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Tradespeople shortage contributes to affordability woes

Innumerable delays on construction sites throughout Ontario add onto builders’ overhead costs, which consumers ultimately pay for.

The question, then, becomes: What is causing the delays?

“Every day, we have delays on our sites, “said Eugene Filice, Great Gulf’s vice president of construction, “because there’s never enough man power to complete what you should be able to in the course of a day.”

While it’s difficult to quantify, Filice reckons that all the delays add an additional two months of construction for high-rise developments. Although a painfully slow bureaucratic approvals process is well documented, little attention is paid to the fact that, not only is there already a shortage of skilled trades workers, a substantial number of them are slated for retirement over the coming decade.

“There are 91,000 skilled construction workers in Ontario that are set to retire, and migration to the Greater Toronto Area is about 100,000 every year, and we’re not going to be able to meet that demand,” said Filice, adding that the problem has become particularly pronounced over the last five years.

“We don’t see the younger generation getting into the trades, which is strange because those who work in the trades are very fulfilled and satisfied with the work they do.”

Indeed, a study undertaken by the Residential Construction Council of Ontario confirms that job satisfaction among construction trades is high. Despite there being some stigma associated with the job, RESCON reports that, on a scale of one to 10, nearly two-thirds rated their job satisfaction between eight and 10, with the average score coming in at 7.9.

The study also determined that nearly two-thirds of skilled trades workers would strongly recommend the profession to a young person, and 81% enjoy a sense of financial security. There are also intangibles associated with the job, like camaraderie and feelings of satisfaction derived from working towards shared goals as a team.

However, the worker scarcity is persistent and the delays Filice alluded to could conceivably make the cost of housing in a city like Toronto even more expensive and beyond reach than it already is. Richard Lyall, president of RESCON, says that a recruitment campaign is well underway to reverse the trend.

“Unfortunately, the average age of a Canadian apprentice is 27 years old. To overcome this, influencers must become better informed about the benefits of construction careers, which are lucrative and highly satisfying, so that we can continue to tell the stories of young people thriving in this industry, like in the Job Talks video series.”

The report, which also looked at behavioural economics principles, will be used to boost awareness about the skilled trades among guidance councillors and educators. Given that the existing labour shortage comes at a time when Queen’s Park and Ottawa are likely to commit more money to infrastructure projects, there will be no shortage of work for tradesmen and tradeswomen.

by Neil Sharma

 April 09, 2019

Canada’s average home prices will be relatively flat this year

Average residential property values nationwide are likely to remain relatively static for the rest of 2019, according to Royal LePage.

In the latest edition of its House Price Survey released last week, Royal LePage noted that the average home price in Canada grew by just 2.7% annually during the first quarter to reach $621,575.

Royal LePage warned that this might indicate a spring market with relatively static pricing, as the gains are markedly lower than what is considered the long-term norm of approximately 5%.

Going into Q2 2019, the national aggregate home price is expected to tick up by just 1.0%, and an ongoing global economic downturn strongly implies that the rest of the year is far less likely to bring with it further growth.

“We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower for longer interest rates,” Royal LePage president and CEO Phil Soper said.

However, the prospects are considerably more positive beyond the immediate horizon.

“Canada is certainly affected by negative global macroeconomic trends, yet full-time job creation in our country is very strong, and full-time employment turns renters into buyers,” Soper stated. “The medium-term outlook for housing remains very positive.”

Moreover, the sluggish growth will actually be a boon for young professionals and just-started households.

“This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities,” Soper added.

by Ephraim Vecina

09 Apr 2019



OREA lobbies government for stronger RECO

The Ontario Real Estate Association is lobbying the provincial government to proscribe bully offers and enhance professional standards in an industry that does little to punish misbehaving agents.

“It’s about time,” said Rachel Hammer, team lead at Royal LePage Team Hammer & Associates. “I believe very strongly that one of the things we’re lacking in our industry is proper policing and enforcement.”

One reason Hammer believes the Real Estate Council of Ontario doesn’t punish unscrupulous sales agents is because there are no mechanisms in place to protect the identity of the person lodging the complaint.

“In order to file a complaint with RECO, you have to identify yourself. Well, we all work together in the same city and voicing a complaint that way puts a lot of people at risk, with regards to their business, which I believe is why a lot of people don’t speak up when they should. We have RECO there to do that, but the question is why don’t they properly police the industry.”

Hammer and innumerable other agents may finally get their wish.

“We’re looking for tougher enforcement,” said OREA’s Karen Cox. “Our regulator, the Real Estate Council of Ontario, should have the authority to proactively investigate the few bad offenders we have and kick them out if they break the rules in our profession. It would modernize the legislation governing the real estate profession, raise the professional standards, and it would be better for buyers and sellers.”

In addition to stricter penalties for untoward agents, OREA wants the Doug Ford government to revisit the 17-year-old Real Estate and Business Brokers Act and amend it to reflect the modern world. The association provided 28 recommendations, which include protecting consumers from unlicensed operators, better education, and an end to bully offers.

“We’re asking not to allow bully offers or pre-emptive offers to create more fairness in the home buying process,” said Cox. “It doesn’t mean it’s the best offer the seller will receive. They don’t know that because they haven’t received offers from interested parties and that really frustrates buyers because they haven’t had a chance to participate and that’s why we’ve recommended ending bully offers.”

However, while Hammer is glad to see OREA lobbying to remove bad apples, she doesn’t feel the same way about the association’s bid to have bully offers proscribed.

“Ultimately, our role as a realtor is to always do what our client instructs us, and if our client instructs us to present them an offer, then it’s our responsibility to do so,” said Hammer. “The question is, where’s the problem with the bully offer? In a seller’s market where there’s very little inventory, putting in a bully offer can be quite strategic to get our client, the buyer, what they’re looking for, which is the purchase of a home. I don’t believe any changes targeting bully offers will change the professionalism in the industry.”

Moreover, Hammer says that sellers can ignore bully offers if they wish.

“The current OREA form for seller directions and offer presentation allows realtors to explain to sellers their options to choose the right offer presentation they would prefer,” she said. “The no conveyance of offers option allows the seller not to even consider bully offers.”

by Neil Sharma

10 Apr 2019

Dangers of using a Seller Property Information Statement. It can cost you big.

A court case decided last month emphasizes the risks of using a Seller Property Information Statement. It also illuminates the risks of having the same agent act for both the buyer and seller.

In July 2014, Aden and Shirley Bowman bought a house from Alma and Shelley Emond. The Emonds are mother and daughter.

The house — built in 1976 by Alma’s husband — was a 1,200-square-foot, single-storey building with five bedrooms, one bath and a full basement. The sale price was $180,000 and the Emonds took a vendor-take-back mortgage for 95 per cent of the purchase price.

Their real estate agent acted as the agent for both buyers and sellers. Shelley Emond told her about historical roof leaks but not that in 2013, and again in 2014, she had painted over ceiling stains resulting from the roof leaks.

At the agent’s request, the Emonds completed a Seller Property Information Statement (SPIS). For many years in this column I have been a strong advocate against the use of this checklist-type form. It is difficult to think of any other single form — except perhaps the marriage licence — which has spawned so much litigation, and has produced so much money for litigation lawyers.

In the SPIS form, the Emonds stated that they were not aware of any structural problems, moisture or water problems. They also stated that they had carried out repairs to known roof leakage issues and that there was no unrepaired damage.

Aden Bowman testified at trial that he never saw the SPIS until it was produced during preparation for the resulting litigation. Although the same agent was representing both parties, she did not review the document with the Bowmans.

Two weeks after closing, Aden Bowman began renovations and discovered historical water infiltration and mould growth throughout the wall and floor cavities of the home. When removing the fireplace because it did not comply with the provincial fire code, Aden discovered rotting wall structure and more mould.

The Bowmans sued the agent, her company, the Emonds and the home inspector. Before trial, the buyers and sellers reached an out-of-court settlement called a Perringer Agreement, and the case continued against the home inspector, the agent, and her company.

In his decision last month, Justice Guy DiTomaso ruled that the agent was negligent and breached her duty to the Bowmans by failing to ask probing questions of the sellers and failing to explain the SPIS document to the buyers. He also found that a number of the Emonds’ SPIS answers were incorrect.

The judge ruled that Alma and Shelley Emond were liable for 30 per cent of the buyers’ damages, and that the agent and her company were responsible for 70 per cent of the damages. The judge found that the inspector conducted a detailed verbal and written report, and dismissed the case against him.

In finding that the home was uninhabitable due to extensive mould and water damage, Justice DiTomaso assessed the plaintiffs’ damages at a total of $450,215 — all of this on a house that sold for $180,000.

Posted On: Friday, March 29, 2019

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents. 
He can be reached by email at, phone 416-364-9366 or fax 416-364-3818.

The federal budget’s missed opportunity…

The federal budget appears to have missed a golden opportunity to address housing shortages in key markets that contribute to Canadians’ affordability challenges, and may even have amplified them.

“They’re all about increasing demand for housing without doing much to increase supply, and you don’t need to be an economist to know that if you increase demand without increasing supply, you’ll end up with higher house prices, which is the oppose of the intention,” said Sherry Cooper, Dominion Lending Centres’ chief economist.

Zoning bylaws have long been identified as a major reason housing delivery in Toronto and Vancouver cannot keep up with demand, and rather than address that issue, Cooper says the budget instead misses the mark.

“The government could have done things to increase supply, like changing the rules around zoning and the Greenbelt to open up more land,” she said. “They could even subsidize housing construction or eliminate some of the red tape and other delays in construction. There are other things that could have been done to incentivize the construction of new housing.”

Other housing measures included in the budget left much to be desired—namely answers. Through the First-Time Home Buyer Incentive, the Canada Mortgage and Housing Corporation will provide first-time buyers with up to 10% of the purchase price of new build, and 5% of a resale, but whether it’s through an equity position in the property or an interest-free loan is unclear.

“This is an important distinction because if the government is taking an equity position in a home, the amount that the homeowner would have to pay would grow as the value of the home increases,” said James Laird, president of CanWise Financial.

If that home enjoys equity surge, will CMHC be entitled to as much as a tenth?

“It may well be that you pay off 10% or 5% of the sale price as opposed to the purchase price, so we don’t know the details yet, but one needs to consider whether you’re also sharing appreciation—the equity you have in your home—when you sell it. Or, for that matter, even a loss.”

The RRSP Home Buyers’ Plan increased the maximum withdrawal amount to $35,000 from $25,000, but it has to be repaid within 15 years with one-fifteenth monthly payments. That makes Davelle Morrison chary.

“I generally recommend clients who don’t have to use an RRSP not to,” said the Bosley Real Estate broker. “The last thing first-time buyers need, between all their debt payments, is another monthly obligation.”

There was much speculation leading up to the budget announcement that 30-year amortizations would be reintroduced, but that didn’t happen. By reducing monthly mortgage payments, Morrison believes it would have been the single most helpful initiative the government could have introduced to help first-time homebuyers.

“Bringing amortizations would allow a first-time buyer—or any buyer—to spend less money each month,” she said, adding that the First-Time Home Buyer Incentive is negligible in markets like Toronto and Vancouver. “If you’re going to save up that 5% in a smaller market where it’s cheaper, you could just as easily do it yourself. What they’ve done is complicated when they could have just increased the amortization period.”

by Neil Sharma

21 Mar 2019

Bully offers conceal money laundering

The federal government has pledged to tackle “snow washing”—the process by which Canadian real estate is used to launder money.

“This issue was identified as a real priority—it has become a priority for my government,” Bill Blair, Canada’s federal minister for organized crime reduction, told Bloomberg. “We recognize and acknowledge the impact that this criminal activity—money laundering—has had on British Columbia, on the affordability of housing, and on the integrity of our financial institutions.”

Last month, a study by Transparency International Canada, Canadians for Tax Fairness and Publish What You Pay Canada revealed that, since 2008, $28.4 billion worth of housing in Toronto alone was purchased anonymously through private entities, $9.8b of which in cash. The study drew upon 1.4 million homes to reach its conclusion.

“Canada’s lack of beneficial ownership transparency makes our entire country an attractive destination for money laundering,” read the report. The scale of Canadian real estate’s money laundering problem does not surprise Erica Mary Smith, broker of record and co-founder of Stomp Realty in Toronto. She first noticed it about a decade ago when she worked in-house for a builder.

“It was around 2008 or 2009 that it started to take off,” she said. “We would have foreign buyers all the time who would try to buy under a different name. You’d never meet them. Sometimes the money would just come through and we’d have the feeling that it isn’t being done the proper way, but it’s hard to prove. They try to use certain IDs or are evasive when it comes to supplying certain things. Builders went through this a long time ago with black market money coming from overseas for the purpose of being cleaned through properties. That’s why RECO brought in the forms.”

However, measures introduced, like Receipt of Funds and Individual Identification Forms, have done little to curb untoward activity in the real estate market. Smith noted that a hot market like Toronto’s, where there are frequently multiple offers on properties, is the perfect way to launder large sums of money. “Million dollar condos sell every day and if people are laundering money, all they have to do is find a multiple offer scenario,” she said. “A bully offer will come in but everyone is none the wiser because there are eight offers on the property and they just think the buyer really wants the property. The higher the offer, the more money they clean.”

by Neil Sharma

31 Mar 2019

Lower mortgage rates as bond yield inverts

The current decline in the bonds market is good news for Canadian fixed-rate mortgage borrowers with rates heading lower.

As the bond market yields invert – as they did Monday in Canada – the cost to banks of borrowing in the market declines, meaning they are able to finance mortgages at a lower rate and pass savings on to customers.

It’s not all good news though because the inverted yield, also seen in US bonds, is often a foreteller of weakening economic conditions and potentially recession.

However, this risk is likely to mean that the BoC will remain highly cautious of increasing interest rates.

An outlook from TD Economics’ Beata Caranci and James Orlando suggests that Canada may need “the real interest rate to remain close to or below zero for a long period” with the deleveraging process only just starting.

There is a growing cohort of investors and analysts that believe the BoC’s next move on rates will be a cut and that is proving good news for variable rate mortgage borrowers too.

Janine White, vice-president of told CBC News that rates will climb in the next couple of years but “for the rest of 2019 the prediction is that the variable rate is going to be stable and maybe has a chance of coming down."

by Steve Randall

26 Mar 2019

Young Canadians are taking some crazy financial risks

Canadian millennials are risking damage to their credit profiles and financial security by not protecting their personal information.

A study by Equifax Canada has found that fewer Canadians overall are checking their financial statements, shredding personal documents, or installing security to their computers, despite the rising threat of fraud and identity theft.

“Identity theft and fraud is more complex and sophisticated than ever, which should be of growing concern for Canadians,” said Tara Zecevic, Vice President, Fraud Prevention and Identity Management, Equifax Canada. “Millennials, in particular, should be doing more to educate themselves and protect their personal data given the incidence of credit card fraud we saw in 2018.”

Data flagged by financial institutions and tracked by Equifax Canada includes:

  • Attempts of credit card fraud have increased by 42% over the last two years;
  • Millennials were targeted in 48% of all fraudulent credit card applications in 2018; and
  • Suspected true name fraud (when an identity thief poses as a real person in completing a credit application) has also increased by 84% over the last five years.

Although the survey highlights complacency from many Canadians, it also found that consumers are sharing less on social media (up to 43% from 39%) and more people are checking their credit reports (up to 28% from 21%). And millennials checked their credit reports more than any other age group (29%).

“Younger adults need to recognize the importance of preventing fraud before it happens,” added Zecevic. “There are so many little things consumers can do to help protect their personal information. It’s simply knowing what to do and making the time to do it.”

by Steve Randall

18 Mar 2019

OREB, BCREA weigh in on federal budget’s housing policies

While pleased the federal government introduced measures in the federal budget to support housing affordability, the Ottawa Real Estate Board nevertheless believes its efforts fell short.

“Some first-time homebuyers will be assisted through the shared-equity mortgage program and the increase of RRSP withdrawals to $35,000,” said OREB President Dwight Delahunt. “However, we would’ve preferred a measure such as the one we proposed to government to increase the first-time homebuyers’ tax credit from $750 to $2500 as this would not have created another debt to be repaid.”

The real estate board believes increasing the RRSP withdrawal amount is a great idea, at least in theory.

“While the government has said these measures are to help millennials specifically, we question whether this cohort actually has this amount invested in RRSPs and whether they will be able to qualify for a shared-equity mortgage program,” continued Delahunt. “Many millennials are facing affordability issues related to their income levels and student debt.”

Despite those criticisms, OREB credits the government for amending the Homebuyer’s Plan to include leniency for turbulent life events.

“We certainly applaud the modernization of the Homebuyer’s Plan to include those going through difficult life-changing circumstances, such as the breakup of marriage and common-law relationships—we have been advocating for this for some time.”

British Columbia residents know the struggle with housing affordability all too well, and the British Columbia Real Estate Association lauds the federal government’s efforts in the budget, particularly with respect to RRSP access.

“British Columbians who aspire to home ownership need to be able to achieve this goal to assure a sustainable future for our province,” said Darlene Hyde, BCREA’s CEO. “Realtors have advocated for modernization of the HBP [Home Buyers’ Plan] for a long time and we’re pleased to see it addressed in Budget 2019.”

However, Delahunt suggests that supply constraints in Ottawa are problematic and could have been addressed in the budget, but wasn’t—nor was amending B-20, which he added exacerbates affordability woes.

“Our biggest disappointment was that government failed to make any adjustments to the B-20 stress test, which was an attempt to cool two major markets in the country. We hope the government will continue to monitor the effects of its mortgage policies and be open to adjusting them if necessary. They need to recognize that, while mortgage debt is on paper the largest component of household debt, it is the lines of credit and credit cards that can have a major impact due to the much higher carrying costs of these facilities.”

by Neil Sharma

25 Mar 2019

Thinking of sharing a home?

With high housing prices, more attention is being focused on the concept of co-housing with buyers sharing occupancy and ownership costs of buying a home.

Last month, real estate reporter Tess Kalinowski wrote about a new web-based app — — designed to match would-be buyers. Co-owners of a home should have a binding agreement that spells out the details of the relationship.

But finding like-minded buyers is only half the story. The other half is setting up a binding agreement to govern the relationship. The most important issues to be considered in entering into a co-housing agreement with partners, whether they are long-term friends, relatives or new acquaintances, are:

  • the initial financing and deposit structure;
  • the ownership percentages to be shown on title;
  • the operation and management of the venture, including a process to resolve disputes;
  • an exit strategy where all parties agree to the sale of the property;
  • and an exit strategy where one of the parties is in default or where the parties cannot agree on the sale of the property.

When all residents of the house are getting along and agree on everything, a written agreement may not seem necessary. But the main purpose of a co-housing agreement is to provide for resolution for operating issues, and disagreements over management and sale of the house.

Some of the issues to address in a co-housing agreement:

Repairs or improvements. When they’re needed by one owner, are the costs divided equally? If only one owner wants to paint or remodel, does the other owner pay half the cost? The theory here is that any improvement will probably increase the home’s value.

Utilities. Are they divided by the amount of space occupied in the house or the number of occupants? If, for example, half the house is occupied by one person, and the other half by two people, are the utilities shared — equally, or two-thirds/one-third? If the single occupant is joined by a live-in partner, does that affect the cost-sharing of utilities, cable and internet?

Defaults. If one of the co-owners is behind on mortgage and tax payments, how does the other owner recover his or her share of the arrears? Do they sue each other while living together?

Division of expenses and ownership interests. What happens when one partner occupies two bedrooms and the other uses only one? If just one owner has a car, does that partner pay more of the shared common expenses?

Subletting. If one party moves out, can he or she rent the space to strangers?

Ending the agreement. This is always a big issue and partners should consider if there will be a written provision entitling one owner to force a sale — whether or not the other is in default. One common provision is a buy-sell clause. This provides for one partner to set a price on his or her share of the property, and let the other partner decide to buy or sell him or her out at that price.

An experienced lawyer should always be consulted when preparing a co-housing agreement. The goal will be to provide for smooth operation of the property, a fair division of ownership, expenses and responsibilities, and an equitable way of unwinding the venture.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents. 
He can be reached by email at, phone 416-364-9366 or fax 416-364-3818.


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