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Fed Taper Brings Risk to Mortgage Bonds Unseen in Treasuries | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   142   0   0   0   0   0
(Bloomberg)—For all the talk that Janet Yellen’s plan to shrink the Federal Reserve’s balance sheet will hurt Treasuries, U.S. mortgage bonds face a bigger test. The securities are already lagging behind Treasuries for the first time since 2011. Investors are demanding 29 basis points of extra yield to buy the bonds instead of Treasuries, with the spread almost tripling from 2016’s low, Bloomberg data show. Firms including Allianz Investment Management and Federated Investors say the spread widening probably isn’t over. “The market will be able to digest it, but you’ll need a higher yield to make buyers buy it,” said Marc Fovinci, head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon, which handles $4.8 billion. “The pace Yellen is talking about, it won’t be like flipping the light switch off. It’ll be like turning the dimmer switch down" on investor demand. The spread will probably double in a year, Fovinci said. The Fed owns more than a quarter of the $6.86 trillion in agency mortgage-backed securities, and its holdings are likely to dwindle to almost nothing at some point because it only bought the securities as an emergency measure to prop up U.S. housing in the last recession. The Fed holds 18 percent of the publicly traded Treasuries market, and it’s likely to ultimately keep more of those holdings as part of its monetary policy arsenal. The Fed’s effort to trim its balance sheet will mark the beginning of the end to its historic effort...
Building is booming but will it last?
News Canadian Real Estate Magazine   August 13, 2017   112   0   0   0   0   0
Housing starts rose in July – an unexpected development that isn’t expected to last, according to RBC. “Our base case outlook continues to assume that that pullback in resale activity alongside gradually rising interest rates and stretched home affordability in some regions will ultimately prompt a further gradual slowdown in resales and, eventually, building activity later this year,” Nathan Janzen, senior economist with RBC, said in a recent report. Canada Mortgage and Housing Corp.reported the seasonally adjusted annual rate of housing starts increased to 222,324 units in July, up from 212,948 in June. The annual pace of urban home construction increased by 5.5 per cent to 206,122 units, driven by a rise in multiple urban starts -- generally apartment buildings, townhouses and condominiums -- while single, detached home starts slowed. Multiple urban starts increased by 10.4 per cent to 141,950 while single-detached urban starts fell by 3.9 per cent to 64,172. Rural starts were estimated at a seasonally adjusted annual rate of 16,202 units. The six-month moving average of the monthly seasonally adjusted annual rates increased to 217,550 in July compared with 215,175 in June. “New Canadian homebuilding remained very strong to kick off the second half of 2017.The 222k (annualized rate) housing starts in July was above the average 215k over
B.C. recreational market remains Western Canada’s most affordable destination
News Canadian Real Estate Magazine   August 13, 2017   96   0   0   0   0   0
Amid continuously elevated home prices in Metro Vancouver—with the benchmark price of a detached house in the city now at $1.3 million, and that of a condo unit at $600,000—the province’s recreational real estate market is proving to be among the top destinations for those seeking affordable cottages and waterfront properties. Rudy Nielsen of NIHO Land &Cattle Company Ltd.—B.C.’s single largest land holder—specifically pointed at Cariboo as the area that offers the greatest recreational value, Business in Vancouver reported. Aside from easy access to lake waters, Cariboo offers readily purchasable properties, with the average price paid for a recreational title standing at $87,845 this year.The title for a 6.8-acre parcel on Francois Lake in the high Cariboo is currently available for $41,000, featuring easy access to a wide range of amenities such as a nearby resort with a store, a restaurant and a boat launch. Vacation properties across the province have been seeing increased demand recently—a development spurred on by denizens of Metro Vancouver continuously snapping up cottages situated within reasonable travelling distance from the city, according to Royal LePage Western Canada manager Jim Morris. Released late last month, the latest edition of the Royal LePage Canadian Recreational Housing Report noted that B.C.recreational properties now sell for an average of $595,077, with the most expensive ones in Okanagan
Vancouver office vacancy rates to plunge further—study
News Canadian Real Estate Magazine   August 13, 2017   133   0   0   0   0   0
In its latest global office report, commercial real estate services company Cushman &Wakefield pointed at a steady trend of Vancouver’s office spaces being progressively filled up over the next few years. The study found that by 2019, Vancouver is slated to have the second-lowest office vacancy rate in the Western hemisphere (6.3 per cent), coming behind only Toronto (3.9 per cent).Other Canadian cities that are predicted to reach remarkable lows are Orlando (7.2 per cent), Ottawa (7.3 per cent), and Winnipeg (7.4 per cent). The report added that over the next two years, the 10 fastest-growing office markets in the Americas will include Toronto at 6.6 per cent, Winnipeg (6.4 per cent), Edmonton (4 per cent) and Vancouver (3.7 per cent). Aside from economic drivers and supply-and-demand pressures, Vancouver boasted of robust development, with 2.3 million square feet of new office space delivered to the downtown area between 2015 and 2017. “That 2.3 million was the most significant wave of development to arrive in basically the last 25 years in downtown Vancouver,” Cushman &Wakefield national director of research Stuart Barron told the Vancouver Sun.“The strength in the technology sector has been so strong that demand in the B- and C-class buildings has been more-or-less explosive.” “The creative companies do love creative buildings,” Barron added.“Companies are
Fed Taper Brings Risk to Mortgage Bonds Unseen in Treasuries
 
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Canadian Real Estate StreetSmartREI   August 11, 2017   195   0   0   0   0   0
(Bloomberg)—For all the talk that Janet Yellen’s plan to shrink the Federal Reserve’s balance sheet will hurt Treasuries, U.S. mortgage bonds face a bigger test. The securities are already lagging behind Treasuries for the first time since 2011. Investors are demanding 29 basis points of extra yield to buy the bonds instead of Treasuries, with the spread almost tripling from 2016’s low, Bloomberg data show. Firms including Allianz Investment Management and Federated Investors say the spread widening probably isn’t over. “The market will be able to digest it, but you’ll need a higher yield to make buyers buy it,” said Marc Fovinci, head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon, which handles $4.8 billion. “The pace Yellen is talking about, it won’t be like flipping the light switch off. It’ll be like turning the dimmer switch down" on investor demand. The spread will probably double in a year, Fovinci said. The Fed owns more than a quarter of the $6.86 trillion in agency mortgage-backed securities, and its holdings are likely to dwindle to almost nothing at some point because it only bought the securities as an emergency measure to prop up U.S. housing in the last recession. The Fed holds 18 percent of the publicly traded Treasuries market, and it’s likely to ultimately keep more of those holdings as part of its monetary policy arsenal. The Fed’s effort to trim its balance sheet will mark the beginning of the end to its historic effort...
10 Must Reads for the CRE Industry Today (August 11, 2017)
 
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Canadian Real Estate StreetSmartREI   August 11, 2017   129   0   0   0   0   0
10 Must Reads for the CRE Industry Today (August 10, 2017) Aug 10, 2017 10 Must Reads for the CRE Industry Today (August 9, 2017) Aug 09, 2017 10 Must Reads for the CRE Industry Today (August 8, 2017) Aug 08, 2017 10 Must Reads for the CRE Industry Today (August 7, 2017) Aug 07, 2017
How Important Is the Asset Manager’s Relationship with the Acquisition/Disposition Team?
 
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Canadian Real Estate StreetSmartREI   August 11, 2017   156   0   0   0   0   0
Over the past few years, there has been a growing focus at IREM on the increasingly sophisticated, highly nuanced relationship between property managers and asset managers. Also coming under greater scrutiny is the relationship between the asset manager and a company’s acquisitions/dispositions team. Not surprisingly, that relationship changes from firm to firm, as Dustin Read, PhD/JD, points out in his new book, Acquisitions & Dispositions: The Role of The Real Estate Asset Manager. One of the key points in the book, and certainly one that I have seen borne out in my own professional experience, is that the most successful combinations of talent exist in a culture of communication and respect across disciplines. In that way, there is little difference between the relative roles of asset manager and acquisitions/dispositions and that of the property and asset manager. Creating a collaborative dynamic across disciplines is a process that grows from the top down. “The structural organization of a real estate investment management firm must . . . be taken into account when exploring ways to help asset managers collaborate with acquisition and disposition teams,” writes Read. As one professional interviewed for the book is quoted as saying, “Acquisitions has to see asset management as a partner. Our asset management team has people working across different regions and different product types with different levels of experience in redeveloping or repositioning properties. It’s on acquisitions to seek out the right people with the right experience for a given transaction.” Clearly, it’s important...
Healthy Job Growth Will Support Steady Absorption in the Office Sector
 
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Canadian Real Estate StreetSmartREI   August 11, 2017   155   0   0   0   0   0
A total of 209,000 new jobs were created in July, more than the 183,000 jobs expected, the U.S. Bureau of Labor Statistics reported last week, and the national unemployment rate fell to 4.3 percent. The number of employed Americans hit a new high of 146.6 million, causing the employment-to-population ratio to move up to 60.2 percent, the highest level since February 2009. Continued steady job gains have led to positive performance in the office sector, even though total absorption was 28 million sq. ft. in the first two quarters of the year, down from 38 million sq. ft. during the same period last year, according to Marcus & Millichap data. “This is not a bad number,” says Alan Pontius, San Francisco-based national director of specialty divisions at Marcus & Millichap. “Absorption has slowed, but it is still positive, and construction remains muted.” New construction deliveries were the biggest story in the second quarter, with 16.1 million sq. ft. of space—the largest amount since the second quarter of 2009, bringing total new product delivered this year to 28.4 million sq. ft., according to Cushman & Wakefield’s second quarter 2017 office report[1]. With healthy absorption, the vacancy rate remained at 13.3 percent since the beginning of the year. As has been the case throughout this expansion cycle, the tightest markets continue to be those with a strong technology sector, the CW report noted. The top challenge in attracting talent to gateway markets like San Francisco and New York City is the high cost...
New mortgage data released
News Canadian Real Estate Magazine   August 11, 2017   144   0   0   0   0   0
New mortgages continue to grow in Canada, according to a new report. There were just over $1 million new mortgage loans funded in Canada last year -- up 1.4% year-over-year, according to the Canada Mortgage and Housing Corporation. Of those new loans, 39.6% were for new-owners and 9.5% were for home owners moving to a new home. “From 2015 to 2016, the number of new mortgages extended to new owners in Canada declined by 1.3% and the number of consumers refinancing their existing mortgage for a larger amount increased by 3.8%,” CMHC said in the report.“The growth in refinanced loans in Vancouver and Toronto and their surrounding areas implies that existing homeowners are leveraging larger amounts of home equity.” New mortgage loans were supported mostly by existing owners who refinanced or moved their existing mortgages to new lenders.That segment comprised 21.4% (or 219,897 total loans) of new mortgages that were funded for owners seeking larger mortgage amounts. “British Columbia and Ontario are the only provinces to record growth in almost all types of mortgage categories, with refinances being among the fastest growing category in both provinces,” CMHC said.“In Ontario, refinance activity was especially concentrated in the Census Metropolitan Areas (CMAs) bordering Toronto, including Hamilton, Oshawa, Barrie, and St.Catharines- Niagara.All of British Columbia CMAs recorded
Solo home owners abound in the Yukon
News Canadian Real Estate Magazine   August 11, 2017   132   0   0   0   0   0
Latest census data for the Yukon (covering the whole of 2016) revealed that one-person households accounted for 32.2 per cent of homes in the territory. The data released last week showed that the proportion of lone ownership in the territory is second only to Quebec, which posted 32.3 per cent.Nationally, this figure stood at an average of 28.2 per cent. According to Gary Brown, senior information officer at the Yukon Bureau of Statistics, this is not a new development as Quebec and the Yukon have consistently posted the greatest proportion of single-person households in Canada since 1981.He attributed this to various economic factors. “One is that some of our workforce is fairly transient:people coming up for a job and just living by themselves,” Brown told the Whitehorse Daily Star.“Another is there’s high income levels here and so people are able to live alone.” Karol Campbell, president of the Yukon Real Estate Association, backed up these observations. “I’ve had a number of clients that have been on their own, of all age groups,” Campbell said.“I can speak personally, people I know, that it was a wiser option to go into home ownership and pay your mortgage than to deal with some of the rents that are out there, because they’re pretty steep.” Campbell
Toronto housing sales slowdown good news for the national economy—analyst
News Canadian Real Estate Magazine   August 11, 2017   149   0   0   0   0   0
The recent decline in home sales volume in the Toronto market should be taken as good news for the Canadian economy, as it might be the first indication of a much-needed shift away from leaning solely on the housing segment for economic strength. Gluskin Sheff chief economist David Rosenberg made the remarks in the wake of latest data released by the Toronto Real Estate Board, which showed a dramatic 40.4-per-cent year-over-year drop in GTA residential property sales in July.Average selling price last month stood at $746,218, up by 5 per cent year-over-year but nearly 19 per cent below April’s record $920,791. “We are going through a natural correction in Toronto real estate.I don’t think it’s going to have a deleterious impact on the national economy. I think it’s actually going to be a positive development,” Rosenberg told BNN earlier this week. “For years the Bank of Canada has been seeking this ‘Holy Grail’ in the Canadian economy away from housing and towards capital investment” he added.“When you really think about it, housing is a consumption good, but it doesn’t really add to the productive capacity of the economy.” Should this trend continue, Canada can realistically outperform the U.S.economy, the economist said. “I think the fundamentals in Canada are pretty decent.When I tell people about
Manhattan's Peak Leasing Season Whimpers With July Rent Decline
 
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Canadian Real Estate StreetSmartREI   August 10, 2017   130   0   0   0   0   0
(Bloomberg)—For Manhattan landlords, Christmas usually comes in July, a month when demand for apartments surges and rents go up. Not this year. Leasing costs in the borough dropped 1.9 percent from July 2016, the first decline for the month in at least five years, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The median net effective rent, or what tenants paid after concessions are factored in, was $3,350. July is typically the pinnacle of Manhattan’s busiest apartment-leasing season, when recent college graduates and families take residence in the city, and landlords capitalize on demand by holding firm on -- or increasing -- prices. But as the market contends with an unrelenting wave of new supply, owners are using the summer as way to get ahead of the competition. They’re offering rent discounts and deal sweeteners in a rush to fill their units before the slower, cooler months set in. “The last thing anyone wants to do, especially now, is rack up vacancies,” said Gary Malin, president of brokerage Citi Habitats, which released its own report on the rental market Thursday. “If you rack them up now, going into a slower time, its going to be even harder to achieve your price.” Manhattan landlords offered incentives such as a free month’s rent or payment of brokers’ fees on 27 percent of all leases signed last month, up from 11 percent a year earlier, Miller Samuel and Douglas Elliman said. Those enticements came...
How Attractive Is Data Center Development?
 
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Canadian Real Estate StreetSmartREI   August 10, 2017   190   0   0   0   0   0
Cloud computing is spurring growth in the market for data centers, with cloud services providers like Amazon Web Services, Google, IBM, Microsoft Azure and Oracle driving the demand. A new report[1] from commercial real services company JLL found that among the 15 major data center markets it tracks in the U.S., nine were seeing at least 30 percent of user demand stemming from cloud computing. In the U.S., cloud-related demand was especially strong in Chicago, Austin-San Antonio, Texas, Northern Virginia and Northern California, according to the report. Bo Bond, managing director at JLL and co-leader of its data center group, says space absorption by multi-tenant data centers was down a little during the first half of 2017, in the wake of record-level absorption in 2016. Last year, U.S. data centers witnessed 350 megawatts of absorption, the JLL report notes. In the data center market, absorption is measured by power generation rather than square footage. U.S. markets absorbed 182.1 megawatts in the first half of this year, compared with 249.1 megawatts during the same period in 2016. For data centers, 2016 was “an absolute frontier[2],” Bond says. “It turned the industry on its end. We’ve seen an unbelievable amount of supply have to come on-line to catch up with [demand].” Compared with 2016, JLL researchers say, a drop-off in absorption this year shouldn’t be interpreted as a sign of weakness in cloud-oriented demand for data centers. Users are still clamoring for cloud-based services, while Amazon Web Services and...
10 Must Reads for the CRE Industry Today (August 10, 2017)
 
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Canadian Real Estate StreetSmartREI   August 10, 2017   141   0   0   0   0   0
10 Must Reads for the CRE Industry Today (August 9, 2017) Aug 09, 2017 10 Must Reads for the CRE Industry Today (August 8, 2017) Aug 08, 2017 10 Must Reads for the CRE Industry Today (August 7, 2017) Aug 07, 2017 10 Must Reads for the CRE Industry Today (August 4, 2017) Aug 04, 2017
Political Uncertainty Weighs On Investor Sentiment
 
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Canadian Real Estate StreetSmartREI   August 10, 2017   128   0   0   0   0   0
Sponsored by Marcus & Millichap Exclusive research results from the third quarter NREI / Marcus & Millichap Investor Sentiment Survey show a gradual cooling trend on investor sentiment. The investor sentiment index edged slightly lower to 150 as compared to 153 in fourth quarter.
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