Real Estate Market Outlook with Ben Myers
Senior VP Market Research & Analytics at Fortress Real Developments which helps to finance various condo developers. Is there too much supply of condos in the market? Is there an impending crash coming? What are the trends in the sizes of condos? Will families be expanding into condo? What’s happening with foreign investors? Transcript Davelle M.: On today’s episode, we have Ben Myers, Senior Vice President of Market Research Analytics at Fortress Real Developments. Welcome, Ben. Ben Myers: Thanks for having me. Davelle M.: Awesome. Thanks. So tell us a little bit more. What do you do at Fortress and how does it relate to real estate? Ben Myers: Sure. Fortress Real Developments is a real estate development company. We partner with other builder developers on most of our development projects, a lot of them. Our major responsibility is sourcing equity, sourcing debt financing and helping development along on the financial side as well as to the construction side of things. So what I do is, I underwrite or do the due diligence on the deals that are presented to us, either from a [inaudible 00:01:22] developer or a broker. I look at them from a revenue perspective, so I look at what the unit can sell for. Is it the right market that we want to be in? Is it the right neighborhood? Is it the right built form? Is it the right product type? Is it the right unit size? Is it the right mix of units? The right amenities, the right features and finishes and that’s kinda where my level of expertise comes in. And then on top of that I kinda produce reports for our stakeholders, either general public, folks that raise capital on our behalf, or our development partners on macro level trends that are happening at a national level and that are happening at a municipal level and are happening on a neighborhood level. So that’s kinda my main focus at Fortress. Davelle M.: Perfect. That’s great. That’s very broad. One of the things that you touched on in terms of: you’re looking, you’re researching trends. So in terms of trends and sizes of condos, what are your thoughts about people saying that people are going to be starting to raise their families in condos? Do you see that as a valid trend in your business? What are you seeing? Ben Myers: Yeah, I know, it’s interesting. I did a survey of realtors recently and for my next market manuscript with Fort, which is kind of a robust report that I put out to the market on trends. So when I went and asked realtors what they thought, it was interesting that a lot of them thought that yes, for the next five to 10 years that’s gonna be a big trend and even a few of them indicate that they’ve already sold a number of condominiums to families. I think it’s inevitable that it’s going to happen and I think it’s gonna be obviously a slow process but it’s a necessity to live in the Greater Toronto Area for us to expand vertically. There is, obviously there is a really tight supply in the Greater Toronto Area, especially in the core where essentially built out of any what we call green-filled lands and in the city of Toronto, Mississauga, Scarborough, North York. There’s very little land available for low-rise housing unless you’re demolishing a strip mall or something that’s already existing. There’s very little land to just do massive single-family detached communities. You know, if people want that they’re being forced to drive farther out or pay very, very high fees. So if people want to stay in the city, they’re looking at alternatives to spend more time with their family and spend less time in their car. So they’re looking at buying condominiums to kind of service their needs. So it’ll be interesting to see how that trend starts to evolve. Davelle M.: Yeah, absolutely. Definitely. And what would you say about the condo supply in Toronto right now? Do you think it’s adequate? Do you think it’s inadequate? There’s always lots of talk about: oh, we’re facing a condo bubble, they’re building too many units. What do you say to people like that, Ben? Ben Myers: Yeah, I know, it’s interesting. For the longest time we were delivering in and around 10 to 15 thousand new condominiums a year in Toronto and that had served the market fairly well. We had a major sales boom in 2011, which resulted in: somewhere in the neighborhood of about 25,000 new condominium sales. So you give those projects a year in pre-construction and then two to three years under construction. We saw a major increase in the second half of 2014 into 2015, just a lot of projects coming to completion. So I think for a 12 month stretch there I think we had about 26, 27 thousand completions bordering on 30,000 completions in like a 26, 28 month period. So just a lot of supply came from online and an amazing thing that happened is, they all got sucked up and everyone expected there to be at least some flatness in the market but if anything it started to pick up. So, very interesting. It totally wasn’t expected with that major level of increased supply that we would continue to see prices gain, and not only gain, but gain more than they had in the past. I think people want to be in Toronto and I think young people aspire to come to the big city from London, to Guelph, to Kitchener, to Brantford, to Windsor. You know, obviously a lot of people are gonna stay in Kingston, or in Ottawa, or somewhere further west, but I think a lot of people desire to come to Toronto and if we can keep producing high volumes of condominiums and keep the prices relatively in check, where a lot of people 300,000 seems