Weisleder: Real estate to crash? Not by these yardsticks

The doom and gloom stories have started again about the Canadian real estate market. Here are some signs:

• Canadians debt to income ratio is at 160 per cent, which means we have $1.60 of debt for every $1 of income;

• Canadian real estate is 20 per cent overvalued;

• In Toronto, too many condominium units are coming onto the market. If there are no buyers or renters, prices will fall;

• If interest rates rise 1 percentage point, many of those with a mortgage will be in trouble;

• Canada is not creating jobs as quickly as the U.S..

I see it another way. If you look at the market fundamentals, you can conclude the real estate market is extremely healthy.

I spoke to Brad Lamb, one of Canada’s leading real estate brokerages, who has developed projects in Toronto, Ottawa, Calgary and Edmonton. You would expect him to put a positive face on things, but here are some of his arguments.

Fewer places to build new homes: 
In 2001, 30,000 new homes were built in the GTA, of which 22,000 were low rise and the rest were condominiums. Buyers were able to find new detached homes in the GTA in areas such as Mississauga, Oakville, Oshawa and Milton.

However, as land became more expensive and more greenbelts established across Ontario, the result is not enough land available to build that many low rise homes. As such, for the last few years, we have seen the opposite; 22,000 new condominium units every year and 8,000 detached homes being built. But we still have the same number of buyers coming into the GTA, who need to find a home to work or raise a family.

Who’s building apartments?
 Rent controls have persuaded developers to build condominiums instead of apartments. Yet young people entering the workforce still need a place to live. That is why the vacancy rate for new condominiums in Toronto is close to 1 per cent. If the units are filled with tenants or owners, prices cannot crash.

Will interest rates go up at all? 
For the past four years, banks have been saying that rates should begin rising in 18 months. Same story today.


Rising rates go along with an overheated economy. Canada is very far from being over-heated, with growth averaging about 2 per cent annually in the last few years.


Debt to income ratios are misleading: Lamb says you have distinguish between credit card debt and mortgage interest debt, which is the interest you pay on your home or an investment property to help build an asset.


Most Canadians are able to carry the cost of their own mortgage debt and the rental income from their investment properties in most cases pays for all of the property expenses. Separating good debt from bad debt would show a different picture.


Canadian real estate remains one of the best investments out there.

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Winnipeg mayoral candidates weigh in on cleaning up audit mess

In the wake of a scathing report into a number of City of Winnipeg real estate deals, CBC asked the candidates who will inherit the mess how they would deal with it should they win the election, including whether they would ask police to investigate. 

The EY (Ernst & Young) report, released Wednesday, found a number of policies and procedures were not followed in some of the city's real estate transactions.

It reviewed numerous deals going back several years, including the acquisition of the former Canada Post building downtown, which is being turned into the police service's new headquarters.

Lawyer Brian Bowman hadn't yet finished reading the audit, but said Friday he hasn't seen criminal wrongdoing so far.

He said, however, he will look more closely at the document before making a final decision about his course of action on the issue if he becomes mayor.

"Certainly under my watch, we are not going to set this aside and continue with business as usual," he said. "We think the status quo is, we are demonstrating it in spades right now, that something has to change."

Charleswood-Tuxedo Coun. Paula Havixbeck said she isn't afraid to call in the police, but it has to be justified.

"If we delve deeper and ask questions, I think that I wouldn't hesitate to take it over to either the police or the RCMP," she said. "But I think we need to hear that evidence. Right now there isn't [any]"

Former St. Vital Coun. Gord Steeves said he understands police already have a copy of the audit, but he said it's up to police, not politicians, to decide what they investigate. He too said he will look at the audit more closely but he does have some genuine concerns. 

"I don't mind telling you, I have some real concerns," he said. "There is some specific things in there where there looks to be some sole sourcing. That seems to be at first blush to be inappropriate."

Funeral home owner Mike Vogiatzakis said the police should be looking at the audit right now, whether he becomes mayor or not. 

"I think you should even bring in an RCMP investigation," he said. "Bring somebody in to do an investigation and see where this money has gone."

Former NDP MP Judy Wasylycia-Leis, who lost to current mayor Sam Katz in the last election. said the current council still has a chance to get some answers now. But she also vowed if it doesn't, she will if she wins the election. 

"If the present mayor and council doesn't deal with this matter and leaves it to the next administration, I will deal with it. And all options will be on the table." 

Neither Michel Fillion nor Robert-Falcon Ouellette could be reached for comment. 

City council meets Wednesday to take a closer look at the audit. 

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