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Solid labor and wage growth spurs increased burden-free accessibility for some American renters

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Photo: Robert Clark

Since the housing market collapse a decade ago, rising wages have improved accessibility to affordable rentals for median income Americans, according to a new study by the listing site RentCafe.

Today, fewer median income earners are rent burdened and have burden-free access to more apartments. Rent-burdened is defined as spending  more than 30 percent of a household’s income on housing costs.

The basic idea behind accessibility is fairly simple — it’s the percentage of all apartments in a market that one can afford with a given income,” reads the report.

Accessibility offers a more detailed look at the cross-section of where the job market and the housing market intertwine reveals what the rental market has to offer and for how much, and most importantly, how much of it can renters afford.

“A broader way to understand the rental market is by looking at accessibility, since comparing incomes against the number of units that are affordable gives an entirely different picture of a rental market,” writes real estate writer Balazs Szekely, who authored the study.

Rising home prices and erosion of affordability have caused demand to surge in the rental market. Renter households have steadily increased following the financial crisis, as for many Americans renting was the only way out of the collapse.

At the national level, the median renter income grants burden-free access to 49 percent of all rental stock, up 11 percentage points from 2011. Between 2011 and 2017, access to rental housing for median earners has improved in 40 of the 50 largest cities.

At the same time, nationwide median gross rent has grown by 16 percent while the median income for renter households has grown by around 26 percent. The highest accessibility rates were shaped by strong wages, not “cheap rents,” says Szekely.

Accessibility rates are the highest for median wage earners in Raleigh, North Carolina (71 percent), San Francisco, California (68 percent), and Omaha, Nebraska (64 percent).

But large salaries, expensive homes, and strict rent control have created a unique market in San Francisco, where the median renter household income is over $92,000 — more than twice the national level.

San Francisco’s favorable labor market conditions have of course impacted this figure directly, but as an indirect effect, they have also pushed the median home price to over $1 million.

“This makes renting the only way to go for young professionals, even for those with paychecks that most homeowners elsewhere in the country only dream about,” says Szekely.

At the other end of the spectrum, Philadelphia, Pennsylvania, Detroit, Michigan and New Orleans, Louisiana had the worst accessibility rates of the 50 largest cities.

Millennials are also fueling demand for rental housing. They are reportedly highly motivated to live in urban areas to be closer to booming job markets and they’re priced out of the buying market, so they’re renting.

And in some white-hot tech-driven markets, like San Francisco, employers offer competitive salaries and recruit many younger professionals who have yet to buy a home.



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Lower mortgage rates won’t do much for Toronto homebuyers, says economist. Here’s why

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Photo: Dennis Jarvis/Flickr

Those in the market for a Toronto home shouldn’t get too excited about the prospect of lower mortgage rates, says one economist.

This week in a widely reported move RBC revealed it was slashing its five-year mortgage rate, and other lenders are expected to do the same. But Stephen Brown, a senior economist with Capital Economics, suggests it won’t do a whole lot to boost activity in Toronto’s housing market.

“While such cuts may well help markets like Montreal where sales remain pretty strong, it’s hard to see them doing much for Toronto or Vancouver,” he writes in a Canada Economics Weekly report.

“In both cities, speculation has played a far larger role in driving up both sales and prices in recent years. For owner-occupiers to replace such buyers, either mortgage rates or prices will need to fall much further,” Brown continues.

Although Toronto sales fell by 16.1 percent in 2018, according to the Toronto Real Estate Board (TREB), Brown is not sure substantial price drops are a foregone conclusion. While sales took a double-digit dip, the average price of a home in the GTA remained relatively stable at $787,300, representing a decline of 4.3 percent.

“Given high transaction costs, absent a severe economic downturn or a sharper rise in interest rates than we envisage, investors may simply decide to hold on to their assets,” Brown states.

Many experts predict the Bank of Canada will continue to gradually increase interest rates this year. But Capital Economics has repeatedly predicted the central bank will need to reverse at least one of the five hikes it has announced since July 2017, in part because of the struggles of the country’s oil industry.

While Capital Economics remains an outlier, some observers are now entertaining the possibility that the central bank will sit on the sidelines for 2019.

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How this coastal-chic Los Angeles home blended high- and low-end decor

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Photo: Amy Bartlam

When designer Genna Margolis of Shapeside was approached by her clients to customize their 6,000-square-foot new-build in Los Angeles’ upscale Brentwood neighborhood, she was immediately struck by the sheer size of the project. “This house is huge and each room is extremely large,” explains Margolis. “One of the biggest challenges was just making sure everything fit to scale.”

The family of five was conscious about spending where it mattered, and saving where they could get away with it. It takes a lot of furniture to fill up a home of this size, and Margolis had to be strategic. “The key to achieving a high-low mix is spending more on the big pieces that take up the majority of the space, and spending less on the trendy accent pieces,” notes Margolis.

The Cape Cod-style residence had a traditional feel (or “stuffy” as Margolis calls it), which clashed with her clients’ contemporary taste. “A lot of the furniture you find in retail stores that’s young and cool is made to fit tiny apartments,” says Margolis. It took quite a bit of trial and error to source pieces that were not only substantial, but stylish.

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Photo: Amy Bartlam

The minimalist design of the entryway came at the request of the homeowners. “This family has three young kids, so they didn’t want to have a lot of stuff in the way when they walk through the door,” says Margolis. She paired a concrete and brass console table from West Elm with a custom-made bench to house shoes and bags. The pegs above complement the leather strap detail on the bench, and allow scarves to be looped through.

Margolis chose a leafy indoor tree to occupy an empty corner. “The more furniture there is, the more structured a plant I will choose. If there’s less furniture, I’ll choose something wider and looser.”







Photo: Amy Bartlam

The open-concept living space, which is defined by two fireplaces on either end, presented yet another design challenge. Ultimately, Margolis decided on two separate seating areas — one for everyday relaxation and another for more formal entertaining. “Since the space is so big and open, I decided to custom-make a really large coffee table that took up a lot of space,” she explains. “The coffee table is almost five feet in diameter and we have an 11-foot long sectional in a dark grey linen.”







Photo: Amy Bartlam

The homeowners did not want the grand piano to be the sole focal point of the space — it was an inherited piece, but they feared it would come across as overly formal. “To make it feel more relaxed, I knew I needed to add a chair, but it couldn’t be just any chair,” says Margolis. “This one is upholstered in a blush fabric and has really dainty legs. I wanted it to be modern, but still inviting and chill.” She also flanked the fireplace with two fiddle leaf figs. “Adding organic factors helped to loosen it up. The piano is there, but it feels like it’s more in the background.”







Photo: Amy Bartlam

The dining room was a lesson in compromise. “The wife wanted everything to be very romantic, but there are four other people who live there, too,” says Margolis. “I needed to incorporate some of those aspects, but overall, make it feel like a family home.”

The jumping off point for the space was the crystal chandelier. To prevent it from from looking too glam, Margolis opted for smoked glass. “From there, I wanted to balance it out with a more rustic dining table.” The blush velvet dining chairs were sourced from ABC Home, while the striped area rug, which “made the space way more cool,” was found online at Serena & Lily. To amp up the texture in the space, Margolis wrapped it in a grasscloth wallpaper and added a statement-making fringed mirror. “The mirror literally reflects the chandelier,” she points out.







Photo: Amy Bartlam

For the master suite, Margolis took her inspiration from a luxury hotel room in Tulum, Mexico. “If you’ve ever fallen down the Instagram rabbit hole, you probably know what I’m talking about. It’s very organic, very beachy, but luxe.” To offset all the white, she chose dark bedding and wood furniture. “I tried to make the room feel very textured, but overall I wanted it to be simple.”







Photo: Amy Bartlam

In the expansive ensuite bath (Margolis swears it’s much larger than the photo suggests), she warmed up the space with a West Elm settee and an area rug from Anthropologie. “It’s perfect because it has accents of blush, which my client loves, but it’s still pretty neutral.” The bohemian tassel chandelier over the tub was purchased from Lulu & Georgia for less than $200. “It works for the scaling and adds a lot of texture,” adds Margolis.







Photo: Amy Bartlam

All three kids rooms are playful and whimsical, but able to grow with them as they get older. Margolis stumbled across a large-scale floral mural from Anthropologie for the family’s only daughter. “I love it because it has a white background, which takes away from the busyness, but it has all the colors she loves, like pink and purple,” says Margolis.







Photo: Amy Bartlam

The nursery is “neutral and calming,” painted a grey hue with a blue undertone and jazzed up with striped curtains that feature a tassel trim. “It’s a simple space, but one that’s really nice to be in.”







Photo: Amy Bartlam

“The third room is an eight-year-old boy’s room — he wanted a really cool bed,” says Margolis. The Moonrise Kingdom-esque cabin bed fit the bill, and was paired with a blue striped rug for a punch of pattern.

“We really worked hard on every single room of this house,” says Margolis of the project. “I wanted it to reflect my clients. I didn’t want them to feel like, ‘Oh, this designer came in and did what she wanted.’ Every piece is different, everything comes together, and it’s also exactly what they were looking for.”

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More condo project cancellations may be on the way in Vancouver this year, developer warns

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Photo: Guilhem Vellut/Flickr

The president and CEO of a major developer is warning homebuyers that more proposed condo projects may be cancelled as inexperienced builders struggle in a cooler market that is still finding bottom.

“Last year, we also saw a few smaller projects get into trouble where they were either cancelled, or, in one situation, buyers were asked to pay additional money to ensure completion of their project,” says Neil Chrystal, the top executive at Polygon Homes, at the Urban Development Institute’s recent 2019 forecast event.

“We may see more of this in 2019, as many inexperienced homebuilders struggle to find suitable financing and are faced with significantly higher construction costs,” he continues.

As a result of falling revenues and higher municipal fees, one Vancouver development was cancelled during the approvals process in the past year, according to industry researcher Urban Analytics. Two other projects were pulled from the market but may relaunch.

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“They haven’t necessarily been cancelled; rather the developers pulled them off the market and are re-evaluating the product and may make some changes prior to bringing them back on the market,” explains Michael Ferreira, managing principal of Urban Analytics, in an email. “So they may modify the unit mix and pricing,” he adds.

Polygon’s Chrystal has some advice for anyone who wants to buy a home in Vancouver this year at a time when condo projects aren’t guaranteed to move forward. He suggests sticking to developments from experienced builders with successful track records.

Despite — or perhaps, because of — the challenges some developers may face, Chrystal suggests 2019 is a good time to purchase a home in Vancouver.

After all, in order to receive financing to actually build a project, developers need to sell a certain number of units before breaking ground. “Builders are introducing incentives and are releasing product at prices well off the peaks of 2018,” says Chrystal.

And despite mortgage rates climbing in the past year, they are still historically low — for now. The Bank of Canada has made it clear that it intends to raise the overnight rate, which influences the lending market, though Chrystal doesn’t anticipate that will happen this year, despite some predictions to the contrary.

Chrystal also highlights job growth and low unemployment in the region. “It is very rare for a housing market to remain depressed when the local economy is doing so well,” he says, suggesting these builder incentives and price reductions won’t last long.

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