Why Some Canadians Are Choosing Residences Like 859 Kennedy Road Over Houses

Why Some Canadians Are Choosing Residences Like 859 Kennedy Road Over Houses

The media loves to cover expensive housing, and right now they’re having a feeding frenzy over the Canadian real estate market. 

It’s fair to point out that the market has caused its share of problems, with even rural areas and small towns now grappling with soaring prices and seemingly endless buyers and bidding wars. 

Although there are some signs the housing market could moderate within the next year or two, in the meantime, Canadians unable to pay the $1 million-plus average home price are increasingly looking to the housing option of rentals, like Alto Properties’ 859 Kennedy Road. 

As vice president of Alto Properties, I’ve certainly seen the demand for the apartments at 859 Kennedy Road, a multifamily residential building in the heart of Scarborough.

Managing 859 Kennedy Road, which is Alto Properties’ flagship property, has taught me plenty about the real estate market and the need to stay patient through periods of turbulence. 


Young People Look to Rentals and Condos

Many people, especially Millennials who don’t have the hefty downpayment for a house, want more flexibility from their housing situation. 

Even if they could afford it, many young Canadians don’t want a $1.5 million house with a mortgage that they’ll be paying for the rest of their lives. 

Renting, however, provides flexibility and a different lifestyle, and the market is already showing the rising popularity of rentals and condos. 

As optimism rises with the availability of vaccines, both of these markets have started to normalize. 

Rental popularity is likely to return with a normalizing economy, according to the Canada Mortgage Housing Corporation’s Spring Housing Market Outlook, and condo sales have already taken a bigger slice of overall home sales in 2021.

The national housing agency, or CMHC, said there’s an overall increase in demand for higher-density housing.

“This compositional shift in sales toward condominium apartments will continue as the pandemic recedes and will contribute to the moderation of average house price growth,” CMHC said in its report. 


Can the Gov’t Help the Housing Market?

There are some signs that the market will calm down in the near future. 

In a recent interview with Mortgage Broker News, Michael Bourque, CEO of the Canadian Real Estate Association, pointed to several positive trends as well as possibilities for federal involvement. 

Part of the reason the Canadian government hasn’t done more to curb demand is because of news from the Bank of Canada, Bourque said. 

“The Bank of Canada is signalling that interest rates are going to go up, so our feeling is when that happens, vaccination has taken place and the economy starts to open up again, the market will cool down – so there was no real reason for the government to do more than they’re currently doing,” Bourque said.

The federal government will likely take additional steps to increase inventory. 

On April 19, the country’s finance minister committed another $2.5 billion to the federal government’s affordable housing program. That money will build or repair 35,000 residences and use more than $1 billion to try and convert commercial buildings into housing. 

That will certainly help, but as Bourque pointed out, the government could still do more. 

“The next thing we’re looking for is for the federal government to play a more active role on the supply side,” Bourque said. “They did announce some considerable infrastructure spending [in the budget], and the number one request that we have is for the federal government to create conditions around infrastructure spending for housing.”


Moderating Housing Market A Slow-Moving Proposition

There’s other good news, though. 

According to an analysis from RBC economics, the market is already showing signs of moderation. April sales slowed down and new listings began to rise, easing the lack of inventory. Prices continued to escalate because the market has yet to acknowledge the change, according to the RBC report. 

In large markets, home resales and new listings increased anywhere from 140 percent to 462 percent, the report said. 

It’ll take time for the market to cool, however. In April, annual HPI (house price index) growth still accelerated in Canada’s biggest real estate markets. The increase in inventory was ignored or just not noticed by pre-approved buyers, who already prepared for short and intense bidding wars. 

But rapid change in the marketplace is unlikely. 

The reality is that 2021 may see some slowdown of the market, but higher interest rates and an inventory increase large enough to cool prices still may not occur until 2022, according to the Bank of Canada. 

Also, the bank’s housing experts predicted that 701,000 properties will be exchanged on Canadian MLS systems in 2021.

For the rest of 2021, the bank expects that housing activity will likely continue to see monthly records. This year, the national average home price could rise by 16.5 percent to more than $665,000.  

In 2022, analysts see a “soft landing” for the Canadian real estate market. 

There’s a good chance that real estate activity could reach more than half a million units — a 6.5 percent increase over 2020, according to RBC Senior Economist Robert Hogue

Toward the end of the year, Hogue said the market will cool down and prices will start to fall. 

“Call it a 2022 soft landing,” he said. 

In December 2020, annualized resales peaked at 700,000 units. By the end of this year, RBC forecasts a downturn of that number by 26.4 percent. 

So there’s reason to be hopeful, but for now, Canadians looking for a home will likely continue to face big price tags and lots of competition.

What To Know for Summer Vacation

Thanks to the pandemic and generous payments from the federal government, Canadians have saved up quite the nest egg.

With the economy starting to rebound, Prime Minister Justin Trudeau promising vaccines for all by September, and a general optimism among Canadian residents, many people are already booking their summer rentals, far-flung vacations and, of course, backyard pools for a staycation with the kids.  

After a year that saw three million Canadians lose their jobs, and travel and socialization postponed indefinitely, spending plummeted at the same time that government checks increased disposable income, which many Canadians put into their savings accounts.

Now most Canadians are working again, and they have quite a bit of cash in their pockets. According to Reuters, The Bank of Canada estimates that Canadians have cumulatively saved up to $180 billion CAD.

As a result, rentals for summer vacations have become a hot commodity, in both Canada and the U.S. People have been pent up inside their homes for too long, and they’re ready to get out.

If you’re one of the many people looking for rentals for the summer, here’s a few suggestions to help you find what you’re looking for at a decent price.

Don’t Wait Any Longer

Start right now!

Summer rentals across North America are already booked out months ahead of time. Many rental sites and popular destinations are already seeing record numbers of reservations and fewer cancellations.

According to The New York Times, rentals are booming across the U.S. Toward the end of March, about 90 percent of vacation homes posted on Vrbo for Jersey Shore and Cape Cod were already booked for July. That’s a stark contrast from 2019, when 30 percent of those homes were still accepting rental bookings in March.

The article reported the same trend for the rental site Homes & Villas by Marriott International, where the booking lead time for summer stays reached 147 days this year. It was just 34 days last year.

The point is: Start looking now. Everyone else already is.

Prepare to Pay More

Yes, you can expect to pay more than almost any year in the past.

The competition is fierce, driven not only by the widespread desire to get out in the sun, but also by those who own more than one home. Many second-home buyers want to use their weekend houses, and have more time to stay because of the rise of remote work.

So there’s not just more competition, but also fewer available properties for renting. It’s not just big homes, either. All kinds of properties, from three-bedroom houses to studios and one-bedroom apartments, are already hot commodities for summer vacation.

Booking prices have risen as a result, a trend that will likely accelerate as we get closer to summer. According to Transparent, a vacation-rentals data company, the national average nightly rate for Airbnb rentals for July and August 2021 is around $220. That’s an increase from last year’s $194 and $185 in 2019.

Longer stays are the new normal

Last year saw an increase in longer stays at rentals in popular destinations, and that trend is expected to continue in 2021.

That could be month-long stays or multiple weekends booked back-to-back. It’s part of an emerging trend called “slow travel,” where travelers spend more time away from home, on average, than before the pandemic.

Final Thoughts

Everything about travel is more complicated right now, and no single article, including this one, can cover it all. 

Flights are more competitive, too. Traveling outside the country means learning and dealing with the various requirements for COVID-19 tests and quarantine that each country decides on their own.

There’s also a shortage of rental cars, and shifting recommendations from health care experts. This Forbes article has some great info on these aspects of travel.

Whatever you choose to do for the summer, remember to stay safe and smart!

Need for housing safety rises with COVID cases

Despite aggressive restrictions mandated by Toronto for more than 12 months now, recent news about the spread of COVID-19 suggests the need for a renewed focus on safety. 

As of April 5, Ontario health officials were reporting 6,000 new COVID-19 infections over the weekend, with ICU admissions reaching a record high. Government officials said that about 494 patients were receiving treatment for COVID-related illness in intensive care units. 

At the same time, the City of Toronto is postponing plans to clear homeless encampments in parks following an outbreak at a hotel being used for sheltering residents without homes. 

What these news stories make clear is the need for ongoing leadership among Toronto and Ontario businesses to ensure the safest possible environments for residents. 

At Alto Properties, we take that responsibility seriously — and we can prove it. 

Our multi-unit residential building at 859 Kennedy Road was recently evaluated by the city’s RentSafeTO program. The program, initially passed in 2017, is a “bylaw enforcement program that ensures apartment building owners comply with building maintenance standards,” according to the City of Toronto website. 

The program evaluates the safety and adherence to COVID-19 safety measures of apartment buildings with three or more storeys and 10 or more units. RentSafeTO operates with a multi-tiered metric based on the building’s rating from the evaluation. 

Our building, 859 Kennedy Road, scored an 87 percent in a report released this January, placing it in the best possible category. Any score between 86 and 100 percent means the building doesn’t need a re-evaluation for three years. 

The evaluations include many categories for health and safety, upholding the highest apartment building standards. City inspectors look at a building’s elevators, security, water issues, guardrails, maintenance of garbage, cleanliness of floors and ceilings, exterior walkways, the presence of graffiti, and many others. Each category receives a score between 1 and 5. 

In the evaluation for Alto Properties’ 859 Kennedy Road, the building did not receive a score lower than 4 in a single category. 

Never before has the safety of residents been more important, and Alto Properties is committed to offering apartments with the highest standards of safety and hygiene. It’s exhausting enough worrying about your safety when you’re out in the world — we don’t think you should have to worry about it at home, too. 

Although RentSafeTO has existed for several years, the City of Toronto has already updated the program to reflect the needs of the pandemic, with a unanimous decision to expand safety measures. 

The new and improved safety measures will reduce the spread of COVID-19 by asking apartment building owners and operators to take additional steps to protect their residents. 

They include “providing hand sanitizer in common areas, keeping non-essential common areas closed as specified by provincial orders, cleaning frequently-touched surfaces, and posting Toronto Public Health signage,” according to the City of Toronto website. 

Under the new measures, landlords of apartment buildings must:

  • Post all new information about fire code violations or pest management activities to their buildings’ tenant notification boards.
  • Give notice of RentSafeTO visits on notification boards at least 30 days prior to building audits with appropriate contact information for staff.
  • Post information on the tenant notification board about air-conditioned spaces in the building to include information about other places on the property that offer relief from uncomfortably warm indoor temperatures.
  • Develop and maintain a capital plan for each rental building that includes a comprehensive five-year forecast extending beyond major capital repairs.

For new and existing residents, these higher standards of safety do not currently apply to condos, townhomes or housing in private residences. If you encounter issues in that type of housing situation, you will have to contact the City of Toronto, which also asks that you first consult with your landlord.

What happens if gov’t payments end this summer?

In December, the Canadian government rolled out the biggest economic relief package since World War II to help restore the country’s economy as it emerges from the worst of the COVID-19 pandemic. 

Even before this second stimulus package, many media outlets were comparing Canada’s aggressive economic response to the lackluster approach taken by leaders in the US in 2020. I fully believe that if Canada had never sent out those $2,000-a-month stimulus payments, it would have been bad for all of us. Many Canadians used government money to pay their mortgage. That’s a significant economic benefit, and it was the right thing to do. 

We are a wealthy nation and we can afford to do what we’ve done to stave off the worst economic damage of the pandemic. In the end, I think Prime Minister Justin Trudeau made the right call. 

As far back as summer 2020, reporting on the stimulus’ impact showed that the Canadian housing market would avoid “extreme stress” as a direct result of that government aid. 

But these measures come at a price. We don’t yet know how big that price tag is going to be, but we’re probably going to find out this year. 

Even with this new $100-billion stimulus plan, Canadian stimulus checks are slated to end in June. Clearly, national leaders are betting that the economy will have reopened enough by this summer that Canadians who lost their jobs will once again be able to take care of themselves. 

But what happens if the economic recovery is slower than they hope? I’m not sure I see the economy rebounding in June as quickly as the government thinks it will. 

Even though many economists have said the US government’s limited economic response did more harm than good for the country’s economy, I see it as a positive sign that many individual US states are already beginning to reopen their economies. 

That’s happening in Texas, Arizona and Florida, among others. I think they’re using a little bit of common sense. They know it’s time to start getting back to normal. Here in Canada, most of us still can’t go to a restaurant for dinner. 

If the economy doesn’t start reopening soon, I worry that many people will still lack consistent income when those government payments end, and that doesn’t bode well for the economy at large. 

By June, if the economy hasn’t picked up and the economic benefits stop, there could be turbulence in the market. The result of that will be interest rates going up. How quickly they go up and by how much — we don’t know. 

In my business of multi-residential Toronto real estate, I think it’s the right time to take advantage of low interest rates. You’re able to enter the market at this point. 

The rate right now is around 2 percent for a five-year term and about 2.5 percent for a 10-year term. 

In the US, the bond yields have already gone up, and I think we could see the same trend in Canada later this year. 

As it relates to my business, any buyers or investors out there will want to try and solidify an acquisition now and lock in a 10-year term. In other words, get in now while the getting’s good.

In the event of the rate going up, which it likely will, you now have a property that’s more attractive because you have a steady interest rate. 

This environment is so volatile, and I don’t have a crystal ball. But I do think those of us in multi-residential real estate should be thinking long-term and preparing for the future.