Tuesday, January 31, 2023
  • Home
  • News
  • Privacy Policy
  • Terms of Use
  • Cookie Policy
  • Disclaimer
  • DMCA Notice
  • Contact
No Result
View All Result
No Result
View All Result
Home News

Buyers, Beware of Speculators: Home Prices Surge 22%

by Editor
December 23, 2021
in News
Buyers, Beware of Speculators: Home Prices Surge 22%

Image source: Getty Images.

The Canadian Real Estate Association (CREA) expects housing sales to moderate in 2022, although prices will not decline. In Greater Toronto Area, the Toronto Regional Real Estate Board (TRREB) reports that the average home price in November 2021 surged 22% versus the same month last year.

TRREB’s chief market analyst Jason Mercer said first-time homebuyers are moving back into the market in a big way this year. However, the 13% drop in new listings indicates fewer homes on the market compared to November 2020. In Ontario, the provincial government raised concerns about speculators, particularly foreigners.

A senior source from within said the Ontario government is prepared to raise the Non-Resident Speculation Tax (NRST) to 20% or more. The move aims to discourage foreign speculation, and it would also ensure the limited housing supply will go to Canadians who need it the most.

Heightened speculator activity

Economists warned about Canada’s housing market entering a speculative phase as early as March 2021. Benjamin Tal, the deputy chief economist at CIBC, said, “It’s possible given the recent increases in prices that some people are speculating about further increases in prices.”    

Speculators, along with homebuyers, don’t want to miss out on the housing boom. Thus, prices have risen too much and too fast. Royal Bank of Canada economist Robert Hogue added that rising prices “often invite heightened speculative activity, which adds more fuel to already hot markets.” 

Apart from increasing the NRST, Ontario plans to tighten exemptions for foreign students and international workers. The province will not hesitate to take action if the federal government does not implement bans or new measures soon.

Supply shortage and high prices

Still, CREA believes that the appetite for homeownership will still be strong in 2022, notwithstanding the hike in borrowing costs. Moreover, prices will remain high due to the supply shortage. 

For Canadians who want exposure to the red-hot market but have limited capital to purchase investment properties, real estate investment trusts (REITs) are your alternatives. Right now, the great picks are growth-oriented Nexus (TSX:NXR.UN) and grocery-oriented Slate Grocery (TSX:SGR.U).

Low-risk business models

Nexus is the top-performing REIT in 2021, with its 70.63% year-to-date gain. At only $12.43 per share, you can partake of the hefty 5.5% dividend. This $704 million REIT boasts a diversified real estate portfolio, although it skews more toward industrial properties.

Of the 95 income-producing properties, 68%, or 69 properties, are industrial, plus there are eight more in the development pipeline. This segment contributes 76% to the total net operating income. Besides the stable cash flows, the long-term leases have rent-escalation provisions.

Slate Grocery is present in major metro markets (23 states) in the United States. Since 96% of the portfolio are grocery-anchored properties and 69% are essential tenants, this $793 million REIT generates durable cash flows. As of September 30, 2021, the portfolio occupancy rate is 94.4%, while the rental spread on new leases is 20.5%.

According to management, Q3 2021 was one of the best, most consequential quarters of Slate Grocery due to record growth (organically and by acquisition). The REIT’s strategy is rooted in the future of grocery and, therefore, is built to succeed.

Homebuyers’ constraints

CREA warns that while the trend will ease in 2022, buyers still face supply and affordability constraints. Also, let’s hope that speculators will not distort Canada’s housing market.

ShareTweetShare

Related Posts

2 Growth Stocks to Buy and Hold Forever
News

3 Canadian Stocks to Buy That Could be Massive Long-Term Winners

October 13, 2022
Can You Retire a Millionaire by Just Investing in the S&P 500?
News

Can You Retire a Millionaire by Just Investing in the S&P 500?

March 27, 2022
Yes, Canada Has a Housing Affordability Crisis. Is It the Federal Government’s Fault?
News

Yes, Canada Has a Housing Affordability Crisis. Is It the Federal Government’s Fault?

March 27, 2022
21 Toronto Condo Launches You Need to Know About This Spring
News

21 Toronto Condo Launches You Need to Know About This Spring

March 27, 2022
“Slightly More Balanced Market” On the Way For the GTA This Spring
News

“Slightly More Balanced Market” On the Way For the GTA This Spring

March 27, 2022
New Ontario Data Standard Will “Even the Playing Field” For Housing Development Approvals
News

New Ontario Data Standard Will “Even the Playing Field” For Housing Development Approvals

March 26, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Most Read

Housing Market Created Good Alternative for Buyers with A number of Properties

Nearly $30 Billion in GTA Housing Linked to Money Laundering

November 18, 2021
How  Canadians can Protect their Money From Inflation

How Canadians can Protect their Money From Inflation

November 30, 2021
That is How A lot it Prices for a Household of 4 to ‘Thrive’ within the GTA

Are Investors the Cause, or Just the Blame, Behind Ontario’s Outrageous Housing Market?

November 26, 2021
A Transformation is on the Horizon for Toronto’s Jane and Finch Neighbourhood

A Transformation is on the Horizon for Toronto’s Jane and Finch Neighbourhood

November 12, 2021
Today’s Housing Market Looks a Lot Like 2017’s… That Should Worry Everyone

Today’s Housing Market Looks a Lot Like 2017’s… That Should Worry Everyone

February 16, 2022
Canadian Start-Up Aims to Deliver Flexible Payment Options for Renters

Canadian Start-Up Aims to Deliver Flexible Payment Options for Renters

January 22, 2022
  • Home
  • News
  • Privacy Policy
  • Terms of Use
  • Cookie Policy
  • Disclaimer
  • DMCA Notice
  • Contact

Copyright © 2021 The Canadian Investor | All Rights Reserved

No Result
View All Result
  • Home
  • News
  • Privacy Policy
  • Terms of Use
  • Cookie Policy
  • Disclaimer
  • DMCA Notice
  • Contact

Copyright © 2021 The Canadian Investor | All Rights Reserved