How Canada’s Mortgage Stress Tests Have Spiked Toronto Condo Prices


The Canadian federal government introduced new mortgage rules in the fall of 2016 to combat rapidly increasing home prices – but have they driven up condo prices instead?

In October 2016, Canada’s Department of Finance introduced a significant change to the mortgage qualifying requirements for buyers with less than a 20% down payment (known as a ‘high ratio mortgage’). Under the new rules, banks would have to calculate the maximum mortgage payment a home buyer could afford based on a new stress test rate which was based on the bank’s posted rate which was typically 2% higher than the discount rate that most buyers actually receive.

For example, buyers in September 2016 were being approved for a mortgage based on an interest rate of roughly 3% and two months later their pre-approvals were based on an interest rate of 5%. This effectively slashed a home buyers budget by roughly 20% because it reduced the mortgage amount they qualified for by that much.

One of the intended goals of this policy was to help cool down the rapid increase in house prices, in particular in cities like Toronto and Vancouver but when we look at the data for Toronto, it actually had the opposite effect for the one house type that was still within reach of most first-time buyers – condominium apartments.

In January 2012, the average price for a condominium apartment was $321,475 and by the time the Department of Finance introduced this new mortgage stress test prices had climbed to $429,407 in October 2016.  A 34% increase in just under five years.


Since then, the average price for a condo climbed to $559,343 in April 2018, a 30% increase in just a year and a half since the stress test was introduced.

Rather than dampen demand and help cool prices the mortgage stress tests actually inflated demand in the condominium market and caused bubble like appreciation because the stress test pushed many first-time buyer’s budgets down making condominiums the only affordable option for them.

Some might argue that this is demonstrates why governments should not meddle with the housing market and should just let the market correct itself.  But I disagree.

The problem wasn’t that the government tried to cool the housing market, it’s that they tried to do too much, too late and likely targeted the wrong group of people.

Despite what finance ministers say publicly, the truth is that they are all addicted to the positive side effects that accrue when consumers take on more and more mortgage debt.  Mortgage debt fuels the entire economy. It fuels new housing construction, it drives home renovations and it drives consumer spending as people feel comfortable spending more than they make when they could just add their spending to their Home Equity Lines of Credit (HELOC) at minuscule interest rates.

The economic highs that come from rising mortgage debt make it hard for finance ministers to do the responsible thing and take action early to cool the debt binge. Instead, they wait till it’s too late, when the debt levels are so out of control that they need to take very drastic measures to cool things down – like increasing the qualifying rate for mortgages by 200 basis points (2%) overnight.

Dramatic policy changes are going to have dramatic effects on the housing market. It’s unfortunate that the federal government’s stress tests have made condo prices less affordable and more vulnerable than before.

Waiting For A Toronto House Price Crash? You’ll Be ‘Disappointed,’ RBC Says

Panorama of Toronto downtown and midtown in foggy morning

A recent poll found that half of Torontonians are hoping for house prices to fall, but a new report from Royal Bank of Canada basically says “don’t hold your breath.”

The modest price gains seen in Toronto and Vancouver in August are a “sign of things to come,” RBC senior economist Robert Hogue wrote in a client note.

After year-on-year declines for much of 2018, home sales in Toronto started rising again this summer. They were up 8.5 per cent in August, compared to the same month a year earlier, according to statistics released last week by the Toronto Real Estate Board.

After some downward pressure, prices appear to have stabilized. The average selling price for all housing types in Greater Toronto sat at $765,270 in August, up 4.7 per cent in a year.

“Area buyers hoping that last year’s Fair Housing Plan and this year’s stress test would bring about big price breaks will be disappointed,” Hogue wrote.

“In fact, several of them came to that realization earlier this summer (in light of steady month-to-month increases over the spring) and jumped back into the market.”

While that may be welcome news to homeowners worrying that the growth in the value of their homes has come to a standstill, it’s a disappointment to the half of Toronto residents who — in a recent Angus Reid poll— said they’d like to see house prices fall.

More than a quarter said they’d like to see an outright price crash, of 30 per cent or more. A majority of renters said they are considering leaving the citybecause of housing costs. That’s a sign of the frustration potential homebuyers are feeling in a market where house prices have long grown faster than incomes.

But though they hope for a correction, few poll respondents hold out hope it will actually happen. Sixty-two per cent agreed that government policy will not be able to make Toronto housing affordable “no matter what.”

Construction slowdown

Canada Mortgage and Housing Corp. reported a surprise decline in the number of new homes starting construction in August. The annualized rate of construction fell to just under 201,000 housing units, down from nearly 206,000 in July, according to data released Tuesday. Economists had been predicting a pick-up to around 210,000.

The largest pull-back was in Ontario, while British Columbia has seen a mild rebound, though construction is still below the frenzied pace of 2016 or 2017.

Economists expressed mixed views on the construction slowdown, with some saying the pace of construction is just returning to more sustainable levels from excessive heights.

“Despite two monthly declines, robust levels of residential construction continue in Canada, with a 27-year high for population growth supporting the strength,” Bank of Montreal senior economist Robert Kavcic wrote in a client note.

“While not all regions of the country have experienced the same price pressures as Toronto and Vancouver, many are seeing heightened building activity.”

But CIBC economist Royce Mendes suggested we can expect to see a somewhat slower housing market ahead.

“A more sluggish pace to homebuilding is in line with our expectation that higher interest rates and tighter lending standards turn this former stalwart of growth into a drag on the economy,” Mendes wrote in a client note Tuesday.

Cost of condo rentals continues to rise in Mississauga


Rental rates for condos in Mississauga continued their ever-upward trend in the third quarter of 2018.

According to the Toronto Real Estate Board’s latest quarterly tracking report, the average monthly cost to lease a one-bedroom condo in Canada’s sixth largest city rose to $1,962 between July and September.

The Toronto Real Estate Board doesn’t expect the upward trend in Mississauga’s rental rates to stop anytime soon without government intervention.
The Toronto Real Estate Board doesn’t expect the upward trend in Mississauga’s rental rates to stop anytime soon without government intervention.  (ROB BEINTEMA/METROLAND / ROB BEINTEMA/METROLAND)

That represented a 3.8 per cent increase over the second quarter of this year and a year-to-date spike of 9.4 per cent from the $1,794 average monthly rate recorded in the first quarter of 2018.

The data is based off a total of 701 leases recorded by TREB member realtors in Mississauga over the past three months.

Rent for an average one-bedroom condo in Mississauga has spiked 21.6 per cent in just two years since the same quarter in 2016, when a unit fitting that description could be had for $1,614 per month.

All types of apartments saw quarter-over-quarter increases. The monthly rent for a bachelor grew 8.5 per cent between the second and third quarters from $1,500 to $1,628. The cost of a two-bedroom unit grew from $2,290 in Q2 to $2,429 in Q3, while three-bedroom condo units jumped from $2,741 to $2,807 over the same period.

“Average rents are continuing to increase at annual rates far beyond the rate of inflation in the GTA as rental demand remains very strong relative to the supply of units available. We will need to see a sustained period of time within which growth in the number of rental units listed outstrips growth in the number of units leased before we see the rental market return to balance,” said TREB’s director of market analysis Jason Mercer in the organization’s quarterly report.

TREB doesn’t expect the upward trend in rental rates to stop anytime soon without government intervention.

“Policy-makers, including those running for election at the municipal level, need to identify and fix existing policies that are hampering the ability to bring more rental supply on line. These same policy-makers also have to develop new policies that could promote the development of more rental units moving forward,” said TREB president Garry Bhaura in the report.

Condo owner on the hook for inaccurate ‘clean’ status certificate


What happens when an owner receives an incorrect status certificate issued by a condominium corporation?

That was the issue in a case before the Ontario Court of Appeal earlier this year.

A bedroom added without consent from the condominium’s board created an inaccurate status certificate for a new owner.

Back in 2013, Dante Reino purchased a condo unit from his mother in a downtown highrise on Bay St. known as Metropolitan Toronto Condominium Corporation 723. He requested a status certificate and was issued a “clean” certificate by the condo corp. The prior owner purchased the unit in 2004 and was also issued a “clean” certificate — one that did not disclose problems.

When Reino decided to sell the unit in 2016, he obtained a new status certificate that stated that the unit was in breach of the condominium declaration.

Before Reino’s purchase, a second bedroom was added to the unit and the kitchen was relocated without the required consent of MTCC 723’s board of directors.

As a result, the new certificate warned that MTCC 723 might take steps to remove the alteration and restore it to its original layout, with the costs being added to the common expenses for the unit.

The Condominium Act says that a status certificate’s information is binding to the corporation, as of the date it is given.

On an application by Reino, the judge ruled that MTCC 723 was bound by its earlier “clean” certificates and had to issue a new certificate without the notation about the unauthorized renovations.

MTCC 723 appealed the judge’s ruling, and a three-judge panel of the Ontario Court of Appeal reversed the lower court’s decision earlier this year.

The Condominium Act, the Appeal Court wrote, “is, among other things, consumer-protection legislation. The purpose of a status certificate is obvious: it is to bring to the attention of a prospective purchaser or mortgagee matters which may be of concern to them when contemplating the purchase of a unit.”

The court noted, “We agree that the condominium corporation is bound vis-à-vis … Mr. Reino by the clean certificate it provided to him when he acquired the unit from his mother in 2013. That said, it does not follow that the condominium corporation is thereafter estopped from issuing anything but a ‘clean certificate’ in relation to a unit where it has previously provided a clean certificate.”

If a condominium corporation becomes aware, after issuing a clean certificate, of a circumstance that it is required to disclose, the “new” information must be included the next time it issues a certificate.

This does not change the fact that it will still be bound by its earlier certificate, but to omit the new information, the court said, would be misleading to a prospective purchaser.

The court added that Reino could always sue the condominium corporation if it was negligent in issuing a clean status certificate to him.

He was ordered to pay $31,625 in court costs for the initial hearing and the appeal.

While the court said the Condominium Act is consumer protection legislation, it did not offer any kind of protection for Reino in its decision and the punitive costs award. To force him into another lawsuit to recover his damages is manifestly unfair.

4 things Peel residents need to know about pot and driving


1. You can’t drive impaired.

Though the legalization of marijuana is new, impaired driving laws are not. It has always been illegal to drive a motor vehicle while your ability to do so is impaired — whether that’s by alcohol, pot or any other drug, prescription or otherwise. Peel police officers will perform a Standardized Field Sobriety Test on the roadside. Officers specially trained as “drug recognition experts” or DREs will then evaluate the driver’s impairment. If you fail the test, you will be charged.

2. It’s just as dangerous as driving drunk

Cannabis slows your reaction time and driving under the influence increases your chances of being in a collision. The penalties for driving impaired are the same whether your abilities are impaired by alcohol, pot or any other substance. They include an immediate licence suspension, fines and the possibility of vehicle impoundment, a criminal record and jail.

3. No law yet governing how much is too much

Legal limits on how much cannabis you can have in your system before you drive won’t be set until December 2018. Peel police have ordered roadside testing devices for cannabis. Meanwhile, existing impaired driving laws remain, setting a legal limit for alcohol at 50 mg and 80 mg in 100 mL of blood.

4. Zero tolerance for young, novice and commercial drivers

If you are under 22 years old, have a G1, G2, M1 or M2 licence, if you are driving a vehicle that requires an A-F driver’s licence or a commercial vehicle licence, or if you drive road construction equipment, you cannot drive with any non-prescribed cannabis in your system. None. Regardless of what the legal limits are for all other drivers, which will be set in December (see above).

Condo developers increasingly using art to stand out and land buyers


It would be easy to mistake the lobby of the One o One condos in midtown Toronto for a nightclub or graffiti-splashed alley.

Instead of the muted colours and cookie-cutter designs that fill many condo buildings, developer Camrost Felcorp hired Toronto artist Anthony Ricciardi to create seven murals splattered with bright paint and a rainbow of drip marks.

Anthony Ricciardi spray paints the eastern facade of a commercial establishment on Bathurst Street in Toronto, on Monday, July 30, 2018.
Anthony Ricciardi spray paints the eastern facade of a commercial establishment on Bathurst Street in Toronto, on Monday, July 30, 2018.  (CHRISTOPHER KATSAROV / THE CANADIAN PRESS)

The flashy pieces put the building in a growing group of condo complexes whose hallways, lobbies and outdoor grounds are being emblazoned with massive murals, ornate sculptures or dozens of commissioned art pieces or custom photographs.

Among the installations that have cropped up outside Toronto condos in recent years are a set of tall jagged red posts, a blue tangled rubber band-like sculpture and a handful of white whirlpool installations.

Real estate veterans say such art is an attempt by developers to bring a community feel to shared spaces, but also a bid to attract buyers. Large installations are popping up at an increasing rate, they say, because many developers are realizing their benefits after the city started encouraging builders to allocate a minimum of one per cent of every project’s construction costs on public art.

Ricciardi, a corporate finance worker in the real estate industry who only recently decided to pursue his art full-time, said so far developers have been a boon for business.

“In the next two years I have four major projects with developers and they will all include sculptural and interior work,” he said. “Developers have been doing this forever, but I don’t think enough artists or people know about it.”

Heela Omarkhail, senior manager of strategic initiatives at developer the Daniels Corp., agreed, saying her company has been attempting to raise awareness of art in the condo world by collaborating with local artists, especially those early in their careers.

Daniels turned to such artists for the two-tower, One Park Place development in Toronto’s downtown Regent Park neighbourhood. In the north tower alone, it commissioned more than 25 pieces of local art, including four sculpture installations, that filled lobbies, hallways, amenity spaces, the party room and even change rooms.

In another of the company’s Regent Park buildings, Omarkhail said Daniels hung in the lobby a quilt called Regent Park: A Love Poem — a nod to the fact that it was patched together by locals who wanted to be part of the community’s revitalization.

To highlight such pieces, Daniels often keeps the art behind a black sheath for weeks during move-in before unveiling it at an open-house night, where artists mingle with residents.

It’s even taken art to the next level by partnering with Artscape, a not-for-profit organization, to put together a musical production starring theatre stars and Regent Park locals.

It is “hard to say” whether the production or condo art convinces buyers to purchase a property, but Omarkhail figures it at least “enhances the relationship between the buyer and the building because … every art piece or plaque has a story.”

“Their sense of home isn’t the four walls of their unit,” she said.

“It extends beyond into those common spaces and really changes the feeling when you arrive in that building.”

David Moos, an art consultant for Camrost Felcorp and a former curator at the Art Gallery of Ontario, said in the development realm he is seeing a “widespread consciousness” around the value of art that includes both high-end, fine art and low-end pieces he calls “decorative.”

The average person won’t instantly see and know how acclaimed a piece of fine art is just by looking at it, but even having art in a condo building could contribute to how world-class the city it is in is perceived to be, he said.

“Some developers take pride in propelling Toronto forward and have realized the role that fine art can play and want to participate in enhancing the urban environment in the most ambitious, sophisticated and impactful way,” he said.

“Toronto deserves the best, most original and inspiring art and developers can participate in making that happen.”

Clearing the smoke on condo no-smoking rules before cannabis legalization


With the legalization of marijuana next month, landlords, tenants and condominium owners may still be uncertain about their rights to either smoke — or prohibit smoking — in apartments and condominiums.

The starting point of a discussion about the rights of smokers and non-smokers begins with the principle that there is no right enshrined in Canadian law, including the Charter of Rights and Freedoms, to smoke tobacco or marijuana in a rental property. In a 1991 Federal Court decision, the judge wrote: “The smoking habit is far from a legal or constitutional right to which the state must pander.”

Under the 2006 Smoke-Free Ontario Act, smoking is not allowed in indoor common areas of an apartment building or a condominium. That includes elevators, hallways, parking garages, party rooms, lobbies and exercise rooms.

In addition, landlords have the right to impose on their tenants a prohibition against smoking marijuana or tobacco, and there is a separate section of Ontario’s new standard form lease which permits the imposition of a smoking ban.

Landlords cannot, however, change the rules in mid-stream and force existing tenants to stop smoking in their apartments. Tenants who rent condominium units are also bound by any no-smoking rules imposed by the condominium corporation, whether or not there is a prohibition in their individual leases.

But even if tenants are not prohibited from smoking tobacco or cannabis in their leases, they do not have the right to interfere with what the law calls the “reasonable enjoyment” of tenants in neighbouring units.

As well, landlords must use their best efforts to minimize smoke-related disturbance to tenants with sensitivities to cigarette or marijuana smoke.

In a 2013 case that went before the Landlord and Tenant Board, tenants accused the landlord of harassing, coercing and threatening them. They complained that the landlord wrongly accused them of smoking marijuana in the unit. The adjudicator found that the tenants did in fact smoke marijuana in their unit, that there was a strong marijuana smell coming from the apartment, and that the landlord did not substantially interfere with their enjoyment of the unit.

In other cases where landlords were unable or unwilling to stop smoke infiltration into neighbouring units, the LTB ordered rent reductions.

The bottom line is that there are no guaranteed outcomes when landlords and tenants bring their smoking cases to the LTB.

When it comes to tenants with disabilities, the Ontario Human Rights Code overrides the provisions of the Residential Tenancies Act and the Condominium Act. Rental housing providers have a duty to accommodate the Code-related needs of tenants who may have a disability or health problem aggravated by exposure to smoke. No doubt the courts will soon have to deal with conflicts between these tenants, and those who have the right to smoke medical marijuana for health reasons. Both parties are entitled to protections under either the Human Rights Code, or the Residential Tenancies Act, or both.

City of Mississauga Ranked Among Top 10 Locations in Canada


The City of Mississauga’s Economic Development Office has been named one of 10 local and regional groups representing Canada’s Best Locations by Site Selection  magazine. The rankings are based on project data, regional partnership, proactive and innovative programming, quality data and web tools and resources.

“This recognition is proof that Mississauga’s economy is thriving and that our ongoing efforts to market our City and attract new business are resulting in significant investment and job creation,” said Bonnie Crombie, Mayor of Mississauga. “Mississauga is a city where world-class businesses choose to invest, expand, compete and achieve success. Mississauga is open for business!”
The results are based on April 2017 to March 2018 corporate end-user facility investment and job creation data and the magazine’s own research. The selection process criteria include:
  • The number of new facilities and expansions per capita
  • Project capital investment per capita
  • Job creation per capita
  • Subjective analyses of website resources, programming and outreach efforts
“Mississauga is honored to receive this recognition. It is a testament to our strong, diverse business community,” said Bonnie Brown, Director, Economic Development. “Our efforts, along with investments in infrastructure and transit, are helping attract more businesses to Mississauga – where the future is unlimited.”
To learn more about the top 10 Canadian economic development group rankings and recipients visit Site Selection.

GlaxoSmithKline Canada invests $36 million in Mississauga


Earlier today, Mississauga Mayor Bonnie Crombie joined GlaxoSmithKline (GSK) Canada to make a $36 million announcement to further strengthen the company’s manufacturing facility in Mississauga. The funds will enable facility improvements, equipment purchases and enhanced manufacturing capabilities. GSK’s Mississauga facility will also soon begin producing Voltaren®, a consumer health brand in Canada for pain relief.

“I’m thrilled that GSK has decided to grow and expand their business here in Mississauga,” said Mayor Crombie. “Our City is proud to be home to Canada’s second largest Life Sciences cluster and today’s investment is proof that our strategy to support its growth is working. Together, we will take innovation all the way to commercialization in Mississauga.”

This investment is part of Mississauga’s Economic Development Strategy to expand its economic development agenda, remain competitive, measure success and attract innovative businesses to the city.

“GSK has been a part of Mississauga’s strong and diverse life sciences cluster since 1989,” said Bonnie Brown, Director of Economic Development for the City of Mississauga. “The city appreciates GSK’s continued commitment and investment in Mississauga. Their presence in our business community helps present Mississauga on a global stage.”

Mississauga’s life sciences sector is the second largest in Canada by number of employees. Today Mississauga’s life sciences cluster is globally recognized as a significant economic driver.

“GSK has been part of the Mississauga life sciences sector for over 25 years and we are proud to contribute to the healthy and vibrant life sciences sector in this City, and this country,” said YS Hong, President of Canada Pharmaceuticals of GSK Canada

Home prices rise against tighter supply in August


August appears to have cemented the Toronto region’s real estate recovery, with average resale home prices up 4.7 per cent year over year to $765,270, including single-family homes and highrise apartments. That is about $34,000 higher than the average a year ago.

There were also about 500 more transactions — an 8.5 per cent increase — compared to August 2017.

The latest numbers confirm that Toronto-area buyers are stepping back into the market and “are getting deals done.”

The number of detached-house sales increased 19.2 per cent in the 905 areas outside of Toronto to $907,780 on average. Detached homes also saw a 12.3 per cent jump in sales in the City of Toronto, where they sold for $1.24 million on average.

The average Toronto-area resale condo price also rose 6.4 per cent to $541,106. The number of sales, however, remained flat overall, increasing 0.7 per cent year over year in August.

The gains are a sign that buyers are finally stepping back into the market in the latter half of this year as the Toronto Real Estate Board (TREB) had predicted, said Garry Bhaura, board president.

“Many home buyers, who had initially moved to the sidelines due to the Ontario Fair Housing Plan and new mortgage lending guidelines, have renewed their search for a home and are getting deals done much more so than last year,” he said in a press release.

Tight market conditions contributed to the strong August, said the board’s director of market analysis, Jason Mercer.

“The annual rate of sales growth outpaced the annual rate of new listings. We only have slightly more than two-and-a-half months of inventory in the TREB market as a whole and less than two months of inventory in the City of Toronto,” he said, adding that there is a dearth of homes available to buy in many neighbourhoods.

“This could present a problem if demand continues to accelerate over the next year, which is expected,” said Mercer.