Why Are Housing Starts Down So Much In Windsor - Essex in 2019?

A lot of economists see statistics such as new housing starts (basically building permits to construct new residential housing) as a leading indicator for the economy. CMHC reported in their March 2019 Housing Start Data, that the Windsor-Essex region’s housing starts had fallen 23% year over year. Is that cause for concern?  Today, we are going to discuss some of the factors we think that are leading to this slowdown and what else you need to know.

Reason 1 - Shortage of Building Lots

I know this seems very obvious but this really is an issue. I personally know people who would love to build but can’t find a building lot for sale. A lot of subdivisions are nearing completion and the pipeline to replace them is pretty slim. Basically, not as much supply of building lots compared to last year.

Reason 2 - Bringing on Additional Supply of Building Lots is Difficult

We have so much land in Windsor they say, why don’t you just develop it? While Windsor isn’t the most dense city, getting a piece of land to a serviced, shovel ready project isn’t an easy task.  If you have to go through the municipal rezoning process that can take 6 months easily and can cost tens of thousands of dollars in some cases. There are also significant area of red tape to battle through including: biology studies, archeological studies, utility servicing studies, traffic studies, noise studies, etc. This can take years and lots of capital, with no guarantee of success, or can make a project uneconomical. This all leads to decreased supply long term and is a major issue for municipalities all over the province with Windsor being no exception.

Reason 3 - New Home Prices are Getting Unaffordable

Some of these construction costs are driving the pricing of new homes to price points that are no longer affordable for the average person. It's commonplace to see $700-800k price tags on the average new build. The market has been doing extremely well locally but sticker shock  has to have some effect on demand eventually.

Reason 4 - Labour Shortage Affecting Trades Pricing

Tying into point 3, part of the reason for the large price tags on some of these new builds are the escalating pricing from the trades.  Electricians, plumbers, bricklayers, etc are in high demand and able to command premium pricing in today’s market. This trickles down to the end buyer.  Hard to see this changing anytime soon.

Reason 5 - Its Taking Longer to Build Homes

Essentially the labour shortage also means slower build times.  Back 5 years ago it wasn’t uncommon to build a house in 90 days. Now it's not uncommon to see 180+ days. This statistically is taking units out of the data.

Bonus Point - What Does All This Mean for the Resale Market?

This decrease in new home sales activity is adding demand to the resale market. Taking some of the buyers out of the new home market for the above reasons is directing them to the resale market. And the resale market already has a supply-demand imbalance. This increased demand could explain some of the crazy resale statistics to start 2019.

Thats how we are seeing the new home starts data. What are you seeing out there?

Real Estate Insider: March 2019 News Report

Spring is here! This month we've got loads of tips & tricks as the Real Estate season begins to heat up!


If you’re looking to invest in a vacation rental, make sure you buy where the people are going! Read this list of 2018’s most booked Canadian destinations. >>

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ROI isn’t just a formula to use when purchasing a property; it should be used for day-to-day decision making in all of your real estate investments! Read here how ROI can be used in anything from purchasing a home to separately metering the water in a duplex! >>

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Read here this Doctors testimonial in favour of real estate investing, and how he came to this conclusion only after trying many other methods of creating financial independence and long term wealth. >>

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Buying or Selling a home can take up a lot of time, so why waste your most precious resource reading through long descriptions of tons of pictures when only a few works better? Read here why “short and sweet” is the way to go when listing a home. >>

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Here are 10 questions you probably have or have had if you are thinking about buying your first home. These might lead to a number of follow-up questions, but luckily we are always available to help you answer them! >>

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If you’re lucky enough to have your grandparents around, be sure to listen to all their stories! They might have advice that could change your life! Read here how this man’s grandmother defied the odds and became wealthy through house hacking, and sparked a passion in him that is responsible for his success today! >>

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The debate of Buying vs Renting continues! This time, it is explained in a different way that most people don’t think of! >>

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If you’re young and thinking about retirement (which you should be), you are probably thinking whether RRSP’s or buying a home should be your first step to a comfortable retirement. This article can shed some light on that question. >>

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When applying for a mortgage, would you rather speak with an expert or go completely digital? Seems Canada is lagging behind other countries in the automation of mortgage applications department. Call me old fashioned, but I don’t think that’s a bad thing! >>

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Should you re-new your mortgage early? Not saying drop everything and run to the bank, but here are a few things to consider! >>

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Thank you for reading & keep an eye out for more to come from your Lalovich Real Estate team!

Russel's Review:  Legal, Tax & Accounting Strategies for the Canadian Real Estate Investor

Hope all is well readers and you are looking forward to spring & a busy real estate season! Continuing on in my series from last year, reviewing real estate related books, I am going to be discussing a book I’ve recently read.

What is the Book?

Legal, Tax & Accounting Strategies for the Canadian Real Estate Investor by Steve Cohen & George Dube.

Who Are the Authors?

Steve Cohen is a Toronto Area lawyer and active real estate investor. George Dube is a Waterloo area accountant and also an active real estate investor.  

What Will I Learn?

The book starts off by talking about the advantages of investing in real estate. How to get started with building a successful team (ie, realtor, lawyer, accountant, lender, insurance broker, etc).

It then delves into more complex topics of legal and tax considerations on purchases. The structure of how you buy a property is almost as important as what you buy. Other topics in this section include: active vs inactive income, partnerships, joint ventures, trusts, financing considerations, etc.

The book continues on to the time period of owning a property and covers issues such as: property management from legal and tax perspective, repairs, renovations and deducting expenses such as auto and travel. It starts to conclude with a section on selling properties. It discussed how to successfully sell a property for top dollar. Tax considerations for the savvy investor to minimize taxes and also some estate planning.

Lastly, the book finishes up with a section on bookkeeping and how important it is to have solid bookkeeping and accounting as a real estate investor, and then reviews some examples of financial statements.

Why I Recommend it?

Investing in real estate is a learning experience. You’ll always make some mistakes but hopefully you can minimize them through reading resources such as this one. Also it comes from a strictly Canadian perspective which is nice and applicable to most Canadians.

My Critique?

It is a little bit dry. Not an overly fun read for the casual investor. More targeted at the more sophisticated investor with larger ambitions.

So there you have it folks. Then next book review in our series. Have any of you read this book?  What were your thoughts?

You can order a copy of the book on Amazon or Indigo. Happy reading!

Real Estate Insider: February 2019 News Report

Welcome back! This month we compiled a set of topics fit for home owners and investors alike to help you weigh your options before making some of the big decisions in real estate.


If you are thinking of investing in commercial real estate (CRE), this article does a fantastic job of laying out the basics of all aspects of CRE to help point you in the right direction. After reading this, give us a call to learn more! >>

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Don’t be surprised, be prepared! Renting Vs Buying is an age old debate. While this isn't one of those articles (it kind of is), it simply breaks down the hidden costs of home ownership that many people don’t consider when contemplating purchasing a home. >>

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Radon, the silent killer. Make sure you know if you are at risk of harmful radon gas because it is one of the most preventable cause of lung cancer there is! Read here to find out what you need to know. >>

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Your ego might like the big house, but your back and wallet won’t. Here are 6 reasons to avoid buying a large house. >>

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Do you have foreign investments and want to buy a home in Canada? This article can explain some of the hoops you’ll need to jump through and some of the calculations you need to consider before making the leap. >>

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Winter is considered the real estate “off-season” because there are less listings, less buyers, and less motivation to go out and look at houses. Read why these are the perfect reasons to buy during this time! >>

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Thinking of buying an investment property but don’t have the down payment in your bank account? Have you thought about a home equity line of credit (HELOC)? Whether you have, or you have no idea what that is, this article is for you. >>

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Ever thought of what would happen to your mortgage if you pass away? This article walks you through multiple scenarios if this question ever crossed your mind. >>

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5 tips from a lawyer to make sure you are protected in 2019! >>

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What’s going on with mortgage rates? Make sure you do your research before your next renewal so you get the best rate possible. You can start with this video! >>

2019 Real Estate Market Predictions

Happy New Year, readers! Hope you had a great holiday season and that your 2019 is off to a great start. Now that everyone is back to business, who wants to talk some real estate? Today, we are going to offer our real estate market predictions for 2019.

Cap Rates Will Mostly Flatten Out or Even Increase A Bit

Cap rates have seemingly hit bottom. They didn’t really have much further to go, so this isn’t surprising. Now that interest rates have increased a bit, investors appear to be looking for a higher cap rate on their commercial investment properties. We reached a bit of a standstill with some properties in 2018, with sellers' lofty expectations not being achieved in the market. To get these deals done, sellers will need to adjust their expectations.

Multifamily Will Still Be On Fire

While it is our opinion that cap rates commercially will stall out, multifamily still has some positive dynamics that will keep it chugging along. First off, the demand is still very high from across Canada and the supply is very limited. It isn’t economical to build with these new construction prices, so adding new supply wont help the situation. Plus, the rental market is tight and rents are increasing—that doesn’t look like it will be changing anytime soon.

Interest Rates Will Increase, But Not As Much As Expected

Economists and market forecasters are expecting multiple interest rate increases this year, on the back of the three times the Bank of Canada raised last year. While we foresee rates to go a little higher, we don’t think the market in general can withstand an interest rate spike without causing a significant recession. The population is far too indebted and—particularly in expensive cities like Toronto and Vancouver—the cost of increased interest expenses can't be born. For these reasons, we think interest rates will have a lid on them.

The Lending Environment Will Get More Difficult For Borrowers

The government has introduced several measures over the last few years to try and cool the housing market. It finally seemed to have been working, as Toronto and Vancouver didn’t have such great stats in the second half of 2018. Combining these measures with higher interest rates, qualifying for the house you want is getting more difficult. We are also seeing lenders and mortgage insurers pulling back their risk, scrutinizing more deals and generally acting less competitive in the financing market.  We expect this to continue in 2019. This may also lead to more firm deals falling through at closing due to some of these factors.  So we advise sellers and listing agents to be extra diligent in ensuring buyers are qualified and pre-approved for a mortgage in your price range, with a little extra buffer for safety. Also, ask for big deposits!

Rents Will Rise & Vacancy Rate Will Fall Again

Residential rents have really increased in the last few years and the factors driving that don’t seem to be changing anytime soon. In fact, with the housing market continuing its climb and with the tightening lending environment, more people could be driven into the rental market, increasing demand. Adding to this is the start of the Gordie Howe Bridge, bringing with it a large influx of temporary workers coming to the area; the vacancy rate is forecast to continue to trend lower.

2019 should be an interesting year in the real estate market. Those are our predictions. What are yours?

Real Estate Insider: January 2019 News Report

Welcome back to a brand new year, Real Estate Insiders! We thought this month would be a great time to cover a variety of topics including living life in a big city, creating wealth, performing background checks, and even why the numbers in your address could deter potential buyers!

Is the “American Dream” an outdated concept? Does yours involve a house with a yard and a white picket fence, or something more suited to your lifestyle? Read about why everyone might be a lot happier if they made their own definition of the American (or Canadian) Dream. >>

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Does your address contain the number 4 or 13? If so, that might be a deal breaker for some cultures. Read here how these numbers have caused headache in housing developments and how city planners and contractors are dealing with it. >>

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If you’re thinking of how to split your estate between your children, this article won't help you decide who is your favourite, but it will help with a few of the tax questions! >>

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Finding the right property manager is essential to creating and maintaining a good portfolio. If you decide to use a property manager, be sure to read this article to help find the right one for you! >>

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Are you thinking of buying your first home? Take it from someone who’s been there before! This article describes almost every cost you should prepare for when buying a home. >>

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Not every investment you make is going to be a winner, however a big part of investing is not making impulsive, emotional decisions! Read how this investor “lost” $130,000 on his rental property but managed to turn it around by keeping a level head and trusting the process. >>

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Don’t be blinded by the cap rate. Here’s a list of things to consider when evaluating cap rates or multiples on a property—and why these tools are simply a starting point. >>

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There are so many options when it comes to creating wealth for yourself, but the common strategy between them all is to diversify. This blogger decided she needed a way to diversify her portfolio and caught the real estate fever! Read here how she turned her love of HGTV into a very profitable investment strategy. >>

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Tenants can make or break an investment property, so we want to make sure you are doing everything you can to ensure you have the best tenant possible! Here’s a list of what you should do to complete a successful background check. >>

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For many people, living in the big city would be a dream come true, but is it really worth it? Read here how the high costs of living are pushing many young adults to pursue a larger life in smaller cities. >>

Real Estate Insider: December 2018 News Report

Merry Christmas and a Happy New Year, Real Estate Insiders! 2019 is just about to start, so we thought we'd put together a handy collection of topics perfect for planning your new year resolutions on your property. When you have a few moments of rest from the hustle and bustle of the holidays, be sure to grab your favourite holiday beverage and check out just a few of the ways you can be prepared for the biggest plans of 2019!

Thinking of doing a huge home renovation? There’s no better advice to get than from someone who’s done it! Read this couple's 6 biggest lessons they learned while putting an addition on their home so you can prepare and limit the number of surprises along the way! >>

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Would you trade paying more interest overall for a lower monthly payment? That’s the argument this article is making for the 30-year mortgage in the wake of rapidly rising interest rates. Overall it is personal preference, so which is yours? >>

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Ever wonder what happened to the people who started investing in Real Estate right before the 2008 crash? Read this article to find out the biggest mistakes this Real Estate investor made when he started out, and how he eventually bounced back. These tips could help fast-track you to financial freedom! >>

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Don’t be afraid to ask the hard questions when it comes to your money and don’t let a shady salesman pressure you into signing anything you don’t fully understand! Here’s a list of 4 big rip-offs to look out for to help save you money. >>

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Preparation is the name of the game when it comes to investment properties. Make sure you’re prepared for many of the aspects of owning different types of investment properties! >>

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Step 1: Buy gifts.

Step 2: Spend time with loved ones.
Step 3: Shovel and salt the sidewalk.

Step 4: Go over your year-end financial planning checklist—we can help you with this last one! >>

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Owning a cottage or vacation home is a goal many people have, but does it make sense overall? Read here for some considerations to help you make this big decision. >>

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AirBnB is being used by many as a source of income to help offset the price of owning a home or investment property. Are you aware of the short and long term tax implications? Read here to see why it could end up costing you way more than expected. >>

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Team Lalovich never cuts corners when it comes to selling real estate, and neither should any other Realtor! Unfortunately, there will always be some that find the worst possible ways so save a quick buck; if it affects the sale price of your home, it should be a deal breaker! Make sure your Realtor of choice is doing everything they can to provide you with the best service, starting with the photos. >>

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“The Bank Profit Indicator shows the amount of profit per man, woman and child in Canada.” Find out this years number here! >>