Opportunity 2013: Housing

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Mark Carney’s warnings about bubbles in Toronto and Vancouver begat tough new mortgage rules that have succeeded in taking some of the gas out of Canada’s most overheated real estate markets. But this potentially dark cloud has some shiny silver linings for innovative players.

Discount brokers:

“When the market is hot, people don’t think they need a realtor,” observes Roy Almog, founder of Calgary discount broker 2% Realty. But when the market slows down, prices drop as well, sending sellers in search of lower agent commissions as a means of absorbing the impact of lower prices. Enter Almog’s firm, which offers full brokerage services but at less than half the typical commission rate.

A slowing market “is our sweet spot,” adds Walter Melanson, director of partnerships for Property, a Moncton, N.B.-based discount real estate broker with more than 100 franchises across Canada, because the extra cost on a 5% agent commission can be a deal-breaker when prices are falling.

Rental providers:

The rate of apartment construction has soared by 29% since 2009, reaching a decade-long record in 2011. If year-to-date trends continue, 2012 will be even more robust. This demand for rentals has drawn the attention of developers like Birchwood Properties, a mid-sized Calgary home builder, which recently decided to enter the apartment sector with a 70-unit midrise. Birchwood launched pre-leasing in July and had all the units rented within two months; the building opened in October. “The need for rental housing is crazy huge,” says Amanda McCormick, Birchwood’s property operations manager, noting Calgary’s shortage of affordable housing. For companies pitching rentals, “there isn’t a lot of competition right now.”

Almog adds that the new mortgage rules will push thousands of first-time house and condo buyers back into the rental market, triggering more demand for purpose-built apartments. He foresees particular potential for units catering to higher-end tenants who previously might have been able to put a down payment on a condo.


The slowdown in demand for new homes also might spur a surge in home improvement spending as owners settle in for the long (or longer) haul. Surveys by Canada Mortgage and Housing Corp. show that almost half of homeowners expect to upgrade their residences by the end of 2013. The projected uptick in renovation activity will mean new business for the usual suspects: contractors, building-materials suppliers and decorators. Three-quarters of renovators say their improvements are in anticipation of a future sale—yet, that may not be enough to net the suddenly elusive “Sold” sign on the lawn.

Read more from PROFIT’s 2013 Opportunity Guide

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