Sunday, February 07, 2016
Solving Southern Ontarios Growing Pains
Citing the need for Torontos housing industry to "stop working in silos" and start working together to address the areas shelter needs, the Toronto Real Estate Board has launched an initiative involving all stakeholders in government, the private sector and not-for-profit organizations.
The first results were on display recently when TREB >
The report also has 32 submissions about what the area known as the Greater Golden Horseshoe GGH -- which includes a large piece of Southern Ontario from Niagara to Orillia to Peterborough -- needs to do to address housing needs now and in the future. Not surprisingly, aging infrastructure, a need for improved public transit and affordable housing solutions were at the top of almost everyones list.
The GGH is home to about nine million people, or one in four Canadians.
The area is in the midst of a housing and real estate boom that has lasted for more than a decade, taking just a brief breather during the 2008 recession. The real estate board had a record 101,299 transactions in 2015 and prices rose by 9.8 per cent compared to 2014. The lack of single detached home listings pushed the average price of a detached home in the City of Toronto to more than 1 million.
Economist Benjamin Tal of CIBC World Markets told the gathering that during a recent trip to Boston, he found "people in the United States are convinced that we are the poster children for a housing bubble."
Tal said the No. 1 threat to Torontos real estate market is perception, saying that a housing crash could become reality if the industry doesnt fight back and explain to the public how economic fundamentals are continuing to support the market.
"Everyone knows we have a high debt-to-income ratio, but that number doesnt tell you much," says Tal. "Nobody is asking you to pay off your mortgage in one year."
He says that comparing Torontos current real estate situation to what happened in the U.S. prior to that countrys housing crash "is not only wrong, its irresponsible."
TREB is forecasting that 2016 could see even stronger sales than 2015, but will at least check in as the second-strongest year ever for sales. Recent moves by the federal government to tighten the qualification rules for insured mortgages will have little impact on the Toronto market, says the board.
Bryan Tuckey, CEO of the Building Industry and Land Development Association BILD, said the GGH is expected to grow by more than 100,000 people annually, to 13.5 million by 2014. He said that means 36,000 new homes must be built every year.
Provincial policies passed 10 years to mandate intensification have created a structural shift in the market. "A decade ago, low-rise types of homes, including detached and semi-detached houses and townhouses, accounted for the majority of new home construction. In 2015, the picture was vastly different, with units in high-rise developments comprising more than 80 per cent of new housing stock," says BILD in the report. It has also increased the percentage of high-rise condominium sales in the resale market, from 37 per cent in 2006 to 47 per cent in 2015.
"The new home industrys adaptation to these provincial policies has resulted in the region growing up and not out. Yet, in both the new home and resale markets, demand has remained strong for low-rise homes. The market is challenged by unmet demand because consumers can only buy what exists and what is available for purchase at pre-construction," says BILD.
This has driven up the prices. The price gap between low-rise and high-rise homes is now about 350,000 and growing.
George Carras, founder of RealNet Canada, told the TREB event that while prices for new low-rise homes have more than doubled in the last 10 years, condo builders have been able keep prices lower by building smaller units. Carras says the average condo in the Toronto area is now 140 square feet smaller than it was a decade ago. Thats a 10 X 14-foot room.
Tuckey said the builders challenges include dealing with long delays to get building plans approved and outdated zoning bylaws that are sometimes at odds with other government policies. One of the report submissions, by the Residential Construction Council of Ontario, says there are 45 different government entities that have a direct role in the process of getting a new home constructed.
Tuckey said that taxes and fees account for an average of one-fifth of the cost of a new home.
Dealing with people in local neighbourhoods who are opposed to development of any kind is also a major hurtle. He says the provincial government should be supporting its policies with education and promotion.
John DiMichele, TREB CEO, says, "There are a lot of smart people who responded to our call for stakeholder submissions or who contributed to the sections of this report and it would be great to get them in one room where they could discuss these issues collectively. We need to realize that we all have a stake in the outcome and its time for us to work together to ensure todays opportunity becomes tomorrows reality."
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Open House Sign Rules Are Frequently Disobeyed
Because open houses are an important part of the real estate business, it follows that open house directional signs are an important part of the real estate business. Yet, while open houses are not particularly controversial, a great deal of controversy centers around open house signs. For purposes of this discussion open house signs refers to off-site open house directional signs.
It may come as a surprise to many real estate agents -- especially new ones -- that many people do not like open house signs. They especially do not like forests of open house signs. The second surprise in this regard is that real estate agents do not have a God-given and/or constitutional right to place as many open house signs as they want, wherever they want.
Real estate signs do enjoy certain constitutional free-speech albeit "commercial speech" protections. But -- just as with other forms of protected speech -- cities, counties, and other jurisdictional bodies have a right to regulate such signs. In the words of a legal memorandum from the California Association of REALTORSCAR, "They may impose reasonable restrictions on the time, place, and manner of displaying signs regardless of whether it is on privately or publicly-owned property."
Throughout the country, many communities have adopted ordinances regulating open house signs. Such ordinances vary widely in their particulars. For example, my local association Orange County [California] Association of REALTORS maintains on its web site a section devoted to open house sign regulations in the approximately 30 communities within its service area. A brief perusal of the section suggests that no two sets of rules are exactly the same.
Some communities prohibit open house signs on public property. Others allow them on some parts of public property e.g. tree wells, but not others street medians. Many communities limit the time period during which such signs can be placed. Typically, 8 AM -- 6 PM.
Quite a few communities limit the number of open house signs that can be displayed for each open house. In some areas there is a fixed limit maybe 5 or 6; while for others it is variable for example, "one sign per change of direction".
The enforcement of open house sign rules varies considerably from community to community. Some are hyper vigilant; others are lax. In some jurisdictions local police may enforce sign codes; in others it is the job of non-sworn code enforcement personnel. Other communities may only periodically assign enforcement responsibility to particular staff members, usually when complaints are on the rise. One thing is for sure: Realtor associations and MLS committees have no right and no business enforcing these or any other municipal codes.
Not surprisingly, a general lack of consistent and diligent enforcement efforts often leads to widespread violations. In particular there are those scoff-law agents who dont care what the rules are. As long as they are not caught and punished, everything is OK. They will put up 10, 12, 14 signs in violation of a numerical limit. They will fly balloons, even though a local code prohibits them. They will place signs in public right of way where signs may be prohibited. Etc. etc. Regrettably, then, some other agents will follow suit, not wanting to be at a perceived competitive disadvantage.
Not only does such behavior reveal an ethically-challenged character, but also it ultimately works to the disadvantage of the entire real estate community. Here is what happens:
The open house sign ordinances of many jurisdictions are frequently the result of compromises worked out between the real estate community and local officials. First, there is community pressure to stop the proliferation of open house signs. Harsh ordinances are proposed. Then, involved REALTORS hash things out with elected officials and city staff. A compromise is reached that everyone can live with. But then, the rules are violated by those real estate agents who feel entitled to disregard them. Others follow.
After a while there is another outbreak of excessive and, often, misplaced signs. There is another groundswell of community protest. Once again, harsh ordinances are proposed. Only, this time, the real estate community is not invited to participate in discussions. Why? Because it has been demonstrated that they wont live up to their end of the bargain.
Open house signs are an important part of the business. They are valuable tools. Real estate agents who value their usefulness should be sensitive to local regulations that govern their use.
- Real Estate For Sale Signs Have Legal Protections
Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way. His email address is .
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