Recent data from the Toronto Regional Real Estate Board (TRREB) showed a steep 69% decline in home sales in early April, compared to the same time last year. Similarly, the number of new listings had also fallen 63.7%. One thing remains unchanged, however: housing prices.
Given the current economic climate caused by the pandemic, those in hopes of finding low housing prices are met with dismay as the average selling price for all home types in Toronto reached $885,371, a 3.7% decline compared to the same period last year. The Greater Toronto Area (GTA) housing market remained flat, with an increase of 0.1% to $821,392 for the same period over last year.
As housing prices in the GTA remain high, an increasing number of people are looking for alternative, affordable options outside of the city’s core. The biggest obstacle to overcome for these home buyers is how to live outside of the city without compromising their lifestyles. The answer is suburban self-sustainable mixed-use developments.
Many first-time home buyers and millennials are not willing to spend a fortune on small studios in the heart of downtown Toronto. Location is no longer a top priority for home buyers, according to Point2Homes Real Estate news. Today’s buyers value affordability, ease of access to work and entertainment, enough space to meet their needs, and modern features and amenities. Developers are responding by revitalizing some of Ontario’s oldest suburbs with large mixed-use developments.
Dubbed as “Hipsturbia,” Toronto developers are presenting walkable, condensed neighbourhoods with condo towers, restaurants, bars, cafes, and retail shops which create a familiar city vibe outside of the city. They are hoping to attract millennials into these otherwise unattractive neighbourhoods by providing easy access to public transit and a robust communities.
“Downtown Toronto is going to continue to thrive, but I think subway connected, suburban-urban locations are going to see a bit of a rebound in the next three to five years,” predicts Sean Menkes, director of office and retail at Toronto-based Menkes Developments Ltd.
“It’s a huge trend in the U.S. and it’s exactly what we’ve been planning for the last few years” said Jared Menkes, executive vice president of high-rise residential for the family-owned firm. “We’re bringing what we know downtown and bringing it to the suburbs.”
Development Highlights - Vaughan, ON
Menkes is teaming up with public-pension manager British Columbia Investment Management Corp. to develop an urban pocket in Vaughan, a suburb just north of Toronto. Construction for Mobilio started in 2019. This mixed-use development is an ambitious master-planned community with 12 phases, 40 buildings, and 10,000 residences. Phase 1, called Festival, is scheduled for completion in mid-late 2022 and will showcase a four-tower development and 85,000 square feet of retail. Residents can expect lots of outdoor play areas and walking paths, restaurants, shops, entertainment activities, top of the line amenities, and direct access to facilitated transit.
Development Highlights - Mississauga, ON
Another exciting mixed-use development to look forward to is Mississauga’s Square One District by developer Oxford Properties Group and their partner Alberta Investment Management Corp. Claimed to be the “the largest mixed-use downtown development in Canadian history,” Square One District will begin construction in the summer of this year with expected occupancy to begin in 2024. In this plan, they will be turning 135 acres into an 18 million square foot neighbourhood for 35,000 people, a dramatic boost to Mississauga’s population which is expecting a spike over the next 20 years, according to Mississauga Mayor Bonnie Crombie. This plan will host 37 towers, more than 18,000 residential units, office and retail space making it a “high density living and working zone.”
Development Highlights - Ottawa, ON
Further North, the board of directors for the National Capital Commission (NCC) in Ottawa has approved a preliminary version of the LeBreton Flats master plan, which will include the redevelopment of 4 districts just west of Parliament Hill. Of the 24-hectare site, the commission is looking to have 44% parks and open spaces. The remainder will feature 4,000 residential units, 116,000 square metres of office space, and 21,000 square metres of retail space. The NCC describes Lebreton Flats as, “a place that is pedestrian and cyclist friendly, surrounded by lively and active parks and plazas, including the dynamic Aquedect District, the Ottawa riverfront and a large destination park.” City of Ottawa Mayor, Jim Watson stated, “Ideally, we need to find things that attract visitors and complement the museums and monuments that are in that vicinity and it needs to be a destination for live, work and play and not just live.”
The Ontario Condo Act states that all corporations should maintain insurance equivalent to total replacement cost value for their property. During construction, Course of Construction insurance is required. However, upon completion and prior to the first occupancy, either the developers or the Condo Corporations must acquire Property Insurance for full replacement cost. Normac is Canada’s leading insurance appraisal provider. We are accredited appraisers who specialize in determining replacement cost value for all types of properties, including large mixed-use developments. Request a quote today.
Cover image from Cision in Canada, Oxford and AIMCo unveil Square One District, a new 130-acre 35,000-person mixed-use community in the heart of downtown Mississauga:
On Sunday, April 26th, the rapidly thawing Athabasca River near the Regional Municipality of Wood Buffalo saw rising river levels escalate to full-fledged flooding in downtown Fort McMurray. By Monday, April 27th, close to 13,000 people had been evacuated from their homes. As of May 1st, it is expected that more than 1200 building were impacted by the Fort McMurray flooding and that a boil water advisory could be in place until as late as September 2020. All of this comes after the 2016 wildfires devastated the community and amidst a global pandemic already impacting many businesses and residents.
Living On A Flood Plain
Much of Fort McMurray is built in a floodplain and while a flood of this measure hasn’t been recorded in 100 years, there have been 15 notable floods since the 1830’s. In 2019, plans were finally underway to improve flood defences in the area. The Regional Municipality of Wood Buffalo had started work on raising a road adjacent to the Clearwater River; it’s purpose to act as both a dike and a major arterial road. To date, $6.5 million of a planned $136.5 million had already been spent on flood mitigation, including building flood walls and berms. Intentions to make Fort McMurray a walled city have now been thwarted.
This begs the question, why would perfectly rational people continue to build in an at-risk area. Based on extensive research conducted by the Globe and Mail, approximately 40% of the structures in the Lower Townsite and Waterways are directly in harm’s way.
Merwarn Saher, Alberta’s former Auditor General claims that politics are too blame. Despite Alberta Environment mapping out 48 flood hazard areas, including the low lying Downtown in Fort McMurray, the province leaves floodplain regulation to municipalities. The hazard areas remain undesignated as off-limits to development due to a lack of community support. The problem is compounded by local officials who wish to revitalize the communities and can’t resist the income incentives generated by property development fees and annual property taxes. This is a common problem which can be seen in other parts of Canada, including Fredericton and Ottawa. “Meanwhile, it’s the provinces and the feds who get stuck with most of the tab for helping flooded communities recover.”
The Mayor of the Regional Municipality of Wood Buffalo, Don Scott, says, “More work needs to be done to keep the lower townsite as protected as we can make it. Council is going to have some pretty serious decisions to make about what steps we’re going to be taking.”
Most Uninsured For Floods
Mayor Scott claims that most of the community does not have any flood coverage or were vastly underinsured. The Insurance Bureau of Canada explains that overland flood coverage is not included in standard policies and typically not available to those in flood hazard areas at all. This means that not only will funds for repairs to buildings be unavailable, but there will be no payouts for any additional living costs associated with displacement, unemployment, or other consequences of the flood.
Monica Ningen, Swiss Re’s president and CEO of Canada & English Caribbean, told Canadian Underwriter, “If flood insurance is available to these properties, it is prohibitively expensive, reflecting the high probability for damage. For these high-risk properties, a mechanism to subsidize part of the premium would be required to make it affordable. This could be achieved through a partnership between the industry and the government.”
Mayor Scott is quoted in the Fort McMurray Today, “There’s a lot of damage and not a lot of coverage…Without federal and provincial help in this situation, there are going to be people facing financial ruin.” The Alberta Premier, Jason Kennedy, believes that the Northern Alberta flooding disaster will meet eligibility criteria for a Disaster Recovery Program, as a one-in-100-year flood event. Mayor Scott estimated on May 4th, that there was more than $100 million in damage.
Insurance Repercussions of 2016 Fires
The evacuation order from the floods ended on May 3rd, the four-year anniversary of the evacuation caused by the 2016 wildfires. 80,000 people were ordered to leave Fort McMurray as flames engulfed almost 2400 structures. The 2016 Fort McMurray wildfires are the largest insured catastrophe in Canadian history, estimated at nearly $4 billion.
Despite the fact that many were able to rebuild after the fires, there are others who are still in ongoing battles with insurance providers. For the condominium community, difficulty to obtain coverage has been exasperated by a nationwide hard insurance market. While condominium corporations are required to insure all units and common property to replacement cost value, according the Alberta Condominium Property Act, this hasn’t been possible for all condo boards and people are losing their homes because of it.
The Cedarwoods condo corporation saw their insurance premiums increase in 2019 by 650% following claims related to the 2016 wildfires. The policy they secured cost $925,000 and only covered one sixth of the total appraised value. The Winchester Greens condo corporation is in a similar situation where 2019 quotes jumped 800% over their 2018 premiums and for only one third of the coverage. Kathy Bowers, owner of property management firm, Fort Management, claims that in light of insurance premium increases and declining property values, many owners have no other choice but to hand over their homes to the banks.
A Perfect Storm
Between the 2016 wildfires, record low oil prices, COVID-19, and now the flooding, the devastation for this community is unfathomable. In neighbourhoods like Waterway, residents are looking at a second or third rebuild after the 2016 fires and summer floods of 2013. “Few have had the misfortune of being hit more than once by natural catastrophes, but that’s the case for many of the residents in Fort McMurray,” Ningen told Canadian Underwriter.
The road to recovery for the Fort McMurray community is long and uncertain. There is no simple solution given the risks of living in the boreal forest and a flood zone. Rob de Pruis of the Insurance Bureau of Canada explains, “There’s some really big global economic factors that are also coming into play here as well that we may not have as much control over.” The municipal government of Wood Buffalo is calling on Provincial and Federal governments to step in and find a solution. Alberta Finance Minister, Travis Toews, confirms that the government is working with insurance providers and has requested that they “work to find solutions for condominium owners in the region.”
At Normac, we are expert insurance appraisals and can assist you in determining your total replacement cost value. Have peace of mind that you are sufficiently covered during a catastrophe. Request a quote today.
Cover image from Fort McMurray Today, Volunteer efforts save Heritage Village from flooding, Heritage Shipyard sees significant damage: