The derelict mall with considerable parking space will be transformed into a network of eight residential buildings with 3,400 housing units, 150 of which will be ‘affordable’,  considerable retail space and a redesigned and enlarged park space and community recreation centre. The new project will see 3.3 million square feet of space, up from the present 227K square feet. While the already significant congestion in the neighbourhood will only worsen, the project will likely spur further densification and gentrification in the area and will see many jobs and investment poured in. Galleria’s poor reputation and derelict condition at the time of the sale likely netted ELAD and Freed a good sale price. The area was once an aircraft manufacturing plant that was transformed into a car plant and then eventually retail and parking space. Construction of the project will take a decade to complete.

 

Buttonville Airport is going for sale!

Buttonville Airport is a privately owned, public airport just north of Markham. It covers over 170 acres of the primest of prime suburban 905 real estate. The airport is a half hour drive from downtown Toronto and is just east of Highway 404, Buttonville’s strategic proximity to the rapidly growing GTA and the massive growth in air traffic over the last several decades helped transform the site from a ‘grassy strip’ to the largest, most dynamic privately owned airport in the nation. 2018 saw the airport achieve just over 44K aircraft movements, down from over 80K in 2014. In comparison, the large publicly owned Billy Bishop Airport in downtown Toronto has aircraft movements over 125K. In 2009, the family who then owned the airport announced that they wanted to initiate a broad redevelopment of the site into a mixed use commercial, retail, and residential development. This was highlighted as a golden opportunity to unlock tremendous value for a huge tract of strategic real estate. The family sold in 2009, forming a ‘partnership’ with Cadillac, and the price has not been disclosed, but the value of the undeveloped acreage was believed to be worth between $100-150 million at the time.

Cadillac’s plan would have created 10 million square feet of overall multi-use space worth billions. In comparison, the total size of the Yorkdale Mall is just under 1.9 million square feet of retail space. 6-7K new residents would have been accommodated, generating tremendous property tax revenue for the City of Markham. At least a dozen mid and high rise towers were to be constructed. In all likelihood, the ambitious scale of Cadillac’s strategy would have made the airport family billionaires. However, the immense rezoning work required to approve the project was never completed. The deal was shifted off to the Ontario Municipal Board, but negotiations involved too many stakeholders and too much work. Delays kept pushing back the project. The uncertainty and complexity of the project proved too cumbersome for Cadillac and it appears the partnership have now agreed to wash their hands of the property and to put up the holdings for sale.

The sale will create opportunities but also challenges. Significant corporate jet traffic uses the airport and will have little room to transition to as Billy Bishop is limited in its traffic and Pearson is bursting at the seams. The sale will likely up pressure on the federal government and federal transportation regulators to finally and definitively approve construction of Pickering Airport. The GTA is growing to the extent that a second international airport will be necessary, barring that, Pearson will have to be rapidly expanded. Pickering Airport’s construction will intensify development in Durham Region, create many jobs, and spur additional construction, rezoning, and densification. The recently elected Mayor was strongly supportive of airport construction and won election with over 60% of the vote on a pro-build campaign.