By SHANE DINGMAN, ADAM STANLEY
Friday, January 19, 2018
A run-down rowhouse in Trinity Bellwoods has become a minor socialmedia sensation in Toronto, thanks to a list price of almost $750,000 that highlights the city's sky-high pricing for even the most distressed properties.
Originally priced at $679,000, the "builder's delight" at 15 Rebecca St. (first reported in The Globe and Mail last month) attracted four bids in its offering period, though none of the potential buyers came close to the seller's target of $900,000.
The house has now been relisted at $749,900, and while it has a few new bids, offers remain open in hopes of fetching a higher price.
Selling agent Al Sinclair of Re/ Max Hallmark Realty Ltd., has a message for bloggers and media looking to make a joke about this property's poor condition: Knock it off, this was a family's home.
"I've had people call me about wanting to do a movie there - a horror movie - it's just distasteful," said Mr. Sinclair, who explains that his client is the son and executor of the estate of the last owner, who had lived in the 120-plus-yearold house since the early 1960s before passing away in 2017. City records show Abraham Slomovitz had owned the property since 1961.
The last resident of the home died in the hospital, Mr. Sinclair says, not in the house - despite some of the ghoulish online speculation. "It's a very emotional situation for the family," he said.
Mr. Sinclair agrees the pictures for the listing show a house in need of "total renovation." While it has six rooms and nine-foot ceilings, it also has no basement, no parking and, while basically everything needs to be replaced, it can't be torn down because it's a rowhouse that shares walls on both sides. Sinclair estimates a builder buying the house would need to spend about $120,000 to $150,000 to make it ready for habitation - which is why no work was done to pretty it up for sale.
"It would be a complete waste of money to put anything into it because it's going to get torn apart. Who's gonna buy this house is a builder and they don't care about that.
"They don't wanna see a fresh coat of paint, because then it looks like you're hiding something," he says. "There's no comparables: this is the cheapest house out there, and there's not a better location in Trinity Bellwoods area."
VANCOUVER BUILDERS TEST 'LOCALS FIRST' POLICIES
The City of Vancouver is looking for ways to reset a housing market in which its residents are battered by both high prices and a low availability, and putting local buyers at the front of the line for any new presale real estate opportunities is one of the policies it is considering.
But as some recent voluntary efforts by developers to prioritize local buyers show, it's easier to declare a "locals-first policy" than it is to verify and enforce that locals end up living in a newly constructed condo or townhouse.
Similar to the province's 15-percent foreign-buyer real-estate tax, the city policy is aimed at non-resident investors who have been shown to buy a disproportionate share of the city's high-end condos.
Andy Yan, director of the City Program at Simon Fraser University, broke down the foreign ownership numbers from Statistics Canada and the CMHC and found that condominiums valued higher than $1.5-million had a remarkably high share of foreign ownership, as high as 19 per cent in Vancouver.
The city-wide percentage of foreign ownership of all home types was just 7.6 per cent and 4.8 per cent in Vancouver's metro area.
Before even having these numbers the city had already concluded that foreign buyers were distorting the market for new condos.
On Oct. 17, 2017, Vancouver's city council passed a motion to begin "a policy framework for new development applications that gives residents who live and work in Metro Vancouver the first opportunity to purchase new presale homes in Vancouver."
So far, such moves have been applied only to individual projects.
One of the first came in 2016 when the West Vancouver district attached a locals' first presale period to the its approval of the sixbuilding, 120-condo unit Sewell's Landing project.
Council's motion could eventually make locals-first the default in any new building application across the city.
That has prompted some developers to move now, and announce they are voluntarily adopting a locals-first policy.
Westbank Corp. opened up a locals-first buying period on Dec. 14 for its 57-floor, 331-unit, Butterfly building project for 969 Burrard St. in Vancouver, the company posted a long document explaining the policy on its website. The company also states it has done similar programs in the past, designed to give a 30-day exclusive buying period for literal locals (as in they lived in the neighbourhood of the development) and another 60 days for residents of Greater Vancouver.
"The sales team also verifies driver's licenses, utility bills and employment letters to insure the buyer included in the Local First program meets the criteria," the document says. "All buyers are asked to sign a declaration to confirm they meet the program's criteria."
The Butterfly document says that in addition to a 30-day window, at any time when presales are open if a foreign buyer and a local expressed interest in the same condo unit the tie would go to the local buyer.
"To be perfectly frank, it's a window-washing exercise," says Josh Gordon, assistant professor at the Simon Fraser University School of Public Policy. "This will have very little effect."
For example, what if a buyer was found to have falsified the declaration of "localness" they signed, would that cancel the sales contract? "We have never had to enforce a declaration before so we are unsure what legal consequences would be exactly if buyer does not live up to declaration," according to Michael Braun, director of sales and marketing for Westbank.
Even how the companies define and screen for locals is ripe for abuse, Mr. Gordon says. Locally registered shell corporations with foreign owners, for example, might slip by as "local." A recent civil case involving a $750,000 home purchase in Port Coquitlam, B.C., showed some Chinese overseas investors will go to extreme measures - such as having nine individuals each smuggle packets of $50,000 in cash across the border into Canada - in order to disguise the origin of real estate funds.
There's the more widely known practice of a foreign buyer transferring money to a relative or other agent in Canada to purchase the home on their behalf.
"We understand and acknowledge that a family member may be helping out another family member to purchase a home in Vancouver [a common reality in a high-priced housing market] and do not specially track that," Mr. Braun says.
Butterfly units start at $960,000.
Until policymakers are better able to establish residency of property owners - for example by tracking whether an owner declares income in the province - announcing a development will be locals' first "is more or less a meaningless pledge," Mr. Gordon says.
TORONTO CONDO RENTS UP 9.1 PER CENT
Rents for condominiums continue to rise rapidly in the Toronto area according to new data from Urbanation Inc., but there are signs of trouble ahead for landlords and investors as the combination of an affordability crisis and the province's new rent control regime are keeping tenants in their apartments longer.
The bad news for renters is that among the 5,094 condo units leased through the Multiple Listing Service in the fourth quarter of 2017 average monthly rents topped $2,166, that's 9.1 per cent higher than last year.
Rent growth happened most rapidly in the core of the city, where prices jumped more than 12 per cent, but renters seeking relief in the 905 suburbs also pushed rents up 8 per cent in those regions.
Rents rose fastest for studio apartments, up 11 per cent year-over-year to an average $1,665 a month.
Average rates for one-bedroom and two-bedroom units also rose, up 10 per cent and 8 per cent respectively.
"I still think rents have more upside," says Shaun Hillenbrand, senior vice-president for Urbanation, a real estate consulting firm that focuses on the condo market. Hillenbrand sees no immediate change in the market fundamentals (low inventory, high demand) in 2018. "I don't expect [rents] will continue to grow by 9 and 10 per cent, maybe 4 or 5 per cent," he says.
Even though developers have moved to cash in on the hot rental market - there are now more purpose-built rental units in planning than there have been in 25 years - of the 7,000 apartment units under construction now, only about 2,000 units will come to completion in 2018.
"That's nowhere near enough to satisfy the level of rental demand in the GTA right now, says Hillenbrand, who believes that 2018 will continue the trend in recent years of almost all new rental supply coming from the condo market. At the same time, Hillenbrand says even that supply has taken some hits as over the past three years a larger share of condo investors have sold their units once they are complete to cash in on the incredibly hot market; in 2017, 4 per cent of new owners flipped their units, up from 3 per cent in 2016 and 2 per cent in 2015.
"It's terrible that all of our rentals are coming from the condo market," says John Pasalis, president at Toronto's Realosophy Realty.
"That's non-permanent rental inventory. Those units can become owner-occupied, all this supply you're theoretically building can disappear five years down the road if people want to move into them."
Pasalis also spotted another clue in Urbanation's numbers that could put pressure on the condo rental supply in the future. The new provincial rent controls are already having an impact on factors that could make condo renting a less lucrative asset for the mom and pop investors who have no intention of living in those units.
Urbanation says the average length of time between "same-unit lease transactions" was 22.8 months in the fourth quarter, up dramatically from 2016 when it was 19.7 months and 2015 when it was just 16.4 months. Essentially, renters are staying in their condos longer: "It increased a lot in the last few months of the year, I don't think that's a coincidence that its happening after the rent controls have come in," Hillenbrand says.
"That's happening because landlords can't kick them out any more. Or they can't kick them out by jacking up rents the way they used to," Pasalis says.
In May, the province expanded rent controls that previously only applied to units built before 1991. Where once owners of newer units could raise rents or evict tenants almost at will, now rents can be raised according to a guideline, currently a maximum of 1.5 per cent a year.
Effectively, Pasalis says, tenants who have been living in a $2,000-a-month condo apartment for two years could expect to pay $400 more a month for the same unit if they moved. Naturally, fewer are moving.
"I have [purpose-built] rentals, our turnover is negligible, our average tenant has been there for seven to eight years. I don't think condo investors are ready for that," Pasalis says.
"Over time you're going to start seeing fewer condo investors buying them, because it's actually not a great investment any more."
MIZRAHI MAKES CONDO PLAY IN OTTAWA
Toronto developer Sam Mizrahi, who is currently building The One at Yonge and Bloor - at 85 storeys it is slated to become the tallest skyscraper in Canada when completed - has announced plans to build Ottawa's "most luxurious" condominium.
The 12-storey luxury condo at 1451 Wellington St. W., is in the capital's booming Westboro neighbourhood and sales are off to a "very strong start" since presales began in 2017, according to Mr. Mizrahi.
This kind of ultraluxury development is a first for Ottawa, but Mr. Mizrahi - whose wife was born and raised in the capital - felt the niche market wanted this kind of building but there just wasn't anything available.
"On a lot of the trips there I saw it and thought there was a good opportunity to do a high-end luxury building that would have significant landmark architectural status to it and would represent the capital of Canada similarly to the other significant buildings in Ottawa," he said.
The building is set for completion in 2023. Ottawa's city council shot down an earlier proposal for the site in 2014, but the Ontario Municipal Board eventually approved it after a debate about the building's height.
"The whole neighbourhood is transforming. The neighbourhood is absolutely right for this," Mr. Mizrahi said. "I'm hoping this will inspire more development of these kind of high-end buildings in Ottawa because there is definitely a market for them."
A run-down rowhouse at 15 Rebecca St. in Toronto's Trinity Bellwoods neighbourhood with a list price of $749,000 resulted in some internet fame, with people asking if they could use the site to shoot a horror film.
For its Vancouver building project The Butterfly, Westbank instituted a buying policy that gave a 30-day exclusive buying period for locals.
A scale model of developer Sam Mizrahi's latest project, a 12-storey luxury building at 1451 Wellington St. W. in Ottawa.
Friday, January 20, 2018