2014 OUTLOOK REPORT & BEYONDTHE FUTURE OF TORONTO

Taller Smaller

More Expensive&

TALLERToronto has $25 BILLION DOLLARS in HIGH RISE homes under construction.

Okay, just to give you some context? This is 2x the GDP of Iceland

We have more HIGH RISE development than ANYWHERE IN NORTH AMERICAAll of this taking place in our city! This can be looked at in 2 in different ways. Is this something we should EMBRACE or FEAR?

1.tearing down the Greenbelt = political suicide2.intensification is more cost effective for gov’t3.should legislation alter, development would take

3

10+years to build needed infrastructure

Ontario’s Greenbelt Legislation is part of our govt’s provincial policy to “build up & not out”.It’s expected that the protected lands around the city will remain undeveloped for reasons:

SMALLER10 YEARS AGO, the price gap between low rise (a house) & high rise (condo) in Toronto was $75K.Today, that GAP is $222,412K.

As real estate prices rise, demand is growing for affordable downtown living in Canada's biggest cities. The reality is that the size of condo units will continue to shrink. Toronto joins the ranks of major international cities with the emerging micro condo trend. As urban space becomes scarce, unit sizes have grown smaller and smaller.

THE SMART HOUSE is a joint project by Urban Capital and Malibu Investments located at Queen St. and University Ave. “Spaces become smaller as downtown land has really shot up in price, like other successful cities and I think this is a sign of success” says David Wex, partner at Urban Capital.

Units are as small as 300 square feet and start at $249K or $830 a square foot.

Consequently, first time buyers will have no other choice but to consider a CONDO as an entry level

Micro Units Trending

November “416”Statistics

UNIT SALES

Yr./Yr. % Change

AVERAGE PRICE

Yr./Yr. % Change

DETACHED 913 +23.9% $855,188 +16%

SEMI-DETACHED 267 -(1.1)% $640,208 +9.9%

TOWNHOUSE 249 +4.2% $472,722 +6.4%

CONDOS 1,081 +12.7% $385,968 +10%

THE STATS

MORE EXPENSIVE

The Globe and Mail recently reported on the affluence of Toronto.  It turns out that Toronto has 182,432 households that earn $200,000 or more per year.  This represents 8.4% of the population.  Six years ago, it was just 133,877 households for a total of 7% of the population.  In Toronto, almost 50,000 more households can be considered affluent. This is enormous progress considering the large number of new immigrants that arrive every year. Montreal has just 68,226 households that earn $200,000 or more per year, for a total of 4.1% of the population.  Vancouver stands at 54,001 for 5.6% of the population.

Media suggest that prices have to fall because they are UNAFFORDABLE. The fact that you cannot afford to buy a home in Toronto is not a reason for prices to fall. Vancouver, Hong Kong, London, New York, Paris, San Francisco, Boston, Tokyo and dozens of other cities are totally and completely unaffordable and have been this way for 25 years. Toronto's housing future is more condos and rental apartments. Just as it was for the other cities that reached affordability decades before Toronto. It is likely that many central Torontonians will NEVER own a home.

Who lives in Toronto?

Generation Y: 50%of the world’s population is under 30 yrs old

50%of the world’s population lives in cities

Lifestyle,Young Talent,Condo Living,

Entry Price Points,

Micro Units, Don’t DriveLive, Work

& Play

Source: TREB

Source: Brad Lamb

The Canadian population is 34M people. Number Gen Y’s is 9.2 M (ages 18-34) equivalent to 1/3 of the population.The average age of a first time of buyer is 35.34% of the market are first time buyers.84% of RENTERS from age18 to 34 intend to buy a home.More than one-quarter of 16 to 34 year olds, who are known as Generation Y, do not even have a driver’s license.

the RENTAL MARKETCondominium rentals are proving to be an increasingly popular option for Toronto residents.

The Greater Toronto Area REALTORS reported in mid-October that 6,541 condos were rented in the third quarter of 2013 which has increased a remarkable 25% from the same time period in 2012. Rents are growing, albeit at a slower pace of 3.5% year-over-year. This reflects a market that is starting to balance out following 3 years of exceptional growth in rents. Note, that the rentals-to-listings ratio remains elevated at above 70%, which still supports further growth in rents.

It’s important to recognize that rental demand is currently running at a 20-year high, driven by such factors as reduced ownership affordability for first-time buyers, strong growth in the population aged 25 to 34 and migration into the core. This, combined with the lack of growth in conventional apartment buildings, is why vacancy rates remain near historic lows despite the growing supply of condos — which made up 85% of the growth in rentals over the past 10 years.

Assuming a flat profile for household formation and ownership rates, the number of net new renter households will average around 10,000 per year until 2016. Over the same period, condo completions are expected to average 20,000 units per year.

Assuming 60% of these units are owned by investors and 3/4 will list their units for rent, we will see an average of roughly 9,000 condo listings per year from new completions. While supply can also be added from older condos (as owners hold onto their units after moving out) and some new purpose-built units, the point is that demand and supply should remain at similar levels.

Source: Urbanation

HOUSING SUPPLYLOW RISE:Constrained land supply has caused land prices to increase dramatically over the past decade, particularly in the low and medium density sectors where it has grown as much as 232%," said BILD President and CEO Bryan Tuckey. "Near record high pricing has pushed the affordability of ground-related housing (residential low-rise) beyond the reach of many new home buyers in the GTA. This has resulted in a considerable reduction in sales, and the economic effects will likely be felt within a few years.

In addition to exceptionally low interest rates — pricing has been driven by the worsening shortage of new and existing low-rise properties for sale which has plagued the Toronto market for more than 3 years.

The number of new “for sale” signs dotting the region was down 4.4% in November, year over year, and month-end active listings were down 12.1%, according to TREB. That means sellers have edged even further into the driver’s seat. The supply problem has been exacerbated, especially in sought-after city neighborhoods close to transit and good schools, by an unexpected rush of buyers into the market over the summer and fall, who were panicked that interest rates were headed up.

did you know?Toronto requires 31,555 new residential units a year to

keep up with current demand.

86% of NEW CONSTRUCTION CONDOS going up today in Toronto are already SOLD.

39% of Canadians own their own homes mortgage-free.

3.15 million have neither mortgage nor home equity line of credit.68% who carry a mortgage have over 25% equity in their home.

7% of Canadians own homes with less than 10% down.

WHAT TO EXPECT:2014 will mark another year in which the “BUBBLEHEADS” will predict once again, that real estate prices are going to collapse. Maclean’s and Toronto Life Magazine will have shocking covers predicting the upcoming real estate apocalypse that never seems to happen.

Publications will be sold, hot air will be blown on talk shows & guests at dinner parties will talk about the Toronto Market with inaccurate information. Historically, Real Estate prices do not fall significantly in periods of economic growth.  That is a fact. Having just come out of a very mild recession, Canadian economic growth will hover next year at about 2%. This number will get stronger with time as the developed world sees the end of the latest recession. Overall, expect to see Toronto’s market out perform inflation  with a growth rate of  3.5 - 4%. With the realities of continuing immigration,  rising costs,  development levies, land costs & decreasing land supply, prices will continue to climb. Expect 2014 to have moderate growth compared to past record years. In a sense, this will be a year where the market catches its breath. Given the fundamentals, Toronto Real Estate will catch on fire sometime in 2015 . Those who remain on the sidelines in 2014 will end up out in the cold.

Wanna mark my words?

A 400 sq.ft studio will sell for $325K+ by 2020.

you won’t be able to find a downtown semi-detached house for under $1Million.

What are YOU waiting for?

&

For the last few years, Johnston & Daniel, through its affiliation with Royal LePage, has

had the distinction of being Toronto’s Number One Real Estate Brokerage for the Greater

Toronto Area. Johnston & Daniel has a reputation for exceptional client care and a

long-term commitment to their broad spectrum of buyers and sellers. In light of

this, I am confident that I have found a company that I can truly partner with to best

service my clients over the years to come. 

In both my work and other aspects of my life, I have proven I have a killer work ethic. With a drive

to be continually challenged, my personal vision for the future continues to broaden and expand.

My seven-year corporate sales career developed my ability to negotiate, analyze numbers and find creative ways to resolve big problems. As a part-

time fitness instructor, I am able to temper my unparalleled energy and am reminded daily that everything I give out, comes back tenfold from

the participants I work with. Additionally, my extensive travels have given me greater global

perspective and have allowed me to appreciate how fantastic Toronto is to work and live. As

someone who considers herself to be business savvy, entrepreneurial and bright, I cannot think of

a better way of bringing the best of who I am to an industry in which I have directly thrived for

close to a decade. 

I fell in love with real estate when I learned that buying and selling properties was truly

empowering; both personally and financially. I also know first hand how overwhelming all of it can all be! I worked exceptionally hard and sacrificed a lot to get into the market and would like nothing

more than to coach clients through the process. I believe in this city and see enormous growth opportunity in the residential and commercial

sector over the years to come. My intention as a Realtor® is to make the selling and buying

experience both fun and easy – I will walk my clients through transactions using a step-by-step approach and bring my positive outlook, listening

skills and negotiating chops to each and every meeting.

About Kori: