“Strong Mayor” Legislation, Ontario

“Strong Mayor” Legislation Coming to Ontario 

The Ontario government is proposing to give mayors of its major cities, such as Toronto and Ottawa, veto powers over bylaws that conflict with building housing. The legislation introduced intends to hand power to cities in the most urgent need of new housing and that are “shovel ready.” 

The bill would allow mayors in Toronto and Ottawa to override council approval of bylaws, such as a zoning bylaw amendment. The legislation will also give mayors the responsibility for preparing and tabling the city budget, instead of council, appointing a chief administrative officer, hiring and firing heads of departments (with the exception as the auditor general, police or fire chief). The government’s greater goal is to build 1.5 million homes in 10 years and to build critical infrastructure. It hopes to support efficient local decision-making to speed up development timelines, cut red tape and get housing built faster. 

 

Not all on board: 

Although Toronto welcomed the proposal, Ottawa’s government doesn’t entirely support the move. Mayor Jim Watson expressed that more power won’t build more houses. Instead, more money, flexibility in rules, such as inclusionary zoning, which would allow for more construction and greater in certain areas. Furthermore, ending exclusionary zoning would allow for the building of duplexes, triplexes and fourplexes on lots zoned for single-family housing. 

 

Will Premier Ford’s attempt to localize decision-making power facilitate the construction of new housing options for the people of Ontario? 

The Ontario Real Estate Association said the strong mayor legislation is a good step, but would like to see it extended to cities beyond Toronto and Ottawa. Overall, Ontario is 1.2 million homes (rented and owned) short of the G7 average, with prices tripling in the last 10 years.

 

Only time will tell. 

 

 

Access the full article here: 

https://www.cbc.ca/news/canada/toronto/ontario-set-to-introduce-strong-mayor-legislation-to-speed-up-housing-development-1.6546743

Canada’s Housing Market: A Theoretical Paradox?

The Canadian housing market is experiencing the opposite of what is assumed in urban economic theory. This theoretical paradox has causes and consequences. We take a dive into what this means and conclude by providing a potential solution to the paradox.

What does urban economy theory assume? 

Urban economic theory assumes housing prices and rents are intrinsically linked. The value of a dwelling is assumed to be the present value of future cash flows (such as rents) generated through propriety. Thus, when rents increase, so should housing prices. 

What is the paradox? 

Housing prices and sales in Canada are decreasing, while rents are rapidly increasing. The Canadian housing market is experiencing the opposite of what is assumed in urban economic theory. 

Take Toronto, Canada’s largest city, as an example. Since 2021, rents for 1-bedroom apartments increased 20%, 2-bedrooms increased by 15.3%, and 3-bedroom units went up by 12.8%. Overall, there has been a 30% decrease in stock availability in the city within a year. This is also taking place beyond major Canadian cities. In Halifax, Nova Scotia, vacancy rents reached less than 1% in 2022. In London, Ontario, rental rates have increased 28.5% in just one year. 

What is causing the paradox? 

A few key contributing factors can be identified as causing the paradox: 

Hikes in Interest Rates: rising rates have increased mortgage rates, causing hesitation and postponement of ownership by aspiring homeowners, resulting in longer than expected stays as renters. 

Resumption of Economic Activities: the pandemic forced individuals to isolate at home, but re-openings are causing increased migration back into the city, especially for workplaces. 

Students: with higher learning institutions open for on-campus learning, students are flocking back into the city, with heightened demand for student rentals beginning in May 2022. 

Immigration: the anticipated arrival of new immigrants as a result of border reopening’s and international turmoil will put increased pressure on the rental market, as this group generally relies on rental housing upon arrival. 

Its Consequence? 

Although unintentional, the consequence of this paradox is increased pressure on an already tight rental market. With future homeowner postponing purchase decisions, the turnover rate of higher-earning individuals in rental housing is lessening. This group, unwilling to purchase with current interest rates, is now in direct competition with students and immigrants, who oftentimes don’t have alternative housing options within the small pool of expensive Canadian real estate. 

The Solution: 

Government action at the federal, provincial and local government levels is required, and is key in solving the riddle in Canada’s current rental market. The basis of a solution is through government intervention to incentivize the construction of new purpose-built rental housing. Only through additional measures taken by regulatory bodies, such as lowering development costs and/or offering interest-free loans, will much needed purpose-built rental supply be generated to meet the demand.

Interested in learning more?

Access the Financial Post article here: https://financialpost.com/real-estate/mortgages/prices-are-falling-but-rents-are-rising-in-canadas-paradoxical-housing-market?utm_source=Twitter&utm_medium=organic&utm_campaign=FP_promo#Echobox=1659531563-13

Generation Rent?

Finder’s “Generation Rent” survey suggests that Canada’s rental market will flourish in 2022

A new survey conducted by the financial research firm Finder, known as “Generation Rent,” revealed that a majority of Canadians 18 or older are opting out of homeownership. In a similar survey conducted in 2019, Finder reported that a significant number of Canadians reported no interest in owning a home. Two years later, the survey suggests a sentiment increase of 60%. 

Why are Canadians Opting-Out of Homeownership? 

The spike in interest rates together with lack of affordable supply are causing more and more Canadians, especially younger generations, to consider renting as a long-term housing solution. 

What the Survey Reveals: 

The recent survey focused on Canadians with home-buying intentions. The results revealed that only 1 in 10 Canadians remain optimistic about becoming a first-time home buyer within the next 5 years against the backdrop of interest rate hikes. On the other hand, 29% expressed that “renting forever” is a far more realistic option, with 16% of Canadians stating they were no longer interested in ownership, and another 13% expecting to rent for the rest of their lives. 

Ramona King, senior finance editor at Finder.com, said “for many, the erosion of housing affordability combined with rising mortgage costs, means the barriers to homeownership appear almost insurmountable – and it’s turning a generation of Canadians into forever renters.” 

What this means for Cacoeli: 

Multi-family rental housing projects have been, and continue to be, our real estate investment strategy. For over two decades, Cacoeli has focused solely on rental properties in Ontario’s strongest primary and secondary markets. To date, we own and operate over 250 square feet of GTA rental real estate. Our experience has granted the opportunity to familiarize ourselves with the most valuable GTA market trends, planning departments, and local trades personnelle. 

Finder’s survey suggests demand for Cacoeli’s asset type is only growing. Cacoeli already has a foot in the door to Ontario’s rental market industry, and we will use this to our advantage in the pursuit of further rental real estate investment projects. 

Are you an ultra high networth individual, institutional and/or family office investor looking to tap into Ontario’s growing rental market?

Cacoeli’s Multi-Residential Opportunity Fund is a great opportunity to do so. Made up of 4 properties located in Ontario’s hot-markets, Toronto, Kitchener and St.Catharines, the fund expects to generate a target net IRR of 18% within a 4 year investment term. 

Get in touch with one of our team members to find out more!

Read more about Generation Rent here:

https://www.westerninvestor.com/british-columbia/nearly-a-third-of-canadians-say-they-will-rent-forever-new-survey-5563163

Take-Aways from “Analysts say interest rate hike should push rent growth in Canada’s large cities” – Global News

Global News assessed aggregated rental data from two Canadian-based agencies, Rentals.ca and Zumper, and concluded that Canada’s largest cities are experiencing rent growth as a result of increased interest rates, a return to the workplace and general changes in daily human migration patterns. 

As an investor in rental housing, we are keeping a close eye on rent growth. 

Here are some of our key takeaways: 

Rising Interest Rates Pushing More Into Rental Market 

Recent interest rate hikes mean higher costs for those in search of a place to call home. More and more, many are reconsidering locking themselves into a hefty mortgage commitment amid rising interest rates, turning to the rental market instead.  

Ontario & BC Have Canada’s Highest Average Monthly Rental Rates 

Ontario, home to Toronto, Hamilton, London, Kitchener-Waterloo, has some of the highest monthly rental rates in Canada. According to the data, Ontario rents are up 1.8% monthly, and 14% year-over-year, with BC experiencing similar increases. 

Hamilton is Red-Hot

In Hamilton, the combined average price data on one-bedroom suites suggests increases of $170 more per month, year over year. For two-bedroom rentals, increases of about $280 a month. Hamilton continuously ranks as one of the highest one-bedroom average monthly rents on Rentals.ca and Zumper’s lists.

Rent Growth in Ontario is Predominantly Concentrated in the Southwest 

St.Catharines is witnessing a 12 per cent increase in rent year to year. Toronto continues to rank as the highest average price for a one-bedroom apartment at $2100. Housing market correction coupled with recent interest rate hikes mean higher costs for those renting in Canada’s major cities, including Toronto, Hamilton, and St.Catharines. Aggregated data from vacant units say rents are likely to continue to rise as many reconsider hefty mortgage commitments amid rising interest rates. 

Interested in reading the full article? 

Access it here: https://globalnews.ca/news/8990244/analysts-interest-rate-hike-rent-growth-hamilton-june-2022/

Tips to Retire Comfortably

You may be in your 20’s, 30’s, 40’s, or even 50’s. Retirement may be years away, but it’s never too early to think about how today’s actions can impact you 10 or 20 years into the future. With rigorous research, analysis and careful planning, Cacoeli believes that financial independence and early retirement can be achieved. 

The Traditional Method: 

Traditionally, retirement savings are in the form of pay cheque contributions and/or saving accounts. Overtime, these contributions accumulate to make up the funds an individual depends on for survival once retired. Typically, an individual requires 1-2M in savings to retire at 65 (with a life expectancy of 75-85 years of age in North America) to maintain a certain lifestyle once no longer active in the workforce. 

What Alternative Methods Exist? 

At Cacoeli, we strive to be different and establish alternative methods towards helping our investors achieve financial independence. Additionally, we only perform transactions that we not only believe in, but invest in.  

Cacoeli’s COO, Kasey Wong, looks to monthly income producing assets as the alternative to traditional savings accounts. Shedding light on multi-family rental real estate assets, Kasey identifies the assets active, tangible, highly-desirable and diversified offerings, in addition to its monthly-income producing capabilities (based on rents paid by tenants). Capital poured and held in multi-family rental assets are better able to accumulate capital and increase in value within a shorter period of time, particularly when compared to traditional methods of retirement savings.  

Check out Cacoeli’s COO, Kasey Wong’s insights on alternative methods to achieve financial independence and early retirement: 

Interested in getting involved in our monthly income producing rental real estate projects?

Get in touch! Any member of our team will be glad to provide you with further information.

Reaching financial independence and retiring comfortably are not impossible. We at Cacoeli are here to help. 

How Cacoeli Achieves Superior Returns: Part 2

Our team uses rigorous strategies to successfully execute numerous real estate repositioning projects. In part-two of our strategy features, we dive into our evaluation of a city’s economic and business attractiveness and how it enables Cacoeli in achieving superior returns.

What is economic and business attractiveness?

A city’s economic and business attractiveness can be defined as the available/open offerings made by a local entity, such as a city’s government, for entrepreneurial ventures and established businesses within its borders. This can come in the form of grants, interest-free loans, and other financial and/or zoning elements that are geared towards increasing, enhancing and/or strengthening local business development.

It’s all in the Documents

Core documents, such as Official Planning documents, zoning-designations, programs and funding towards local entrepreneurialism can reveal a lot about the future of a space. In critically assessing and evaluating planning documents, Cacoeli is well equipped to propose a suitable project for a given location, ensuring that it fits nicely within the existing and future landscape.

Economic-Business Attractiveness & Real Estate 

Another critical research variable considered by the Cacoeli team is the relationship between business growth and real estate demand. When localities encourage, support and maintain business development, greater job opportunities begin to open up. More jobs, particularly high-skilled jobs, triggers an influx of skilled-workers to fill the job supply demand. Increased numbers of skilled workers impacts overall average earnings and income levels of a particular city, while also applying pressures on its housing availability and supply. Increased employment opportunities lead to an influx of high-earning workers, and a decrease in housing vacancies and supply, causing land scarcity and increased, competitive land values. When local economies experience such a change, property developers express greater interest and initiate additional development projects. This cycle is illustrated below:

So…Why Does Economic and Business Attractiveness Matter to Cacoeli?

Our job as your asset manager is to seek, assess and evaluate information to the best of our ability and advantage. By interpreting past, current, and future economic plans for a city of interest, Cacoeli is able to set realistic expectations and achievements for all of our opportunistic projects.

The goal: minimize operation costs, maximize investor returns.

Learn more about economic and business attractiveness from our CEO, Jedidiah Liu, in this short-clip: 

Interested in getting involved with our deeply-researched, opportunistic, multi-family real estate investment projects?

Get in touch with us today! 

How Cacoeli Achieves Superior Returns

Our team uses rigorous internal strategies to successfully execute numerous real estate repositioning projects and maximizing the return on investment for our clients.

One of our vital factors when considering a given project is – location, location, location!

 

Secondary Markets Provide Great Upside

At Cacoeli, we focus on cities with populations of 100,000-200,000. Typically, these are located in secondary markets throughout Ontario, Canada. This population density is suitable for a dynamic rental market, while also capable of revealing important data that feed our economic projections & decisions.

 

It’s all in the Analysis 

But we don’t stop there. Cacoeli takes their analysis to the next level by running an internal demographic report.

Determining the average and and occupation of the population is critical to determining what real estate asset is suitable for a given location. Cacoeli approaches projects by asking key questions, such as:

 

Has the population increased over the past 5 years?

How old is the population?

What is the average number of individuals in a household?

What is their daily occupation?

What is the average household income?

 

Our job as asset managers is to rigorously assess and execute using the most important and up-to-date information on any given location of interest for our investors.

 

Through our internal assessment and reporting, Cacoeli is capable of researching and executing projects that directly meet the demand of a particular location. This tool has proven to be effective in achieving higher-than-average returns on our real estate projects for nearly two decades.

 

Watch our CEO, Jedidiah, dive into the important role of location in any of Cacoeli’s real estate investment projects:

https://youtu.be/8EAAEEWQj5o

New, Rare, Value-Add Investment Opportunity

Introducing Cacoeli’s new, rare, value-add real estate investment project: Holborn-Chicopee!

Our new rental asset in the Kitchener-Cambridge-Waterloo region is another short-term real estate investment opportunity that is planned to generate a net IRR of 12-22% in 3 years. Nestled in the booming KWC-region of Ontario, this asset has a number of rare “pockets of value” which, when properly addressed, present material increases in the assets’ overall value. The “pockets of value” include: purchase price, price per unit, cap rate, and rental rates. By maximizing ancillary revenues and optimizing the assets’ use – Cacoeli is confident that they can enhance both operational and financial performance of the asset.

With nearly two decades of experience in repositioning multi-family rental operations, the Cacoeli team knows to how to maximize their projects best and highest use. Our creative and hands-on approach is our key to success in this increasingly competitive and highly desirable asset class, allowing us to own, operate and manage more than 1.2 million sq/ft of GTA real estate, including 250 multi-residential rental units in Ontario. Successful repositioning projects with higher-than-average returns for our investors make up the majority of our track record.

Accredited, Institutional & Family Office investors looking to diversify their investment portfolios – get involved in this new, rare, value-add investment opportunity!

Visit our website www.cacoeli.com, or follow us on your favourite social media platforms https://linktr.ee/cacoeli.

In the Works: OPA & ZBA Application in the City of Whitby

Cacoeli is thrilled to announce our most recent development application!

This proposal consists of an 11-storey mid-rise building, comprising 120-units and 2-levels of underground parking in the City of Whitby. Our OPA & ZBA application for 132-152 Brock Street North will provide the city a mixture of market and affordable housing, in addition to a ground-level daycare facility.

A big thanks to our development partner, Terra Bona Developments Ltd., and our architects at the IBI Group for working with us on this complex proposal. Together, our value-aligned partnership worked tirelessly to ensure that our project would offer viable, alternative, rental housing options in the City of Whitby.

Stay tuned for progress updates on this application!

To learn more about our development partner, visit: www.terrabonacanada.com

To learn more about our architects, visit: www.ibigroup.com

JUST ACQUIRED: 890 Bloor Street West

Cacoeli is pleased to announce its latest acquisition for the Cacoeli Real Estate Opportunity LP located at the heart of downtown Toronto, in the Bloordale neighbourhood.

Positioned on the north-east corner of Bloor Street West & Ossington Avenue, this project is in close proximity to critical infrastructure, such as public transportation, parking, grocery stores, schools and other key amenities and services.

This is another elevating acquisition for our investors. The attractive location and nature of this acquisition provides limitless opportunity and value creation.

Based in Toronto, the Cacoeli group is a vertically integrated real estate investment firm and comprises capital raising, investment management and property management entities. Since its formal inception in 2014, Cacoeli has been steadily growing its assets under management, focusing on opportunistic return investments.