More cautious criteria for condo project financing could upend some development pro formas and potentially constrain housing starts in the coming months. CBRE Canada’s annual survey of lenders finds them generally less open to loans on high-rise condo projects than they were 12 months ago.

“Headwinds are hitting the condo sector. A tightening in underwriting is on the way,” Carmin Di Fiore, CBRE’s executive vice president, debt and structure finance, warned during the online release of the 2022 survey results earlier this week. “Cost-push inflation and rising interest rates are pencilling out very differently compared to previous years.”

In the period between November 2021 and November 2022, high-rise condos have shifted from being one of the least worrisome underwriting candidates to midway in the pack of 18 categories of commercial real estate assets. More than 30 per cent of respondents — from a total survey base of 29 companies that collectively hold about $200 billion in real estate loans — expressed reservations versus fewer than 10 per cent naysayers last year.

During the pandemic, online house-hunting and virtual tours became the norm for prospective homebuyers. The shift to a digital platform opened a world of possibilities for people who were looking for a home.  

But who exactly is looking (and what are they looking for)?  

According to Point2’s latest data, young Canadians are hungrier than ever for houses.  

Specifically – it’s a young millennial using a smartphone to search for houses online – preferably something with more than 1,000 square feet with 2-3 bedrooms and bathrooms, for a modest price of $200,000 to $300,000.  

Maybe you know one of these people. Maybe you are one of these people. Either way, they make up over 63.51 per cent of prospective homebuyers these days, and one thing is certain – they’re not looking to buy at the top. 

A new report shows house prices need to drop by more than $500,000 for millennials to be able to afford a home in Ontario.

Generation Squeeze, a charitable organization fighting for generational fairness in the country, recently released a 56-page reported called “Straddling the Gap 2022,” which looks at the disparity between home prices and earnings across the country.

The study analyzes what Canada’s “primary goal” should be for home prices by looking at the gap between earnings and average home prices from 1976 until 2021, which was the last year available to procure data from the Canadian Real Estate Association (CREA).

The Bank of Canada is widely expected to deliver its seventh consecutive interest rate hike at its rate decision announcement this week.

What’s less certain is the size of the move, with markets and experts split between a 25- or 50-bps increase.

“Policymakers have done little in recent weeks to provide any clarity here, and economic data has been yielding mixed messages,” economists from National Bank of Canada wrote in a recent research note.

“Stronger-than-expected jobs and GDP growth along with still-hot inflation contrasts with a rapidly deteriorating housing market, weak household consumption and forward-looking indicators suggesting inflation relief is coming,” they added.

An additional hike will bring the Bank’s overnight target rate to either 4.00% or 4.25%, and imply a prime rate of 6.20% or 6.45%—a level not seen since 2007.

Toronto has been recognized as one of the top 25 best cities across the globe to live and work in for 2023.

Resonance Consultancy, a global consultancy firm, recently released its World’s Best Cities list and Toronto is one of the few Canadian cities that made it.

It is the highest-ranked city across Canada to have hit the top 100 list, coming in at 24th. Over thirty places later comes Montreal at 57, then Calgary at 65, Vancouver at 69, and Ottawa at 96th.

According to the ranking, Toronto is “poised for big things”, and cracked the top 25 list due to its diversity and education.

The Ontario Line subway has always seemed like a pipe dream — a figment of Premier Doug Ford’s imagination that he seemingly invented just in time for announcing the Government of Ontario‘s take over of major Toronto transit infrastructure projects in April, 2019.

Nevertheless, that pipe dream is gradually turning into reality — a real project with tracks, stations, trains and, well, pipes. Provincial transit agency, Metrolinx, and the “procurement and commercial lead for major provincial construction projects,” Infrastructure Ontario (IO), have announced that they have awarded a $6 billion fixed-price contract to Ontario Transit Group (OTC) for designing, building and financing the Ontario Line Southern Civil, Stations and Tunnel (South Civil) package. The award includes $5.5 billion for capital costs and $0.5 billion for financing and transaction costs.

The Ontario government unveiled a series of new measures aimed at tackling the province’s housing supply shortage and affordability crisis on Tuesday, including plans to cut development costs and to allow property owners to build up to three residential units on a single lot without a bylaw amendment.

The government provided details on the new legislation, which largely targets red tape and municipal zoning laws that stall housing construction, this week.

“The legislation supports our new plan to further reduce bureaucratic inefficiencies that delay construction and increase costs for homebuyers and renters,” Minister of Municipal Affairs and Housing of Ontario Steve Clark told reporters on Oct. 25. “It also supports greater density near transit, as well as measures to protect and help homebuyers and also use provincial lands as sites more for attainable housing.”

Over the last month, the conversation on Toronto’s housing crisis has seen the volume turned up as candidates for the municipal election outlined platforms to address one of the City’s preeminent issues. As an eyebrow-raising new housing plan from the Provincial Government to create 1.5 million homes is tabled, high prices and now high mortgages rates are creating barriers to many for house or condo ownership. Tricon Residential is a multi-family development company that has sought to ease the housing crisis by delivering rental housing in the form of high-rise condo style developments, and their most recent downtown project, The Taylor, provides some insights into how their process works. 

Canada’s real estate boom discussed back in February 2022 was heavily investor-driven, especially in the context of new construction. Betterdwelling.com sifted through ownership data and discovered that most condos built since 2016 are investors owned. Those owners could be landlords who want: (i) a second home  (ii) an income source or (iii) just a place to seed equity. Regardless of the motivation, the “most affordable” housing option is, by an overwhelming majority, investor-owned.

As reported earlier by the Residential Construction Council of Ontario (RESCON) and Global News rising Canadian interest rates as well as some other trends in the construction industry may be changing the trajectory of Toronto’s condominium market.

In its Condominium Market Survey for the second quarter of 2022, Urbanation reported that 6,792 new condo units were sold in the second quarter. This is a decline of 19% from Q1, and just under twenty-five percent year-over-year. The global news article entitled, Here’s how high-interest rates are impacting Canada’s condo demand noted the experts forecast the sale of only 10,000 more units launched between now and January 1, 2023, with 10,000 units being delayed or scraped.

It’s typically part of the real estate world that’s not seen by your average homebuyer. But the condominium assignment sales segment of the market has been turned on its head this year as interest rates rapidly jumped. And according to one expert, the plunge in assignment sales activity is not done yet.

“When I say it’s the tip of the iceberg, it’s because I know there’s further interest rate hikes coming. And I know that this is now unchartered territory from having to qualify for a mortgage perspective,” Simeon Papailias, managing partner at Toronto-based real estate sales and consulting firm REC Canada, told Yahoo Finance Canada  in a phone interview.

As historically low interest rates fuelled seemingly ever-climbing home prices, Papailias says, condo preconstruction sales were “on fire”, up until March of this year.