It’s Condolicious … !

The GTA keeps building up and out, but planners, politicians and many citizens prefer midrises. So why aren’t more builders interested in a middle ground?

Catherine Mulroney

The mood in the room was tense, Niall Haggart says, the night he pitched his company’s plan for a midrise condominium to a public meeting in Oakville.

More than 700 people were in attendance, and it was an affluent, professional well-educated crowd, recalls Haggart, vice-president of the Daniels Corp.

“It was acrimonious,” he says, “because people in Oakville are passionate about their community and change is often greeted with less than enthusiasm.”

But he also says that an interesting thing happened following the meeting. “Some people hung back … and said, `Mr. Haggart, keep going. I want to buy one of your units.’”

It’s an experience that speaks to the contradictions inherent in the world of midrise and mixed-use developments.

Buildings in the five- to 12-storey range hold an appeal to both city planners and many potential owners. They’re often seen as neighbourhood-friendly, offering the intimacy of a smaller number of residents who can live at tree level and with a sense of connection to community and the street.

Many also see midrise as a format that has brought a special blend of density and livability to many great international cities – as well as some parts of Toronto.

But if midrise seems to fit the bill, why have so many developers decided not to take a chance on the format? Why is so much of the GTA’s new development still driven to extremes – highrise or sprawl?

“Midrise buildings are not easy projects to build,” says Howard Cohen, principal of Context Development, which builds mid- and highrises.

Along with sometimes “vehement” community opposition, he says the properties tend to be proposed for small parcels of land, which can make parking expensive if there is a need to create underground spaces.

Other issues, such as loading requirements and fire access, can also get complicated.

With potential revenue limited by the smaller number of units, delays due to anything from zoning regulations through to community opposition can make the projects too much of a gamble for a builder’s time, energy and capital.

One of the greatest frustrations in Toronto, Cohen says, is working with inconsistent zoning, and at times being at the mercy of the local city councillor.

He notes, for example, that Bayview Ave. has been designated a neighbourhood street, limiting any construction to four storeys, “if you can get approval.

“If the city wants these types of buildings it must facilitate the process,” he stresses.

“There are things we can do with the city to make approvals smoother,” agrees Robert Freedman, the city’s director of urban design.

One of the steps already taken is the approval of an inter-divisional group to look at co-ordination of planning and approval, with curb cuts and water mains no longer existing in isolation.

Building more midrise developments “is absolutely the way the city wants to go,” he says.

There are challenges, though. With 75 per cent of Toronto considered stable residential neighbourhoods, the question of blending in can be challenging, if the developer can even acquire enough property on which to build.

Proximity to public transit and the number of bedrooms in a unit can affect the number of parking spaces required, which increases costs, while extras such as the need for an elevator in buildings once routinely considered walk-up height adds to the bill, Freedman acknowledges.

Still, “there’s much more middies building going on than you’d think,” says Barry Lyon, a Toronto real estate consultant, pointing to construction downtown from Yonge St. to Leslie St. and buildings along King St from Niagara St. to Broadview Ave.

But Lyon agrees that the construction of mixed-use buildings in the five- to 12-storey range can be fraught with challenges.

From a design perspective, there are problems related to how and where the shadows of the buildings fall. While highrise towers can be tall and elegant, some midrise buildings suffer from “squash and spread,” which results in longer-lasting shadows, he notes.

“Without architectural TLC these buildings can be boring unless they have European-style terraces, balconies and insets but that all adds to costs,” Lyon says.

Those increased expenses are slapped on top of buildings with fewer units to begin with, and because midrises mean passing up the ability to charge higher prices for the views that come with units on higher floors, the profit margin can be challenging.

And then there are questions of aesthetics.

“Midrise buildings blend well, but the problem comes when they line either side of the street and you build canyons,” Lyon warns.

One of the reasons this can occur is because “what’s missing is a city-wide vision of midrise (buildings), which serve as a transition from the main streets to the side streets.”

Add in the concerns of the neighbours and no one can predict the fate of construction proposals, even though community fears about property values dropping are unfounded, he notes.

“Consider the Benvenuto,” he says, citing the classic midrise building at the crest of Avenue Rd., south of St. Clair Ave. The Peter Dickinson-designed property bears a heritage designation and is home to Scaramouche, one of Toronto’s toniest restaurants.

“It’s a lovely example of a midrise fitting into a neighbourhood but it likely wouldn’t get proposed today.”

Cohen also points out that midrises also aren’t necessarily the best way to provide housing in established neighbourhoods.

“You may get less light, less privacy and more neighbourhood noise,” he says, especially in the midrises typically built on main thoroughfares.

Sensitivity to surroundings makes it far easier to build on the verges of established neighbourhoods of single-family homes, Freedman says.

As an example, he cites Context’s Ideal Loft project near College and Bathurst Sts., which is terraced down so it doesn’t loom large over neighbouring houses.

The city’s general rule for midrise construction is that the building should be designed only up to a height as tall as the street is wide, Freedman explains.

It’s a model that has worked well in cities such as Paris and Buenos Aires, he adds, and says that when done well, can beautify the streetscape, enhance viability of public transit and create homes that are of particular appeal to seniors because of their proximity to stores and other services.

As for Daniels’ 12-storey project in Oakville – called One Eleven Forsythe – it went all the way to the Ontario Municipal Board and the developer succeeded by reaching out to the community and establishing a working committee with residents.

“If there’s a willingness, we can resolve things,” Haggart says, adding there are only a handful of units left with completion of the building slated for next fall.

Opposition from a similar demographic greeted Daniels’ Kilgour Estates proposal in North Leaside. Local residents expressed fears over the project’s proximity to existing housing and details such as whether mechanical spaces like elevator caps would be in the line of sight. With the luxury of 4.8 hectares, however, the firm was able to take steps such as situating the tallest part, an eight-storey building, overlooking a ravine, so it was not flush with the established neighbourhood.

The best-known phrase in real estate is location, location, location. But the one that probably applies best to making midrises work in the GTA is compromise, compromise, compromise.

City core attracting a wealthier, better educated, childless population

John Spears
CITY HALL BUREAU

The explosion of high-rise condominiums in Toronto’s downtown isn’t an illusion: The population of the downtown core has grown by 65 per cent in the past 30 years, and nearly 10 per cent in the past five.

That makes downtown Toronto one of the fastest growing communities in Greater Toronto, says a new report by the city’s planning staff.

And the newer residents are wealthier, better educated and less likely to have children than their downtown neighbours.

Downtown may be the fastest growing area of the city, but it’s not sucking the life out of other neighbourhoods, said Barbara Leonhardt, director of policy and research in the planning department.

“I don’t believe it’s at the expense of other areas,” she said in an interview.

“We’re seeing growth in other areas as well – all of the areas where we want it to happen: the North York centre, the Scarborough centre, the Etobicoke centre and along the avenues.”

Still, downtown growth was dramatic: 17,000 housing units were built in the area between 2001 and 2006. The downtown population stood at nearly 169,000 last year, up from 102,000 five years earlier.

The sprouting towers – and applications for many more in the approval pipeline – prompted planners to gather more information about who’s living downtown and what services are needed, Leonhardt said.

Planners sent 15,550 questionnaires to residents in the area bounded by Lake Ontario, the Don Valley, Bathurst St. and Dupont St.-Rosedale Valley Rd.

Eighteen per cent responded – 2,260 households – meaning the survey should be accurate within 1.7 percentage points.

Most of the new downtown residents didn’t move that far from their old homes.

Of those who had moved within the past five years, 70 per cent came from another Toronto address; and of that group, eight out of 10 had moved from another downtown home or one within 5 kilometres.

The survey zeroed in on who’s living in housing built since 2001, comparing these generally newer downtown residents with those living in pre-2001 dwellings.

Only 4 per cent of households in the newer units have children, compared with 12 per cent in the older housing, the survey found.

The newer units are dominated by adults 25 to 39; older units have “a more diverse distribution,” including more children, older adults and significantly more seniors.

The shrinking child population downtown, and dwindling school enrolment, have been flagged as an issue by Councillor Adam Vaughan (Ward 20, Trinity-Spadina).

Leonhardt said that since people are tending to have children later in life, it’s possible many young downtown residents ultimately will have children.

“What is an issue, I think, is housing that’s suitable for people when they decide to have children: Is it being built?” she said.

“That’s something we are looking at – whether or not we need to look at interventions in the market to see that kind of housing built.”

Income levels are sharply different between the older and newer housing groups.

In the older housing, 51 per cent of households have income under $60,000. In the post-2001 units, only 29 per cent of households have incomes under $60,000.

And 83 per cent of residents in newer housing are in the labour force – nearly all of them in full-time jobs – compared with 67 per cent in older housing units, the same rate for the city as a whole.

Armed with currency that now packs a punch, Canadians are ‘coming over the wall,’ one real estate agent says of the U.S. market

MATT HARTLEY

There may never be a better time to consider becoming a snowbird.

If you yearn for Palm Springs when the snow starts to blow, or beachfront property across the border from Vancouver or just somewhere warm to go when the kids move out, now may be your best opportunity to grab hold of the dream.

It’s been a very long time since Canadians shopping for real estate options south of the 49th parallel have had this much going for them.

A soft U.S. housing market, jittery American sellers, fearing the ill effects of the credit-crunch fallout and the loonie reaching parity with the greenback, have combined to create a very friendly situation for Canadians looking to enter the U.S. housing market.

Just a short drive south of the Washington State-B.C. border sits the Horizon at Semiahmoo Resort community, a 650-home development spanning 200 acres nestled on the shores of the Strait of Georgia. When the developers began planning the project, they figured that about half the homes would be snapped up by residents of nearby Seattle, and the other half by Canadians.

That was before parity became a buzzword. Now it appears as though more than 85 per cent of the residences will be sold to Canadian buyers, according to Vince Taylor of Pilothouse Real Estate Inc. in New Westminster, B.C.

“When the magic parity hit the other day, our phones started to ring,” he says. “Everybody wants to find U.S. real estate. The Canadians are coming over the wall. They didn’t build the wall big enough.”

With “nothing more than the pesky border” separating Semiahmoo from Canadians looking for an attractive “green” community for a summer home, Horizon has become coveted real estate. The average price of a house in Semiahmoo is about 50 to 60 per cent less than a similar home in nearby White Rock, B.C., Mr. Taylor says.

“You take a spectacular project like Horizon, you couple that with a credit crunch and a softening U.S. economy, and parity on the dollar, and you just have this amazing selection of circumstances,” he says. “I can’t believe the difference on all our U.S. products – how the phone has started to ring recently.”

But it’s not just in Semiahmoo that Canadians are finding bargains; prices in places such as Maui are suddenly downright “wowie.”

“The stuff that we have in Hawaii is absolutely on sale from a Canadian point of view,” Mr. Taylor says. “The markets are soft, the prices are great, and now Canadians can afford it in unprecedented ways.”

Another advantage that Canadians have is their attitude toward mortgages. One of the reasons the U.S. credit market collapsed was that people were signing up for mortgages with deposits that sometimes totalled less than 5 per cent of the cost of the property, and then were unable to meet the payments.

Canadians are used to putting more money down on a house initially, so while it might be difficult for Americans to get money in the United States, banks are taking a longer and more favourable look at Canadian mortgage applications.

“We always put down 20 per cent in Canada, so what do we care?” Mr. Taylor says.

Canadians are also scrambling to scoop up property as prices plummet in other areas, such as Palm Springs, Calif. Local Re/Max agent Michael Layton says he’s entertaining a near constant stream of northern visitors on the lookout for retirement digs.

“I’m seeing a lot of people who are on that cusp – four to 10 years out from retirement – and they’re thinking now is a good time to buy,” he says.

Most of the Canadians Mr. Layton is dealing with come from Toronto, Vancouver and Calgary, and they arrive with ready cash. As the market has softened and American homeowners have been shaken by the credit crunch, Canadians are becoming increasingly attractive to American sellers.

“I’ve found that the sellers are a lot more willing to wheel and deal,” Mr. Layton says. “They’re getting very nervous, so now more than ever, it’s a great time to buy because I’ve had sellers who are adamant they aren’t going to go below a certain price all of a sudden … drop it $15,000 below that price if they smell a buyer.”

It’s not that the properties are bad or that anyone is worried about an out-and-out market crash, it’s just that with so many people looking to sell all at once, it’s truly a Canadian buyer’s market, he says.

A quick glance at the MLS.com website reveals just how real the credit crunch is. In addition to those in Palm Springs, home and condo prices in Phoenix and Miami have also been slashed. Mr. Layton says that before the credit crunch, the housing market in California was so robust that agents routinely didn’t bother running numbers to attempt to discern the true value of a home.

“If the house down the street sold for $500,000 last week and you wanted to sell your house, I’d say let’s try for $520,000,” he says. “We didn’t do statistical analysis of what the market will bear because the market was growing at 10 to 15 per cent a month. People began pricing their properties without doing their basic homework.”

As 2005 came to a close, sellers were still fixated on those never-before-seen numbers, and expected they would have to take only about $10,000 off the price to find a buyer, Mr. Layton says. The reality was that prices had to come down much further.

Now, he says, most of the Canadian buyers he works with come in with cash and are able to drive a hard bargain against prices that have returned to earth.

“Cash is definitely king,” he adds. “With the lenders defaulting and people hearing the big names like Countrywide [Financial Corp.] have problems, then they really start to get nervous. And then I bring them an offer from a Canadian buyer with cash and it’s closing in 30 or 35 days – those sellers stay up late thinking long and hard about that offer.”

While some real estate agents, like Mr. Layton, have had to do little to encourage Canadians to come south to find the vacation home of their dreams, others have been more aggressive in spreading the word about the advantageous situation for Canadians.

Forty-five minutes up the road from Palm Beach, Fla., sits the community of Spanish Lake Resorts in St. Lucie County, where the developers are offering a free two-night stay at a local hotel for Canadians dropping in to check out properties.

“We are seeing lots of inquiries this season,” says Mary Beth Bittan, director of international sales and marketing for Spanish Lake Resorts. “It’s a great time for Canadians to buy because of the fact the dollar has such a strong value comparable to the American dollar.”

It’s so strong, Spanish Lake is accepting straight-up transactions in Canadian dollars for the homes at their resort, which start at $130,000 (U.S.).

While the situation is currently tilted in favour of Canadians, the window on U.S. housing bargains probably won’t remain open forever. Some economists believe currency parity may last into 2008 and possibly 2009, but Mr. Layton doesn’t see the real estate situation staying the way it is for long.

“The builders are cutting back and I think it’s going to level itself out,” he says. “I don’t think it’s going to take a full two years to come back to balance and be a much more even market. But right now we have a high inventory and so the buyers are definitely in the driver’s seat.”

“I think our market has a little bit of a cushion, because we are where retiring people are going to retire to – they’re not going to retire to snowy, cold places.”

Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. TREB worked very hard to oppose this tax and commends the efforts of REALTORS® on this issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result of this strong position, City Council was forced to make a number of amendments to the City’s original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.The City has not yet provided detailed information on administration or implementation issues. The following is based on currently available information. Some information from the City is available here.

What was approved by City Council?

A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential:

• 0.5% of the amount of the purchase price up to and including $55,000

• 1% of the amount of the purchase price between $55,000 and $400,000

• 2% of the amount of the purchase price above $400,000

Commercial / Industrial / Etc.:

• 0.5% of the amount of the purchase price up to and including $55,000

• 1% of the amount of the purchase price between $55,000 and $400,000

• 1.5% of the amount between $400,000 and $40 million

• 1% of the amount above $40 million

When does this take effect?

February 1, 2008.

Are existing transactions grandfathered?

Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax, regardless of the closing date. (Note: Media reports that closings must occur by Feb. 1, 2008 are inaccurate.) The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before February 1, 2008?

Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008?

Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

Where does this apply?

The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.

Are first time home buyers affected?

First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

Toronto’s REALTORS® are concerned about the potential impact of the City of Toronto’s recently approved second land transfer tax and disappointed that the public’s opinion of this tax was ignored.“REALTORS® have been working hard to provide the facts about this unfair idea and the public responded with action. An overwhelming majority of Torontonians believe that this tax is a bad idea,” said Maureen O’Neill, President of the Toronto Real Estate Board (TREB). “The public made their voices heard loud and clear but, unfortunately, they were ignored.”

A poll conducted by the Environics Research Group, commissioned in part by TREB, showed that 62 per cent of Torontonians think that a land transfer tax is an unfair solution to the City’s financial challenge and that 61 per cent of Torontonians wanted their Councillor to vote against it.

“Torontonians deserve to be treated fairly. A second land transfer tax is an extremely unfair way to address the City’s financial challenges. It forces a relatively small group, home buyers, to pay for services for everyone. That, simply, is unfair,” added O’Neill.

TREB also raised concerns about the potential impact of a second land transfer tax.

“Home ownership is something that the City should be trying to encourage, not discourage. The second land transfer tax will make it more difficult for people to achieve that dream and it could hurt property values for some current home owners,” said O’Neill. “It could also have far-reaching impacts on the City’s whole economy by reducing the amount of money that home buyers have to spend on things like furniture, renovations, and energy-efficiency upgrades.”

TREB is disappointed that the City is choosing new taxes instead of more prudent solutions. Specifically, TREB believes that the City should have waited for the Mayor’s panel to report on alternative options. The Environics poll showed that 78 per cent of Torontonians think that City Council should have waited until the Mayor’s panel finished its work before deciding on new taxes.

“This is a classic example of putting the cart before the horse: tax now, save later. That, simply, doesn’t make sense,” said O’Neill. “The Mayor appointed a panel to look for savings and other options and we applaud him for that. The panel is something that TREB, and the public, called for, but they should have been allowed to finish their work so that fair options could have been considered instead of a land transfer tax.”

TREB has consistently supported fair options for dealing with the City’s financial challenges, including a more fair deal with senior levels of government, and continues to support City efforts in this regard.

“Unfortunately, we disagree with the City on the land transfer tax, and we will continue to oppose it. We continue to believe that it is not fair,” said O’Neill. “Let’s not forget that this tax doesn’t solve the City’s financial challenge. We look forward to working with the City towards fair solutions. We will continue to push for a fair deal for Toronto from senior levels of government, as we always have.”