Garth Turner - Real Estate in Canada

[Gamecock-YT]

3 hours ago, longlake95 said:

I think it’s more like 25% of home owners are mortgage free, and the other 75% have mortgages. 

 

This is a bit dated but when I was going down the rabbit hole yesterday was as relevant as I could get:

 

 

 

Edited April 18, 2023 by Gamecock-YT

[longlake95]

Okay if you include the renters….I get the jist. 

[Peregrine]

The GTA probably has a population that's around 8 million now, on par with New York City. I remember 20 years ago when they had less than 5 million. I think it's surely the fastest growing developed city in the world. Combine this with housing NIMBYism and a public transport system that hasn't budged and it's really unsurprising why housing prices are what they are.

 

The Tier 1 cities in China have the same problem with housing prices and they don't have the NIMBY problem because the state owns all the underlying land.

[SharperDingaan]

17 hours ago, Jaygo said:

can you elaborate please. Does this playing out negatively affect some reits?

 

The price of a REIT share is the PV of the net cashflow, discounted at market rate; divided by the number of shares in the REIT. The higher the vacancy rate the lower the net cashflow (facilities still have to run even if floors are empty), and the less ancillary revenue from the office tower food court and rental space. WFH drastically reduces both space requirements and foot traffic; the longer it continues, the more the need to maintain efficiencies by consolidating dispersed clients in fewer buildings (via incentive discounts) - and repurposing those now empty buildings.

 

Reduce the vacancy rate (via condo conversion), you also raise foot traffic, and the free cash flow going to the REIT. Do the WE thing (long base let, multiple short re-lets) as condos for the masses, and you dramatically increase free cash flow. And as lease costs also fall significantly, as soon as land purchase and demolishment/rebuild costs are avoided; high vacancy rates going forward are unlikely to reoccur.      

 

If those long lets are with crown agencies, the future cashflow is easily securitized, and proceeds can be used to pay off debt. REIT financial ratios improve, and they trade at higher multiples. 

 

SD

Edited April 18, 2023 by SharperDingaan

[mcliu]

9 hours ago, Peregrine said:

The GTA probably has a population that's around 8 million now, on par with New York City. I remember 20 years ago when they had less than 5 million. I think it's surely the fastest growing developed city in the world. Combine this with housing NIMBYism and a public transport system that hasn't budged and it's really unsurprising why housing prices are what they are.

 

The Tier 1 cities in China have the same problem with housing prices and they don't have the NIMBY problem because the state owns all the underlying land.

Population 20 years ago ~5m today ~7m. ~1.5% CAGR

 

Hard to compare NYC and GTA cause GTA is made of several cities. The size of GTA is probably around 10x of NYC.

 

[Peregrine]

15 minutes ago, mcliu said:

Population 20 years ago ~5m today ~7m. ~1.5% CAGR

 

Hard to compare NYC and GTA cause GTA is made of several cities. The size of GTA is probably around 10x of NYC.

 

 

That number's from 2019. The 2021 census had the GTA at 7.3 million. With over 1 million new immigrants in Canada last year alone I have to imagine that the 2023 census is close to 8 million or above that. Not to mention that with urban sprawl what qualifies as GTA should be broader encompassing than the official definition.

[maplevalue]

https://www.ctvnews.ca/politics/canadian-government-won-t-rule-out-changing-immigration-targets-to-address-housing-challenges-fraser-says-1.6555446

 

Quote

“When we look to the future of immigration levels planning, we want to maintain ambition and immigration, but we want to better align our immigration policies with the absorptive capacity of communities that includes housing, that includes health care, that includes infrastructure," Sean Fraser said in an interview on CTV’s Question Period with Vassy Kapelos on Sunday.

 

...

 

“If we were going to shift the way that we operate, to set a target or to align the numbers with the housing capacity, it's a monumental change in the way that Canada does immigration,” Fraser said.

“That doesn't mean we shouldn't do it. But it does mean if we're seeking to make a permanent change to the way that Canada's immigration laws operate, we have to do it right.”

[whatstheofficerproblem]

 

This could be fake, but since it's making rounds on social media here it is. Big if true. Very bad symptoms, you won't be missed. I wonder how this will play out on the broader economy down the line. Also would love to see the supply chain implications, franchising growth & real estate movements.

 

Edited July 7 by whatstheofficerproblem