The Toronto Star said this week that according to UofT planning professor David Hulchanski, the impact of housing Ontario’s 10,000 of the 25,000 Syrian refugees destined for Canada will be minimal.
While 10,000 people is not an inconsequential sum on the surface, experts are saying that it means only about 2,500 permanent units needed, as most will arrive as families — and those units will only be required after the refugees are out of temporary units on military bases. With about 1.3 million rental housing units in Ontario, “They won’t even be noticeable” according to Hulchanski.
Settling the refugees in six reception centres in Toronto, London, Kitchener-Waterloo, Ottawa and Windsor will account for the initial costs as part of the $8.5 million the Ontario government has allotted.
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While pundits continue to speculate on the future of the housing market, CBC reports that there’s one “concerning development” not getting much ink: changing demographics. “We are adding the fewest number of people to the working age population that we ever have,” according to Ben Rabidoux of North Cove Advisors, a speciality market research firm.By most estimates, people begin to sell their homes as they approach 70, and our aging Boomer population means we’re likely to see more homes for sale than ever in the near future. Rabidoux told CBC that rural monster homes are the most vulnerable to a price decline, as Boomers decide they don’t want to maintain them anymore, and younger buyers realize they can’t afford them at current prices. Family-sized homes in convenient, popular markets like Toronto will be less likely to fall in price, he said. Big cities mean bigger incomes, and a limited supply of single-family homes.Small, low-maintenance homes in smaller communities are also unlikely to decline, he said, but tiny condos are likely to succumb to price drops like the monster homes, as they’re plentiful but too small for the downsizing Boomers.As Boomers leave the market to be replaced by a smaller group of younger buyers, a price adjustment is inevitable, he said, but unlikely to come at the same rapid pace as a decline if it were caused by higher interest rates.“I think you're going to increasingly see an imbalance in supply and demand in the high end of the market,” Rabidoux told CBC. “But listen, I would have said that two or three years ago and it hasn't happened.”In spite of continued predictions that our so-called bubble is due to burst, like the January prediction by MoneySense magazine that this was the year “prices really will fall,” the year is almost over and we’ve yet to see the predicted increase in mortgage rates or a corresponding downturn in prices. Just last month, the CEO of RioCan, the country’s largest real estate investment trust, said that as long as the majority of Canadian real estate is in responsible hands, we shouldn’t be overly concerned.“Between REITS and large pension fund players, we probably own 80 percent of the real estate in the country. It’s in very strong hands and we don’t borrow a lot,” Edward Sonshine told BNN. “When you don’t have the weakness because of debt, you’ve got staying power.”While during the last major price correction, in the 1990s, it was common to borrow 110% of the cost of a building, Sonshine said. At RioCan, they work to 40%, and that many pension funds work to less. He said he expected the hot Toronto and Vancouver markets to continue to gather strength. “There is no doubt in my mind that Southern Ontario is just going to keep going,” he said. “[Although] not always up in a straight line, whether it’s commercial or housing.”Bubble-bursting predictions have become so stale, it’s hard to take them seriously. That doesn’t mean homeowners shouldn’t be wise about debt, but there appears to be no reason to panic.Unless, perhaps, you live in London. According to the UBS Global Real Estate Bubble Index, which recently looked at 15 world cities, London is less affordable for residents than any city except Hong Kong, and it was most at risk of falling prices.The UBS, formerly the Union Bank of Switzerland, examined the housing market between 1985 and 2009 for its report, and said that historically, markets with a rating higher than 1.0 were at risk of “a real price correction of on average 30 percent.” Once a market was rated higher than 1.0, such a correction happened within three years 95% of the time, they said. London’s recent rating was 1.88. Houses in London have increased 40% since 2013, the annual rate of inflation runs above 9%, and income growth has been less than robust. According to price-to-income and price-to-rent ratios, London was among the world’s most expensive cities.The report found that prices had also “decoupled” from incomes in Hong Kong, Paris, Singapore, New York and Tokyo — 12 of the 15 cities were found to be overvalued. New York and Boston were found to be fair valued relative to their histories, and Chicago undervalued.It’s hard to call anything a bubble unless it actually bursts, but as a homeowner here in the GTA, I’m still sleeping soundly.
