Changes to the OMB

Construction PlansThe Ontario government, bowing to pressure from large municipalities, is scrapping the Ontario Municipal Board.  In the past a Developer presents his project plans to the City for consideration.  Usually the Developer has a basis for his proposal.  The City reviews the plan in a well defined process and makes its recommendations to the Developer in order for the project to be approved.  If the Developer disagrees then they have the right to file with the OMB for a review.   This can happen because of disagreements on land use, density, City restrictions etc.  The basis for the appeal would be the development rules that are set by the province and the Cities Official Plan (OP).  The review panel starts from the beginning takes that into consideration and comes up with a recommendation which is considered final.  Often it can go against the wishes of City Planning.  The Cities complain the process takes up large amounts of its staff time (Toronto Star).  The new system gives far more power to the City.  If there is a disagreement the project will now go to a Tribunal which will look at the existing work and make recommendations back to the City.  TVO highlighted concern in December,  it is most interesting that both Developers and Environmental groups are concerned that it takes due process out of the system.

This is a big shift in power to the municipal government.   What does mean?  Likely longer approval periods. Developers I have spoken to believe that it will take much longer to arm twist local Planning into agreeing to the rules and precedence that have been put in place ultimately adding to time and cost to a project.  It will may also make it more difficult for smaller developers to move projects forward as the cost is already significantly high.  One of the good things about the recently retired  OMB was its ability to minimize political influence.  Under the new forum is there now the risk for the flow of funds to politicians and civil servants as the stakes become ever higher.

For the real estate business if this slows projects, restricts density or reduces the opportunity to use land for redevelopment that will continue to feed the GTA housing dilemma.

Government Market Intervention

new construction 2.jpgI have held off discussing what the Ontario Government is proposing to cool the housing market but after considerable thought I have concluded nothing.  What they have done is damage the investment market by expanding rent controls which will halt all single purpose construction in the GTA as noted in the NP  and the Toronto Star.  Many of these projects were funded by pension dollars and they are not interested in investing in government price capped markets.

The Finance Minister in an interview does not know what are the market implications of  the Foreign Buyers Tax.  Will it cool the market, John Robson says Why it is time to hit the roof.    The Toronto Star today suggested that a tax belong on the speculators and not foreign buyers.   Simply by forcing buyers to close on new construction and not assign the property along with a flipping tax would help cool speculation.  MacLean’s article this week  Wynn government flies blindly into the housing bubble outlines the folly of the market controls and  or for that matter the impact on product availability.  Like all governments they are going to study the problem.  Unfortunately the problem is that without supply and with continued demand prices will stay high.  A liberal spokesperson on the Arlene Bryon Show proposes a  capital gain tax on the sale of your principle home.  I am sure you can see where this is going.

I spoke to Gary Singh Of Royal Lepage Signature today about the market and he indicated that it has been slowing since the start of the month.  This weekend some buyers were parked waiting to see what happens but he believes that it will pick up steam going into May as there is  too many buyers.

WynnA paid article Stop Strangling the Middle Class  in the papers today highlights that how the over two million acres of land the Wynn government took out of development market has created this mess.   No other market driven  jurisdiction in the world has done this and along with complex planning and environmental laws we are now reaping the rewards of government planning.   You know they have a point.

As an investor in the market homes will continue to be purchased, infill will continue and new condo projects will march forward but be very wary of the impact of rent control on your investment.


Reference to Enthnicity Axed in Fintrac draft

As new guidelines are being drafted for FINTAC the agency is concerned about ethic groups from areas of war and terrorist activities as reported today in the NP and the Globe and Mail.   It appears that the real estate industry has encouraged a withdrawal of such a requirement but the fact remains that whether doing a residential or commercial transaction the we must be aware of potential risks.  In this age of heightened concern in the western world the industry needs to be careful of who we are doing business with.



National Post reported yesterday a big surge in Canadian GDP with some Economists predicting Canada will out strip the US in growth potentially near 4% annually.

As we look for answers to the housing price increase such growth is good news and bad, good for struggling parts of the country and maybe not so good for Toronto and Vancouver. Lets aee howbthings play out over the next two to three months.

Family Feud

Parents purchased properties 30-50 years ago when they came to Ontario.  These properties are now in the hands of the elderly or their children.   Strange things happen in family dynamics when the potential to sell comes calling.  Last year I worked with a family to sell their property but we could never get to a point of agreement. There was too many agendas and no trust between parties.  I have become wary of discussing a sale unless all the members who have an interest are on board.  This can be quite difficult.  In one instance a family member wished to develop the property while others wished to sell.  Discussions went from this is a viable project to it is dead in the water.   In another there is now too many parties involved – who makes the decision?  There is nothing like money to split a family, ask any Family Lawyer or Trustee of an Estate.

Some keys to consider:

  • Selling a property so that all members proportionately benefit from the sale.  One member should not have a hidden agenda to benefit.  Transparency is not easy.
  • If the one part of the family agrees to sell to the other then they need fair market value.  this may be easy with a home but with land or commercial property there needs to be a point of reference.  The only sure way of getting fair market value is to put the property on the market.
  • Avoid lawyers until you have a general agreement.  Lawyers skill is to interpret the law,  write contracts etc.  Without clear instructions they may suck ten of thousands of dollars from the asset sale.  Come to a mutual agreement and have the lawyers write it up.
  • Have agreement on triggering the sale transaction.  Be clear on what you will agree to and if possible have mechanism to come to a decision.
  • Have a professional facilitate discussion who will help you find common ground. Trust is key to success and a third party can make that happen

In my profession experience defining objectives, building trust and then working to ensure a win for the parties is critical to a successful sale.


February Residential Market

February produced a dramatic year over year increase in both residential and condo sales in the Toronto and Mississauga markets   Although February 2016 was just the beginning of this round of market growth, 26% year over year in leads to discussions of a bubble.  A bubble requires market speculation that prices will keep going up.  In this market price increase is caused by a lack of supply as sellers needing somewhere to move do not list.  We are down to 13 days on market which can only lead to bidding wars for property.  People want to live in the city which has finite properties.  A warning from Doug Porter Economist at BMO in the NP on February 17 higher homes prices will impact the economy and is leading to much higher debt ratios.  Much as been placed on foreign buyers in the market but as reported today in the NP a recent survey indicates most foreign buyers are buying for educational housing or personal use.  In the Star today Mark Rezoni of CBRE indicated at there annual conference that prices are in line with other major cities such as London and New York.  Although housing starts are up 13% its is not keeping up with demand.

It is well documented the governments efforts to restrict access to money but it does not solve the demand problem.  In Ontario the provincial government needs to free land for development, stream line the environmental restrictions, approvals and development guidelines.  Cities need to also adjust zoning and speed up the approval process.  The Province and the Feds need to free up money for highways, subways and rail.

Market information is provided by Royal LePage Signature and sourced from the Toronto Real Estate Board.





Foreign Buyers Not a Factor in the GTA

The Financial Post Reported the A Foreign tax in the GTA (real estate), ill advised, following the release of a survey conducted by TREB.  TREB commissioned IPOS to survey members on foreign transactions (I did participate in this survey) and the results show that approximately 4.9% of transactions were to foreign buyers.   We should keep tabs on foreign buying it is becoming clear that price increase in residential properties is related to demand, limited product supply, land availability to build and the cost and time to get product to the market.  TREB yesterday stated between 104,500 and 115,500 home sales are expected this year, with a point forecast of 110,000 – down slightly from 113,133 sales reported by GTA REALTORS® in 2016.  The growth rate for the average selling price will be between 10 and 16 per cent with an average price range between $800,000 and $850,000. TREB’s point forecast for the average selling price is $825,000.

Another busy year for home sales.