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(Photo: John Cullen)
We expected a bumpy ride with Ford as mayor, but we weren’t prepared for a self-sabotaging Lindsay Lohan of politics. With a new scandal every week, it’s easy to lose track. Hence, we present a scrapbook of two very long years in Fordlandia.
(Image: JasonParis)
In the first half of 2012, Toronto homebuyers faced rapidly escalating prices, bidding wars and “phantom bids.” In the second half of the year, the market cooled, in part due to the stricter mortgage rules that Finance Minister Jim Flaherty imposed in June. What did 2012 as a whole mean for current and aspiring homeowners? Below, we look at the end of year resale stats from the Toronto Real Estate Board, and break down the important numbers.
The people driving the agenda for the city are more likely to come from outside local government than inside. This was the year our premier, rendered virtually impotent by a minority legislature, up and quit without warning. And our mayor, who listens to no one and refuses to build consensus on council, has created a city hall power vacuum.
What follows is Toronto Life’s list of the real influence peddlers—the people who, either publicly or behind the scenes, have had the greatest impact on the city. We looked for people whose power was broad enough to be felt across different sectors, or else so palpable in their immediate field that it somehow changed things for the rest of us. We looked for people whose ability to alter public opinion, raise money, rally troops or simply get stuff done was both formidable and undeniable. The result is a carefully calculated and highly opinionated look at power in the city in 2012.
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(Image: Jeremy Burgin)
In most of Canada, home prices are starting to stagnate (or even fall), suggesting that the country’s real estate market is finally starting to cool (the stricter mortgage regulations enacted by Jim Flaherty at the start of the summer seem to be taking effect). However, in Toronto, single-family detached homes continue to be the holy grail of real estate. This week, the Toronto Real Estate Board reported that the average price of a detached house has again moved north of $800,000 for the first time after dipping over the summer. So what gives? We break down the numbers, and what they mean.
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A few blocks down the street from me, in Seaton Village, there’s a beautiful three-storey house with four bedrooms and tremendous character. Its owners, a pair of journalists in their 60s, bought it in 1972 for $35,000, which was $2,500 less than the asking price. When they moved into the neighbourhood, they were considered pioneers—none of their friends had even heard of Seaton Village. The property was a dilapidated rooming house, and the couple spent the next 40 years lovingly restoring it. When they put it on the market this spring, they got seven offers. The asking price was $1.195 million, it sold for $1.44 million, and the money they made will play a big part in funding their retirement.
This is the kind of story that drives members of my generation crazy. As baby boomers cash out on their real estate investments, their children are finding themselves either priced out of the market or buying houses they can’t afford. The big gamble of Toronto’s young professional class is that they’ll have the same luck in real estate as their parents. Torontonians in their 20s and 30s are throwing themselves into frenzied bidding wars, banking on the hope that Toronto house prices will continue to rise in perpetuity.
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Mira Nair’s The Reluctant Fundamentalist screens at TIFF 2012; Nair will appear on a panel called India: Bollywood & the Independents
TIFF has confirmed the programming (and guests) for its Asian Film Summit, which will be held on September 10 at the Shangri-La. In addition to the previously announced guest of honour, the triple-threat actor, producer and director Jackie Chan, and former U.S. senator Chris Dodd, festival regular Harvey Weinstein was announced in the role of Master of Ceremonies for the closing banquet. In the press release, Piers Handling, director and CEO of TIFF, explains that the summit aims to “foster deeper relationships and generate new business opportunities between key film players in the East and West,” something that federal finance minister Jim Flaherty congratulated them on (also in the press release).
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The city’s condo boom may be keeping both Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney up at night, but at least one high-level economist is contradicting both (because when has anyone ever agreed about the real estate market?). Robert Hogue, a senior economist at the Royal Bank of Canada, insists there’s no bubble in Toronto and, while the market will likely see a bit of cooling, there won’t be an epic condo crash. In a report released today, Hogue argues that demand for housing remains strong—after all, there are roughly 38,000 net new households in the Greater Toronto Area each year and they have to move in somewhere.
We’ve been wondering what the new federal mortgage regulations will mean for Toronto’s real estate market (especially since Finance Minister Jim Flaherty’s worries over the local condo boom were a key motive for the rules). This week, some chilling words from Moody’s Investors Service: though the measures will likely cool home sales across the country, it already “may be too late to avoid a housing correction.” Moody’s analysts write that a massive build-up in consumer debt and the fact that disposable income is growing more slowly will make it difficult for Canadians to pay off what they owe, especially if interest rates rise—all of which could send house prices plummeting. Of course, as is always the case with housing market predictions, there are many willing to take a dissenting view, namely, that the regulations won’t have a significant impact on Toronto’s condo mania. [Financial Post]
(Image: Joshua Sherurcij)
The runaway real estate market in Canadian cities (and whispers and shouts of bubble trouble) is worrying Finance Minister Jim Flaherty enough that he’s again introducing new mortgage rules. Among the new measures, which kick in July 9: the amortization period for a government-insured mortgage will max out at 25 years, rather than 30; the maximum amount homeowners can borrow against their homes will be reduced from 85 to 80 per cent; and only homes with a purchase price under $1 million will be eligible for government-backed mortgages. Flaherty specifically singled out the increasingly absurd condo markets in cities like Toronto as cause for unease—but a recent Globe and Mail article suggests developers and some industry experts still aren’t concerned about things going south. The general belief is that, though Toronto’s market may be cooling slightly and buyers are becoming more skittish, the expectation of sustained low interest rates means the construction cranes aren’t going anywhere. [Globe and Mail]
(Image: Vlad Litvinov)
As the federal government promised nearly a year ago, a massive stretch of the Rouge Valley will become Canada’s first urban national park, with the help of $144 million in federal funding. The government will mete the money out over the next decade to create Rouge National Urban Park, a 47-square-kilometre green space bordered by Lake Ontario, Toronto, Markham and Pickering. The exact boundaries of the park haven’t been decided yet, but so far the proposed space is about 15 times larger than Central Park and within easy reach of seven million Canadians—a fifth of the country. At an announcement today, Finance Minister Jim Flaherty said the government will seek consultation from the public and hopes the space will be a “people’s park” (which is convenient, since some parkgoers will soon be taking the “people’s highway” to get there). [Globe and Mail]
Loyal councillors have defied him. His approval ratings have plummeted. And his powerful Conservative backers are nervous. How did it all go so wrong? The strange story of Rob Ford’s city hall
On Newstalk 1010, the sly strains of the Hollies hit “He Ain’t Heavy, He’s My Brother” offered the first clue. Then morning host Jerry Agar burst on the air with a surprise announcement: Rob Ford and his councillor sibling Doug were taking over the station’s Sunday afternoon talk-fest, The City. For the once-staid CFRB, landing the boisterous brother act that Margaret Atwood had puckishly dubbed the “twin Ford mayors” was clearly a coup, but that didn’t answer the more obvious question: why on earth would the Fords want to spend two more hours a week in front of an open microphone when they were hardly suffering from a lack of media exposure?
Rob Ford, after all, ranks as one of the most compelling and exhaustively chronicled figures in Canadian politics, adored and despised with equal gusto. His every pronouncement seems to turn into front-page fodder, his every grimace and belly scratch catalogued by rapt photographers. And who could forget the YouTube footage of comedian Mary Walsh arriving in his driveway, decked out with a velvet breastplate and a plastic sword?
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(Image: Seekdes from the Torontolife.com Flickr pool)
Toronto’s gravity-defying condo market continues to set records. Over 6,000 freshly built condos were sold in Toronto in the first quarter of 2012, the highest number for the January-to-March quarter ever, according to the latest stats from Urbanation. On average, condos are getting smaller and more expensive (makes urban living sound delightful, doesn’t it?), and Toronto had 338 active projects in the first quarter, compared to 284 for the same period last year. Stephen Diamond, CEO of developer Diamondcorp, told the Globe and Mail that he’s so confident about the market he’s raised $130 million for more condo construction. “We’re not supplying too many units,” he said, saying that immigration trends and a slowdown in single-home construction should keep demand for condos strong. Still, speculation about a slowdown continues—Finance Minister Jim Flaherty expressed concern over Toronto’s condo market earlier this year, suggesting that developers seem willing to build new development right up until the bubble bursts—and based on Diamond’s comments, he’s probably right. To recap: the condo boom is inspiring both optimism and anxiety…just like it did last year. [Globe and Mail]
Canada’s biggest banks seem to be the subject of a strange amount of scandal of late. This month alone, a massive lawsuit was leveled against Royal Bank of Canada, ex-RBC advisers admitted to forging client signatures and a former Bank of Montreal adviser was banned from working in securities. Now, there’s a spat with Canadian insurance brokers, who lodged a complaint with the Office of the Superintendent of Financial Institutions (yes, it’s a real office) and alerted Finance Minister Jim Flaherty that RBC and BMO are openly disregarding rules against promoting insurance on their websites. (Under the Bank Act, banks are allowed to own separate insurance companies, but they’re prohibited from selling or marketing insurance.) Naturally, big insurance wants big banking as far away from its business as possible, and have lobbied hard to have rules in place to keep banking and insurance operations distinct. But large-scale financial institutions are still pushing hard into the territory—the insurance biz made up 10 per cent of RBC’s total profits in the three months ending January 31—and with big, big dollars at stake, we don’t expect them to stop. To the insurance brokers of Canada, we wish you luck. You’ll likely need it. [Globe and Mail]
Last fall, the Royal Bank of Canada—with $27 billion in annual revenue, $752 billion in assets and 74,000 employees, the biggest and most prudent bank in the world’s safest banking system—announced that new employees would no longer be eligible to receive what is probably the company’s most important workplace benefit: the comprehensive retirement insurance plan. It insures the Royal’s Canadian employees, or at least those hired before January 1, 2012, against all sorts of risks. The risk of reaching retirement age at a time when stock markets are down, or interest rates are low. The risk of outliving one’s retirement savings. Inflation risk. Risks you’ve probably never even heard of, like reinvestment risk and liquidity risk. Even the risk of earning below market returns.
This generous program wasn’t unique to the Royal. Many employers, particularly big companies, once offered similar plans. Some still do, though their numbers are dwindling. You may be wondering, “Why have I never heard of retirement insurance?” You have. It’s called a pension.
We’re heading for a pension crisis. The federal government says so. The opposition says so. Most provinces say so. The library shelves of the land groan beneath the weight of studies. The first class of baby boomers hit 65 this year, and we’re still not ready. The economist Michael Wolfson, formerly the assistant chief statistician of Canada and now at the University of Ottawa, estimates that half of all Canadians born between 1945 and 1970 who have average career earnings between $35,000 and $80,000 are facing a drop of at least 25 per cent in their post-retirement standard of living. Which is perhaps not surprising given that most of us don’t have a pension plan.
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After a few weeks of relative quiet from Research in Motion, the company dropped a big pile of news on the world yesterday: the company’s fourth-quarter financial results were nearly as bad as analysts were predicting; former co-CEO Jim Balsillie resigned from the board; and RIM’s chief technical officer and chief operating officer were both dismissed. Will CEO Thorsten Heins’ day of reckoning set RIM on the path back to smartphone supremacy? We rounded up what the analysts are saying.
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