As we approach the second quarter of 2017, we have seen a few trends in the Canadian real estate market reveal themselves. We’ve reviewed the latest real estate reports and have found some very interesting trends that will affect both the buyers and sellers into the future.
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Mixed-use buildings and developing communities
With the continued population growth in Canada’s urban centers, and Canada once again leading the G7 as the fastest growing country in terms of population, the demands on real estate are palpable and builders are adapting.
Canada’s three largest cities, Toronto, Montreal, and Vancouver, now hold more than one-third of the entire countries population. Whether it is the countries baby boomers that are selling their family homes and looking to downsize or millennials who see the benefit of avoiding the traditional commute to work and want to work where they live, more and more people find themselves living in the city.
As this trend continues, builders are shifting from the once revolutionary mixed-use buildings to building entire communities for people to spend time in. These communities combine components of residential, retail, and commercial, so that people can live, work, and shop all within one local area. These active, and accessible surroundings are essential to make people feel comfortable living in these spaces and will keep visitors coming back to spend more time there.
Two examples of these type of spaces in Toronto are the Canary District and Regent Park. In both of these neighbourhoods, developers are not only building mixed-use buildings, but entire mixed-use neighbourhoods and communities around them. With developers building not only condos and office buildings, but community centers and parks such as the Regent Park Aquatic Centre, YMCA, and Corktown Commons.
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Increased use of technology
As technology continues to advance and more apps are developed, more and more data is being made available to home buyers. In today’s marketplace people looking to purchase a home have access to more information online than they ever have before. This allows the homebuyer to research on their own and to make better informed buying decisions. In the past, real estate agents have been the keepers of the information that is now readily available to the public. Agents will continue to play an important role in the purchase and sale of homes, but their role is being reinvented as they are no longer the sole proprietor of this information.
Developers are also using technology as a competitive advantage. By offering realistic virtual tours using virtual reality simulators, and providing potential buyers with 3D computer concepts of what the entire developed community will look like before ever breaking ground, developers are able to harness technology to better share their visions and convert sales without the need for expensive physical showrooms.
Technological advancements are largely impacting commercial spaces as well. As more and more businesses are moving towards smaller, open-concept spaces, and allowing their employees to work remotely and with flex hours, the need for large, traditional, office spaces is becoming few and far between. Newer buildings are being designed and built with this in mind, and are offering smaller ‘workplace 2.0’ type spaces that cater to this need from small businesses and even larger more established fields like law firms, and accountants. Owners of older buildings are having to retrofit and upgrade their facilities to compete.
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Decreased affordability
With house values climbing over 15% in the countries hottest markets of Toronto and Vancouver in 2016, and projections for continued growth for Toronto for 2017, the gap between income growth and increases in house prices is a real concern for many Canadians. With housing costs approaching 50% of median household income, housing affordability continues to deteriorate across the country.
With the low-interest rates that have been in place for some time, combined with the population growth, there is a high demand on the limited supply of real estate in many markets. With demand anticipated to remain strong, supply issues will remain that will keep pricing high.
One potential for relief is if the government can increase the supply by releasing some of their restricted lands. By providing additional land for developers to build the supply would increase which could help affordability.
With these trends in the view, it will be interesting to see how the rest of 2017 will progress and change over time.
Sources
http://www.pwc.com/ca/en/industries/emerging-trends-in-real-estate.html
http://www.bnn.ca/canadian-housing-affordability-deteriorates-further-rbc-report-1.636408
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