Toronto Condo Completions are Heading to Zero by 2030
Dec 6, 2024
auto_awesome
The podcast dives into the alarming decline in Toronto's housing market, with new home construction sales hitting a 27-year low. Former BoC governor Poloz shares insights on the looming recession and economic challenges, including Canada Post strikes impacting small businesses. Interest rate predictions spark discussions about their potential effects on the economy and currency. The hosts also touch on the resilience of Canada's equity market while navigating complex GST regulations and the changing landscape for public services.
The podcast emphasizes the alarming decline in new construction sales in Toronto, which may lead to zero completions by 2030.
Former Bank of Canada governor Poloz highlights an overarching recession affecting Canadian businesses, exacerbated by strikes at Canada Post.
Neighborhood Holdings is presented as a valuable investment option due to its consistent performance and lower risk mortgage strategy amidst market volatility.
Deep dives
Neighborhood Holdings Overview
Neighborhood Holdings presents itself as an attractive investment option for those seeking consistent income and portfolio diversification. The firm stands out in the private credit fund space due to its impressive track record of nearly a decade demonstrating consistent performance and projected net yields of 8-10%. This approach allows investors to benefit from monthly income without the volatility often associated with public markets. By establishing itself as a reliable source of capital, Neighborhood Holdings addresses the challenges investors face amidst fluctuating public market conditions.
Unique Mortgage Financing Strategy
Neighborhood Holdings employs a distinctive strategy in its lending practices, focusing on residential mortgages secured by first mortgages with lower loan-to-value ratios. Unlike traditional banks that often require extensive documentation, this approach aims to support quality borrowers who may struggle to navigate stringent lending practices. They typically target an average loan-to-value of less than 60%, which significantly reduces risk and mitigates exposure to market fluctuations. This selective focus on average residential borrowers sets Neighborhood Holdings apart from other mortgage funds that may engage in riskier lending practices.
Impact of Interest Rates on Investors
Investors in Neighborhood Holdings benefit from adaptable variable-rate mortgages that offer a pricing floor, effectively insulating them from potential interest rate hikes. This mechanism means that as interest rates rise, investors see enhanced mortgage returns, which provides a cushion against downside risks. Such a strategy positions Neighborhood Holdings favorably as it aligns with the broader market trends, offering a sustainable income stream in a potentially rising rate environment. This adaptability is vital for investors looking for stability in an ever-changing financial landscape.
Current Real Estate Market Insights
The podcast discusses the pressing challenges within the current real estate market, particularly concerning new construction sales in Toronto, which are reportedly at a 27-year low. The government aims to construct 3.9 million homes by 2030, but current data suggests that the actual output may not meet these targets due to pre-sales and financing issues. A particular point of concern is the projected decline in new home completions, which could lead to a housing supply crisis in the Greater Toronto Area. This situation implies potential repercussions for employment in the construction sector, raising questions about the stability of the market.
Developer Sentiment and Future Outlook
The podcast highlights a cautious outlook among developers regarding the housing market amidst declining pre-sale data and a backlog of projects under construction. With indications that home completions could dwindle to zero by 2030, industry professionals are grappling with the compounded effects of high interest rates and low consumer demand. A particular emphasis is placed on the lagging indicators of housing starts, which reflect a development community that may be hesitant to move forward given the current market sentiment. It raises concerns about the long-term viability of new construction initiatives if conditions do not improve soon.
Housing sales plunging means no new housing by 2030. Former BoC governor Poloz says we are in a recession. Canadian businesses struggling with Canada Post strikes. Powell at the Fed signals rate cuts might be over. Bank of Canada on deck next week.