Time for your weekly roundup on the biggest stories in real estate.
Canadian real estate is pricey, but how overpriced is the question everyone is trying to answer. In this article, we estimate that number using the OECD House Price-To-Rent Ratio. By pricing homes relative to the historically accepted yields, we can determine how far detached prices have become from value. By adding an additional regression model, we can build a baseline projection to find out where prices will be by 2020 – spoiler alert, 28% lower.
The next trend for Canadian real estate is single-person households. New numbers from Statistics Canada shows that more people are living by themselves in urban centers, and a with a whopping 28.2% of the country now doing so. This applies both additional pressure to housing, and puts an upper limit on home prices as single-income households becomes increasingly more normal. Definitely the next big real estate trend both developers and agents are going to want to tap.
A House-Price-To-Rent Index is useful for determining how detached prices are from rent, but the ones available aren’t very useful for individual cities. We started assembling indexes to help solve that, with our first published index being Vancouver condos. Vancouver condos are overpriced by 9% by our model, which means prices need to drop by that amount to balance. That, or rents increase by 9.76%, or any combination of the two. Rents rising this much is hard, but not impossible – Toronto increased 17% over the past year.
Commercial real estate firm CBRE put together a list of the 50 top tech hubs in North America for clients, and Vancouver scored highly. Despite being in the top 10 for quality and years of experience, the city is the lowest paid tech hub on the continent. Yes, even pay in Oklahoma (the lowest quality score) is higher than Vancouver. We run the numbers on how hard it is for these talented tech employees to actually stay in the city.
You think your city has foreign buyers, but there’s not a lot of other cities in the world that have foreign buyers like Vancouver. We take you through a mini-dive on the historic events that shaped the Vancouver real estate market. These events led to a unique city where global wealth is being stored in residential homes, kind of like really big gold bars. We walk you through a few key events including when Canada’s largest developer, and the world’s most powerful investor, explain this in passing.
Are Toronto condos overpriced? Depends on what you’re comparing them too, today we’ll be comparing it rents in the city. Assembling a condo price-to-rent index, we believe condos ended 2016 underpriced by 2%. This means prices will need to increase by 2%, or rents drop by 2.24% to balance the market. Except rent at the end of the second quarter of 2017 is 17% higher from the same time the year before, so condo prices may actually rise even further by year end.
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