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Affordable housing has been a hot topic in
recent years, and is even more so now as rental vacancy rates are extremely
tight and housing prices have experienced record rates of increase in Atlantic
Canada. A recent news article caught my
attention, with its reference to a price point – “attainable” – I
haven’t heard as much about, and it inspired me to take a look at what the
difference is, and how each lines up with Atlantic Canadian markets. Then, because alliterations sound better in
threes, I needed a third A: the obvious choice in this context is to look at availability.
First, the definitions, a slipperier
thing to pin down than one might imagine.
Canada Mortgage and Housing Corporation (CMHC) defines affordable
housing as housing that costs less than 30% of a household’s before-tax (gross)
income, absent any requirement for the housing to be provided or made possible
through a government program, and without restriction on tenure or type.
With that definition, affordability
is very much relative: in theory, a $4.3-million home would be “affordable”,
provided your household income is $300,000 – about 1.7% of Atlantic Canadian
households. Relatively affordable: on the market for approximately
$4.4-million. Source: ViewPoint Realty
Seems likely that this is not the
intention of the definition, or any measures put in place to encourage the
supply of affordable housing. And in
fact, CMHC’s Housing Continuum graphic implies that affordable housing is
separate from market housing. Wikipedia
offers a slightly more specific definition:
…housing which is deemed affordable
to those with a median household income or below as rated by the national
government or a local government by a recognized housing affordability index.
 If we combine the two, that would
indicate that affordable housing is housing which costs no more than 30% of the
median household income – and for practical purposes, let’s assume that is in
reference to local median incomes, and not, for example the national figure…more
on that later.
We conducted a very high-level
analysis of the median incomes for the four Atlantic provinces and a selection
of cities. We used average rental rates
for 2-bedroom units because this is by far the dominant unit type for rental
accommodation. The calculation is simple
(very!): divide 30% of the median household income by 12 to get the monthly
income, subtract off the average rental rate and an allocation for utilities of
$150 per month (property tax and water are included in the rental rate;
electricity/heating may or may not be included, so to play it safe, we assumed
that it’s not for most units) and see what’s left over. Great news: positive balances all-round,
averaging $620 per month surplus – hoorah, there’s no affordability issue!
Data Sources: Environics Analytics via Sitewiseweb;
CMHC; Dalhousie University
Here’s the “but”…and it’s not
inconsequential by any stretch. Median
household income is, by definition, the middle of the income spectrum. So, a household earning the median income
being able to afford average costs for rental housing tells only half the
story. Our next analysis worked the
figures backwards: we took the average rent plus the same allocation for utilities,
on an annual basis and figured out how much a household would need to earn in
order for housing costs to equal 30% of their gross income – then figured out
approximately how many households fell below that income threshold, based on
the number of households in various income brackets. Reports of an issue don’t look overblown at
all.

Data Sources: Environics Analytics via Sitewiseweb;
CMHC; Dalhousie University
Prices for owner-occupied housing
have increased substantially over the course of the pandemic. We ran the same sort of analysis as above,
for average/median sale prices in 2020 and 2021. The geographic availability of data is a bit
inconsistent, but our aim is a general idea, so overall, the data is fit for
purpose. Mortgage rates impact the cost
of housing; we used discounted rates (rather than the posted rates) relevant at
the relative times. To keep things
simple, we assumed a 5% down payment, then based on a very unscientific poll
around the office cross referenced against an online monthly expenses
calculator, we allocated 40% of the mortgage cost to cover property tax,
utilities, and insurance costs: rough idea, fit for purpose.
Data Sources: Environics Analytics via Sitewiseweb;
CREA; ratehub.ca
We also looked at the year-over-year
change in house prices: in 2020, the median income was sufficient to afford a
house in all Atlantic provinces, and the selected cities (2020 house price data
for Moncton is conspicuous by its absence), but in 2021, the income needed to
afford a typical house climbed over the median level for Nova Scotia and PEI,
and their capital cities.
Data Sources: Environics Analytics via Sitewiseweb;
CREA; ratehub.ca
Obviously, averages and medians are
the central figures: there will be houses priced
lower as well as houses priced higher, so the above analysis is not to say that
in HRM, for example, you couldn’t find a house priced within your means if your
household income is less than $100,000 (though it’s getting trickier,
especially with our recent embrace of the “offers over” system of home
buying). But this does provide an
indication of affordability, and leads us to the next A on the list:
attainability.
Again, the definition is slippery,
and in some senses, attainability is defined the same way as affordability,
i.e., at no more than 30% of gross household income. It seems that the key difference is the
removal of reference to median income: each income bracket will have its own
price range of attainable housing – and associated appropriate housing types,
categorized by type, size, and tenure.
Implicit in the idea of attainability is that suitable housing exists in
the local market in a variety of forms and price points, sufficient to meet the
needs of the population.
We used data on household income
brackets to model the proportion of households in each province/city by maximum
monthly housing budget. We then used the
same $150 allocation for utilities for rental units to determine affordable
rental ranges, and the same ratios for expenses-to-mortgage (i.e., 60% of
budget is available to service the mortgage, with 40% allocated to property
tax, utilities, and insurance) to determine affordable house prices, as were
used in the earlier analyses. All
figures are approximate at best and should not be relied upon for life
decisions, but they give a sense of what is attainable to each income bracket
from a price perspective.
 Data Sources: Environics Analytics via Sitewiseweb
Data Sources: Environics Analytics via Sitewiseweb. Note that the annual income from a minimum
wage job, at 40 hours per week and 52 weeks per year varies by province but all
four Atlantic Canadian provinces would fall towards the low end of the
$20,000-$39,999 income bracket, averaging $26,000 overall.
And so we come to the final A: availability. It's an important one, because it's effectively the supply side of the supply and demand equation, which is the driving force behind prices. For this portion of the discussion, we're abandoning price points in the interest of balancing level of effort that can be allocated to a blog post.
One of the components of the attainable definition was that a variety of housing formats would be available locally to serve the various budgets - the CMHC housing continuum graphic gives a rough sense of what this might look like, as does this Housing Life Cycle graphic borrowed from the City of Belleville, Ontario.
From an availability perspective, we
start with rental tenure. With the
exception of Cape Breton and St. John’s, vacancy rates are low across the
selected cities.
Source: CMHC (annually in October)
At a provincial level, in October
2020, there were just over 3,000 vacant rental units in Atlantic Canada, of a
total rental universe just shy of 114,000 units. Once those 3,000 units are sliced and diced
by price, style, and location, availability is probably problematic.
Source: CMHC (October 2020)
For residential sales listings, we
have to rely on data for Nova Scotia only, due to availability, but we suspect
that a similar pattern will be in evidence in the Maritime provinces at least. Prices continue to climb in 2021, but it
appears that the supply-side driving force behind that trajectory may no longer
be in play: the number of listings for the period 1st January to 16th
June in 2021 was greater than any other year in the past five years,
versus 2020, which had the fewest listings of the five years.
 But what about affordability of
these available houses? That’s a
question that could have many answers – in that it can be answered in a myriad
of ways. We’ve opted for a very simple
one, using price points of affordability for the median household income under
two interest rate scenarios: the current posted rate and a current available
discounted rate, and ignoring down payments because we’re more concerned with
monthly costs in this analysis. We’ve also ignored time – and changes to
mortgage rates and income levels over its course, for illustrative purposes
(horseshoes, hand grenades, and this blog post).
Median Household
Income
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$67,115
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30%
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$20,135
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Monthly
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$1,678
|
Mortgage amount @ 1.68% (discount rate)
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$410,793
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Mortgage amount @ 4.79% (posted rate)
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$293,120
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Mortgage rates from ratehub.ca
Let’s just pause on the one-hundred-and-seventeen-thousand-dollar
difference in what is “affordable” under those two rates. In some areas, you could buy a house for
that. Maybe not for much longer, if
interest rates stay low, but there are rumblings from economists that as
interest rates rise, the “affordability” of houses will contract and what some
fear is a housing bubble, may burst.
The second half of 2021 is yet to
be, so here are the Nova Scotia listing counts annually to 16th
June. A few things jump out: (1) there were more listings in the first
half of 2021 than in the same period of any other year in the past five (we
already knew that from earlier); (2) other than at the outset of the pandemic,
when home was so distinctively the safest place to be and few wanted to let
strangers walk through theirs, 2021 had the fewest listings below the posted
interest rate affordability threshold; and (3) 2021 had the fewest listings
below the discounted interest rate affordability threshold, full stop.
 Source: NSAR MLS®, with affordability
thresholds calculated using data from Environics Analytics via Sitewiseweb;
and ratehub.ca.
Back to that mention of localized
median household incomes. In the absence
of sufficient NOAH (Naturally Occurring Affordable Housing: see TDP VP Neil
Lovitt’s excellent blog from earlier this year) in the region,
programs that encourage affordable units in new developments are an important
part of the solution moving forward.
There’s a knife edge on which
balances the costs of development with what is affordable to those who need
non-market housing. It is highlighted by
reaction to a recent announcement of a sizable federal loan on a new apartment
building that will be approximately one-quarter designated affordable units. They’ll be priced in relation to the median
income for the area, which has generated a fair bit of blow back (to be fair: the
perception of how widespread negative reviews of policy are is almost certain
to be skewed, since those who really disagree are far more likely to speak out
against it, while those who agree or are neutral have less incentive to chime
in on the discussion). The issue they
raise is that the local (Halifax) median income referenced is close to $90,000
(as in, one large Costco order close to), so the affordable units could be
priced as high as $2,238, though most are actually going to be less than that
since the agreement includes provision for a further discount to the 30%‑of‑median‑income
standard. The underlying questions in
the flak are really: is median income a reasonable metric on which to base
affordability measures? And what median
should be used? And is there any
relationship between the maximum “affordable unit” price tag and unit size? One-bedroom versus four at $2,200 is a
pretty substantial difference.
There’s a geographic driver of
housing prices, and it costs more to commute less, generally. Maclean’s magazine published an analysis in 2014 that showed a minute of driving time
could save you thousands in housing costs.
Inspired, we devoted a TDP Trends to the topic; with some variation, in general,
the farther you get from the downtown core, the less expensive houses are.

Source: Turner Drake & Partners Ltd. (2015)
This is relevant to a discussion of
housing that is affordable, attainable, and available because cars are
expensive to own and operate. Pushing
affordable housing to the far reaches of the city, where transit options are
limited/nil (and don’t forget that commute times via bus are going to be
longer), is short-sighted at best, and counter-productive at worst. But median incomes are likely higher where
housing prices are higher, whether that’s localized within a city, or the city
median is used in lieu of the provincial one.
Is there a conclusion? Not in terms of a solution. But an acknowledgement of the complexity of
the issue, and the fact that a broad stroke approach to the metrics may provide
little in the way of assisting those who need support to find and keep suitable
housing that fits both the budget and the family structure. That, and the fact that “affordable housing” as defined, is only of
use if it is also attainable and available.

Turner Drake refines high-level,
surface-scratching analyses like the foregoing, into fine-grained, location
specific consulting assignments, including market and non-market housing supply
and demand analyses throughout Atlantic Canada, and Housing Needs Assessments
from coast to coast. To see how we can
provide solutions to your real estate problems, you can reach Alexandra Baird
Allen at (902) 429-1811 or abairdallen@turnerdrake.com.

After listing
a property for sale, you receive an offer from a prospective buyer. Then,
before you’re able to present the offer to your seller-client, a second and third
offer arrive with all of the buyers and their agents impatiently waiting for
answers.
While
handling multiple offers requires more diplomacy than handling a single offer,
from a business standpoint there is really little room for complaint here. You
have an attractive listing, which has a good chance of selling quickly, and
your marketing efforts are paying off, which should please the seller.
However,
there is plenty of room for problems if you don’t handle the intense demand for
your listing with diligence and fairness to all – your seller-client and the
prospective purchasers.
Verbal
Offers Are Not Competing Offers
All offers must
be presented in writing. If a seller’s agent is presented with a verbal offer,
the seller must be told what was offered and the buyer’s agent must be
instructed to put the offer in writing in order to be considered.
Disclosure
to the Buyer
In Nova
Scotia, the decision to disclose the existence of competing offers to buyers is
entirely up to the seller.
Should the
seller receive competing offers, the seller’s agent should:
- inform
the seller immediately;
- recommend
the seller review each offer prior to making a decision;
- disclose
the presence of competing offers to the buyers’ agents if the seller agreed to
do so, however the content of the offers must remain confidential;
- attempt
to have all offers presented to the seller in the same time frame. The seller
can delay the presentation by providing written consent; and
- advise
the seller of their options, such as:
- accept
one offer, reject all others;
- counter
one offer and set others aside pending the result;
- reject
all offers;
- accept
more than one offer with any offers after the first as back-up offers. Any
back-up offers must remove the seller’s obligation from the first contract when
moving on to the next through a condition included in the counter offer, such
as “seller’s acceptance of this back-up offer is subject to the seller ceasing
to be obligated in any way by [date] under the previously accepted purchase
contract. This condition is for the sole benefit of the seller.”
Representing
Buyers
The buyer’s
agent has a duty to disclose competing offers and any terms that are known to
them, but ultimately buyers might not be made aware of competing offer
situations; that decision rests with the seller. If the seller does disclose
that the buyer is in a competing offer situation, the buyer’s agent should:
- immediately
inform the buyer;
- advise
the buyer of the seller’s options;
- ask
to personally attend the offer presentations; and
- advise
the buyer of their options, such as:
- increase
the offer prior to presentation;
- leave
the offer as it is;
- withdraw
the offer; or
- reconsider
the fixtures, chattels, terms and conditions of the offer prior to presentation
and have these changes reflected in writing.
Tips for
Buyers
Once the buyer
is made aware that they are in a competing offer situation, they may want to
increase the offer price and/or reconsider a term or condition in effort to
compel the seller. Financing and inspections are both examples of conditions
that buyers could remove in effort to improve their offer. Doing so however,
increases the level of risk for the buyer.
Price:
What can the
buyer realistically offer on the property? Is the property appropriately
valued? Buyers should understand the long-term risks of increasing their offer
price and what impact it could have on their financials. Further, buyers should
understand that increasing their purchase price above the asking price does not
guarantee that their offer will be successful.
Property
Inspection:
Buyers may be
tempted to remove the inspection condition in an effort to present a more
appealing offer to the seller, but there could be major risks involved in doing
so. Property defects and major repairs are an expensive reality in many older
buildings and foregoing the inspection will prevent the buyer from having a
clear understanding of the current state of the property. Buyers are recommended
to use extreme caution when deciding to remove an inspection clause for this
purpose.
Financing
Pre-approval:
If you don’t
know exactly what you can afford, you may be looking out of your price range
and wasting your time. You may also be looking below what you would have
qualified for and not getting the right investment property for you.
If you start
off by getting a pre-approval on the other hand, you can sort by price, identify
the right neighbourhoods, and find your desired property much faster.
Offer
& Acceptance:
There is no
contract until all parties agree to its written terms, sign their names to
express that agreement and communicate acceptance to the offering party. Until
then, you have nothing more than a stack of offers – not a stack of contracts –
any one of which could appeal to your seller-client. Do not advise a buyer or a
buyer’s agent that the seller has accepted the buyer’s offer until the seller
has signed the offer. A seller who orally expressed a willingness to accept an
offer has not yet accepted the offer and has no legal obligation to do so.
Thus, no contract has been formed.
The Back-up
Offer:
When one
offer is accepted, your client may be willing to negotiate another as a “back-up”. Of course, this would require agreement by the second buyer and would require
special language indicating that the back-up contract has no legal standing
unless and until the primary contract is terminated.
Only One
Winner:
Unfortunately,
in the case of multiple offers for one property, there will be those that lose.
Someone will walk away disappointed for not having been able to buy their ideal
property, but if everything is handled in an equitable manner, the seller
should NOT be the losing party, but should walk away with a deal that is in
their best interest.
James Dunnett is
a Consultant in our Brokerage Division and has extensive experience in handling
complex leasing and sales transactions. If you need help managing your leasing
requirements, or are interested in purchasing or selling a commercial property,
James will be happy to assist you through every step of the transaction.
Contact him at (902) 429-1811 or jdunnett@turnerdrake.com.

The Covid-19 pandemic has had a tremendous impact on
the commercial real estate industry.
Central Business Districts throughout Atlantic Canada (and beyond) have experienced
the greatest impact as the market shifts away from traditional brick-and-mortar
office space. Many large employers anchoring
multi-story office buildings have transitioned to a remote workforce to satisfy
public health guidelines, while also providing their staff with more flexible
working arrangements. Vibrant, bustling downtowns
are now a shell of what they once were – your morning pitstop is now closing
its doors and is shadowed by dark buildings and empty parking garages, while office
towers are being considered for possible sale, renovation, or conversion to
multi-residential purposes.
With a reduction in office occupancy, downtown
districts have experienced a significant decrease in traffic. During December 2020 our in-house regional
market survey found that the majority of urban centers throughout the Maritime
provinces have experienced increasing vacancy rates. Halifax was the only market to see a slight
decrease in the rate (of 1.39 percentage points). Downtown St. John’s on the other hand recorded
the largest vacancy rate at a whopping 37.46%, substantially higher than that
of the greater St. John’s area as a whole, and up 10.93 percentage points (PP) from the prior year.
Moncton office vacancy rates increased 8.56(PP) from the prior
year while Saint John and Fredericton followed with growth rates of 4.07(PP)
and 3.83(PP) respectively.
On a macro level, Statistics Canada report that the
number of firms with 10% or more of their workforce working remotely doubled
between February and May 2020. This trend may not be over any time soon, as one
in five companies reportedly expect 10% or more of their staff to continue
working from home post-pandemic. Canada did experience a decrease in remote
working after the first wave of COVID-19, however since October 2020 remote
working has increased and in December was sitting at 28.6% according to Statistics
Canada.
Although the pandemic has brought a lot of doom and
gloom, it has also created new opportunities and broadened perspectives. Our Lasercad®
team have had the pleasure of helping our clients pivot and re-focus; assisting
them in mapping out socially distanced office layouts in order to
“future-proof” spaces, while also promoting continued in-person workflow
amongst staff. We have provided landlords and building owners with accurate
measurements and floor layouts to aid in managing and renovating their
properties.
The long-term effects of the pandemic on local commercial
real estate remain to be seen, however preparing yourself and your property for
various outcomes is a great start. Having an electronic CAD inventory of your
space allows the flexibility to run a variety of scenarios and can be a helpful
tool while working with tenants, contractors and buyers. If you would like to
hear more about our recent projects please don’t hesitate to reach out. Our
Lasercad® team would be happy to discuss your concerns and
requirements as you try to navigate these uncertain times. .jpg)
Mark Smith is a consultant in our Valuation
Division and is heavily involved in many of our Lasercad® projects. For more information about our range of Lasercad® services, feel free to contact Mark at (902)
429-1811 or msmith2@turnerdrake.com.

Expropriation is the forceable taking of property by an acquiring
authority for a public project, such as a road, transmission line, pipeline
etc. In the vast majority of cases, only a small portion of a property is taken,
and sometimes only a partial interest is required. Pipelines, for example, only require a
sub-surface easement interest, allowing the owner to continue using the surface
for anything that doesn’t interfere with the operation and maintenance of the
pipeline itself. Transmission lines are
happy to share, requiring only an easement interest for the towers and the
overhead lines. Regardless of whether
the interest is full (fee simple) or partial (easement), the acquiring
authority pays compensation for the value of the interest taken, the boundaries
of which are defined by a survey plan and a legal description, properly recorded
at the Land Registry.
In some instances, however, an acquiring authority may exert control
beyond the boundaries of what it has legally acquired. In Nova Scotia, new highways are usually
designated as controlled access highways under the Public Highways Act,
imposing potential new restrictions on building setbacks. A permit from the Minister is required for the
construction
of buildings and structures within 60 metres (197 ft.) of the limit of a
designated controlled access highway or within 100
metres (328 ft.) of its centre line. That
is probably far more restrictive than the local By-Laws require, potentially
sterilizing a fair chunk of land alongside the new highway unless Ministerial
approval is granted. In rural areas it
probably doesn’t matter, but in urban areas it might, especially if there is a
potential for development. The Public
Highways Act does allow compensation for so-called injurious affection
resulting from a controlled access highway designation … but not for new
highways. So, any compensation in
respect of new setbacks alongside new highways must presumably be claimed via
the Expropriation Act, even though the restrictions are authorised under a
different act.
Pipeline easements come with
similar strings attached. Oil and gas pipelines
are regulated under the National Energy Board Act (which strictly speaking
grants orders for rights of entry rather than expropriations). The Act imposes an automatic 30 metre (98 ft.)
Prescribed Area – or safety zone – on either side of the pipeline,
within which so-called ground disturbances and construction activities
are restricted. Some activities are totally prohibited and others require the
pipeline company’s permission. So,
whilst the pipeline company only acquires the easement within which its
pipeline sits, it casts a 30 metre shadow on either side. Compensation for restrictions within the 30
metre safety zone is often challenged but has been awarded and upheld by the
Federal Court in valid circumstances. Again,
in rural areas it might have little impact, but in urban areas it most likely
will, especially if it interferes with development plans. .jpg)
Lee Weatherby is the
Vice President of our Counselling Division. If you'd like more information
about our counselling services, including advice on expropriation matters, feel free to contact Lee at (902) 429-1811 or lweatherby@turnerdrake.com.

From the tip of the Tuskets to the briny Bras d’Or, Nova Scotia hosts a buffet of islands along the coast and in our many inland lakes. They provide visitors with a glimpse of wild beauty and an air of mystery; offering fantasies of self-isolation in a rustic cabin, or (in rarer cases) a self-sustaining luxury compound in the sea. There is no denying the unique appeal of an island property: every trip is a journey and the setting is ripe for peaceful contemplation and an escape (geographically) from it all. But not all islands are created equal, and one person’s paradise is another’s bare rock suited more to the gloomy vibes of a horror film à la The Lighthouse (filmed, incidentally, in the almost-an-island Cape Forchu near Yarmouth, NS). On occasion we are tasked with placing a monetary value on islands in Atlantic Canada, and though it feels crude to reduce these special places to dollar signs, our valuation crew is beholden to the oath of Market Values and Highest and Best Use. So, what factors into such an assignment? Before I jump into my canoe or take to the sky for the inspection, here are some considerations rolling around my head: Location The classic axiom of real estate applies most strikingly to island properties. An island located many kilometres out to sea will attract a much smaller pool of potential purchasers than an island within a leisurely boat ride of the mainland. For every additional hour spent travelling to an island, the cost of fuel, and risk of weather increases the difficulty in visitation and greatly increases the cost to move construction materials. For this reason, inland islands (on mainland lakes, or the Bras d’Or Lake) are generally more accessible and desirable than their oceanic counterparts. Amenities What better accessory for your yacht than a private island? Islands located near marina facilities, yacht clubs, and other services are immediately attractive to folks who enjoy Nova Scotia’s sailing culture. This trend is best revealed in the market for islands between Lunenburg and Chester on Nova Scotia’s South Shore. Here you will find the most expensive islands in the province, adorned with multi-million-dollar estates including the recently purchased “Kaulbach Island”. With a price tag of $4,000,000 this property includes multiple high-end buildings, deep anchorage, and a farm to keep you stockpiled in the event of any cataclysm (yacht not included). Waterfrontage Sandy beach or granite cliff? Both offer beauty but it is the former which is sought most by island purchasers. Valuing an island property often involves two key unitised elements: the “Basic Land Value” captures the uplands which tend to vary in quality based on vegetative cover, topography, etc. and are expressed as a value per acre; and the “Waterfront Benefit” which varies based on coastline material (sand, stone, boulders, etc.), accessibility, topography, and aesthetic appeal; and is expressed as a dollar amount per linear foot of water frontage. Breaking down value into both the Basic Land Value and the Waterfront Benefit is one of the ways we can leverage past sales of islands (which are inherently unique) to provide an estimate for islands yet to be sold. Ecological Interest As with many assignments involving wild places, the cold calculus of valuation has a redeeming quality when it can be leveraged to protect the land for future generations. In Nova Scotia, organisations such as the Nova Scotia Nature Trust, Nature Conservancy of Canada, Ducks Unlimited, and the Provincial government have created a market for islands which explicitly recognises their ecological significance. Islands which might otherwise be used to dry fishing gear can be justified with a Highest and Best Use “for conservation use” when there is demonstrable demand for islands hosting birds, mammals, and plant life unique to these coastal oases. It’s a small step, but by establishing conservation as a legitimate Highest and Best Use (backed by market data) we are opening a door to recognising the intangible values and relationships we have with land. It is this humble appraiser’s hope that one day the valuation process will broaden even further, allowing for the legitimate weighing of non-market values and against the rigid confines of what is merely “financially feasible” or “legally permissible”. Perhaps we can one day pit the spiritual value of land against its extractive value. .png)
James Stephens is a consultant in our Valuation Division and is heavily involved in the valuation of lands for the provincial governments, private land owners, and land trusts including the Nova Scotia Nature Trust, Nature Conservancy of Canada, Annapolis Valley Farmland Trust, and the Island Nature Trust. For more information about our range of Valuation® services, valuations for land donations, feel free to contact James at (902) 429-1811 or jstephens@turnerdrake.com.
Well, last year
certainly was one for the history books. Of all the issues amplified by the
pandemic in 2020, housing and its affordability has been among the most
universal, and the most important. Tight vacancy and escalating rents,
construction cost and process challenges, plummeting interest rates and a
dearth of listings, CERB and eviction bans, renovictions and rent control,
escalating homelessness and guerilla shelters. The jury is still far out on
2021, of course, but the challenges and conversations around housing show no
signs of a speedy resolution.
I’ve been trying and
failing for some time to write about housing; what’s been happening in our
region, and how those trends have been affected by the ongoing pandemic. Part
of my challenge has been simply keeping up to date – these days you can’t go
more than a week or so without getting hit with some new and relevant
information. Another part of my challenge has been the complexity of the issue.
Housing is the bottom line that many personal, economic, and policy issues fall
down to; it is difficult to understand one major facet of the issue without an
appreciation for the others.
Originally my goal for
this piece was to do a punchy listicle with a couple interesting data points. In
my naivete, I established a working title of “3 Charts to Explain Housing”.
However, I’ve found it impossible to weave together anything worth saying using
so few threads. So, with apologies to our ever-patient marketing staff and any
of you who were wishing for a light read, I give you: Seven Facets of Our
Housing Situation Explained (with eight charts).
POPULATION GROWTH
While the COVID-exodus
to Atlantic Canada from elsewhere in the country has received much media
attention over the past few months, it is really a sideshow. Despite the
interesting anecdotes about sight-unseen sales in (formerly) sleepy markets, or
Realtors® conducting showings via Zoom, overall interprovincial migration is
not significantly different in 2020. We have longer term and more fundamental
growth drivers affecting our region. Many of these have been a significant
source of housing demand over recent years, but in some cases, have waned under
pandemic conditions:
Oil Patch Kaput
During the tar sands heyday from late 2004 to late 2015 out-migration
from Nova Scotia to Alberta averaged about 1,250 people every quarter. That’s
one Antigonish per year. For eleven years straight. These days, with oil trading
at half its price, the exodus has collapsed by a similar proportion while in-migration
from Alberta has remained comparatively steady. The result: in the 62 quarters
from Q1 2000 to Q2 2015, net migration from Alberta to Nova Scotia was positive
only 3 times. In the 21 quarters since (no data yet for Q4 2020), it’s only
been negative once. A penny saved is a penny earned.
Real Estate Refugees
Yes, there is certainly a notable inflow of population and home-buying
capital from other Canadian regions that have experienced stronger price
appreciation, and worse pandemic performance. The work-from-home narrative
dominates the conversation on this, but it is not the whole story. This is a
combined house price arbitrage play with the beginnings of a structural trend,
principally from Ontario and British Columbia, driven by population aging as
households execute longer-standing plans to retire Down East. It has been going
on for several years, with 2017 being a breakout after Toronto and Vancouver
posted eyewatering year-over-year house price increases. The after-spring bump
in 2020 from ON and BC is only about 10% higher than the same period last year.
Increasing Immigration
The immigration story was really kicked off in 2016 with the
much-publicized landings of Syrian Refugees however other streams for entry
really took things from there. Nova Scotia went from welcoming about 610
international immigrants per year (2005-2015 average), to more than 1,390 per
year since. Numbers have waned in 2020, obviously, but the Federal Government
was early to state that immigration, and increased immigration at that, is a
core element of its post-pandemic economic recovery plans. We therefore expect
this trend to pick right back up as vaccination is rolled out globally.
Student Bodies
Efforts to recruit international students (and their sizable tuition
fees) have been front and centre for post-secondary institutions for some time.
However, the Trump presidency apparently supercharged things as a significant
number of prospective students have diverted to other western countries who didn’t
follow the same nationalistic and isolationist path. This is such an
interesting twist of fate that it deserved its own chart:  Again, the pandemic has had an understandable dampening effect as travel
has become restricted and classes moved online, but this is a temporary blip. With
sanity restored to the White House, however, it will be interesting to see how
quickly, and to what extent, this trend recovers in Canada.
Added together, we get a picture of population
growth which has been driving strong housing demand for a period well before a
coronavirus turned the world upside down.

In fact, the pandemic
has decelerated the net impact of these demand drivers, evidenced in CMHC’s
2020 Rental Market Survey which found apartment vacancy in Halifax rising
significantly from its previous record low… though it remains too low.
SUPPLY RESPONSE
All of this new
population needs shelter, demand requires supply. Adequate housing supply, in
and of itself, does not solve all housing challenges. However, making sure we
are expanding our housing inventory in pace with our population growth is a
fundamental piece of the puzzle solving some issues, and making many others a
lot easier to deal with. Supply and demand interact like tectonic forces in
housing markets, any of the other actions we might take are done in their
context. Let’s take a look at the Halifax area, which is generally where most
of the province’s population growth is landing. How have we been doing? (Note: Household growth is derived
by applying occupancy rates to population growth estimates from Statscan.
Occupancy rates are interpolated/extrapolated from census figures, and are
approximately 2.3 people/household for recent years. This approach likely
underestimates the number of households added as the demographics of new
arrivers lean towards smaller households than the general population.)
Not good.
Typically, it would be
excessive to examine this data over a 30-year period, but here it is necessary
to show just how unprecedented the current growth disparity between people and
shelter is in Halifax. For the entire time series Halifax only rarely approached
– and never exceeded – an even level of housing construction for each household
added to the city. Each time that it did, the industry responded with stronger
building rates. This is important as demand is also increasing from shrinking
household sizes within the existing population in addition to this incremental
demand from growth. In 2016 Halifax blew past that previous ceiling, adding
more households than houses for the first time in at least three decades, and
more importantly, sustained these historic levels of under-building for 5 years
and counting! The first rule of getting out of a hole is to stop digging.
CREDIT
As debt becomes cheaper
to carry and more easily accessed, it inflates the value of assets. Falling
yields on risk-free vehicles like government bonds drive investors to seek
higher returns, and the same low rates that motivate this behavior mean the
system is flushed with credit on which to acquire these assets. For decades,
interest rates have been in secular decline, and this was accelerated
significantly in 2009 when the Great Financial Crisis ushered in the era of
emergency near-zero rates which have seemingly evolved into permanently low
rates. Or perhaps the emergency is now permanent, it is sometimes hard to say.
Real estate is an
illiquid asset, which means transactions in the market are heavily influenced
by the marginal buyer; those who are willing and able to outbid all others for
the property, and thereby set the bar for valuation. We observe the impacts of
this monetary policy context clearly in the commercial real estate sector as cap
rates have compressed, amplifying the market value of properties
independent of changes in the income they generate. A similar effect is felt in
the residential sector, where increasing mortgage credit acts as an accelerant
in any market with a whiff of demand, launching prices higher, even as the
incomes that support them lag.
The chart below shows
the results of a simple model that applies typical mortgage parameters to
annual house price, income, and interest rate data to plot the changing
relationships between income, purchase price, and mortgage carrying cost. In
the data since 2000, incomes have increased by about 70%, new house prices by
200%, and average interest rates have dropped by 50%. 
The resulting price to
income ratio skyrockets by nearly 190 percentage points as a result. However,
the countervailing force of loosening credit means the actual carrying cost of
that price, which is what households actually pay (because we don’t buy homes,
we buy mortgages), is only up 5 percentage points over the same period and
generally fluctuates up and down within a tight 15 point range.
This is the critical
mistake made by those who talk about housing prices as being “detached” from
incomes. House prices are attached to incomes, firmly, by the sinews of credit.
As it has eased, that connection has lengthened, but the relationship is just
as firm. In fact, it is more accurate to describe this relationship in the
inverse; it is largely because interest rates have fallen that prices
have gone up! If interest rates were to reverse their long-standing trend, we
would see how quickly this detachment narrative disappears.
DISAPPEARING NOAH
Naturally Occurring
Affordable Housing, in housing policy parlance, is a somewhat new and
misleading term that basically refers to unsubsidized housing that exists
within the private market at a relatively affordable price. Think classic
shoebox 3-story walkup apartment buildings (though it can come in any form). Without
non-market interventions such as capital grants or operating subsidies, this
housing is affordable mostly because it is less desirable relative to other
options in the market, and this is principally a function of when it was built.
Buildings go down in relative value over
time, or depreciate in valuation parlance, because they go out of style, they
get rundown and tired, they lack design features and amenities that more recent
buildings have, they are more likely to suffer pest nuisances… if competition
is the mechanism by which markets work, these buildings are losing the
competition.
This part of the
housing inventory is critical for those employed in entry-level positions or
lower-income industries. However, as NOAH is still firmly within the housing
market, it is subject to market forces. In times of growing demand, the lower
end of the market is generally where renovations and recapitalizations become
feasible first. In and of itself, this is a good thing. We want our building
stock to receive reinvestment and cycle back up through the market instead of
declining into uninhabitability. However, that idyllic impression of market
function is running into some cold realities.
The first is a quirk of our development history.
The chart below shows the distribution of apartment inventory in Nova Scotia by
building age (we have removed the comparatively minor contribution of buildings
built pre-1950 for the sake of our x-axis). With regular maintenance and the
occasional replacement of major building systems like roofs and HVAC, that
typical midcentury shoebox building may be expected to last 50 or so years
before a complete revamp is required to extend its lifespan.

At any given time there
is a continuous stream of building stock aging down and being recycled back up
through the market, but a disproportionately large section of the apartment
inventory is now coming due. Units constructed during the boom of the 70s are
turning over, and there are far fewer units next in queue replace them at the
bottom. Particularly cruel examples notwithstanding, this dynamic is largely
responsible for the increasing prevalence of “renoviction” stories that we’ve
seen in the media over the past couple years. Our total supply of NOAH is
dwindling.
INCOME INEQUALITY
The second reality affecting
the ability of NOAH to adequately serve lower income households is the fact
that those households are falling further behind. The majority of households in
rental housing are in the bottom 40% of the income distribution. The chart
below shows how incomes (adjusted for inflation) have changed over time. 
This of course does not
reflect the added issue of declining income mobility, highlighted in recent
research from Statistics Canada. Still, even this
incomplete picture is concerning: over four decades real family incomes in this
lower 40% have, at best, increased by less than $4,000 or about 0.26% per year.
Unfortunately, the operating expenses of the buildings they occupy (property
taxes, utilities, construction materials, insurance premiums, contractor and
trade labour, etc.) are growing at a much higher rate. Compounded over decades
this means rent in stable, older buildings – even if run on a break-even
financial model – will increasingly outpace the ability of many renter
households to afford them.
This is mostly a
renter’s issue, but it affects those in owner-occupied housing as well. Though
interest rates have maintained affordability in the carrying costs of mortgages,
other costs associated with home ownership, such as down payments, have become
increasing barriers to entry. Ultimately, the spectrum of the population that
the housing market serves is getting narrower, and a big part of that issue (especially
the “crisis” part) is due to stagnant household finances and stagnant social
supports as inequality in our society grows.
SUPPLY OF NON-MARKET
HOUSING
The third reality is
the availability of housing options for those who are finding themselves
outside of the limits of the market. Canada as a whole has not engaged much in
the production of social housing, especially since the late 80s and early 90s
as the federal government unwound their previous decades of involvement. Yet,
even by these low standards Nova Scotia has the dubious distinction of being
the second worst province in terms of adding to its stock of non-market housing
since 1990: 
A brief pause here to look
over the rim of my glasses at New Brunswick which has apparently built all of
thirteen (!) units in the last three decades. This data is from CMHC’s
inaugural Social and Affordable Housing Survey, so hopefully in future updates
more units will be identified.
Barely more than 7% of Nova
Scotia’s non-market inventory has been built since the 90s, and I would wager the
proportion for more recent decades is closer 0%. Over this same timeframe, all
housing completions tracked by CMHC totaled nearly 98,000 units, meaning only
0.93% (910 units) of what we’ve built has gone towards increasing our
non-market inventory.
Now, this is at least
somewhat understandable. Up until recently Nova Scotia has been able to coast
along without too much trouble thanks to stagnant population growth and the
ability of NOAH to take considerable pressure off the waitlists for non-market
options. Well, those days are over. If there was one thing the Province could
do without having to wait for their Affordable Housing Commission to tell them,
actually increasing the inventory of social housing would be it!
IMPORTED DEMAND
Finally, we get to the
Boogeymen. For those who subscribe to the “detachment” perspective described
earlier, the thought process is straight forward enough; if local fundamentals
are not viewed as an explanation for housing costs, logic dictates that
something else must be afoot. There is a fairly large goodie bag of these
something-elses, but they are always fundamentally about pathways for external
demand to enter and distort local market conditions: money laundering crime
lords, capital from unstable regions flying to the local real estate of safer
countries, foreign and local speculators turning houses into tax-advantaged
capital gains, Wall St. and Bay St. financializing local housing in order to
transfer wealth from residents to shareholders, wealthy tourists displacing
locals via AirBNB conversions.
Like any good story,
there is always an element of truth at the core. And like any good Boogeyman, a
lack of information prevents us from ruling them out entirely. The issue with these
explanations is not whether they are completely fabricated; most are true to
some degree and documented to have occurred somewhere at some time. The issue
really is whether they are happening locally, and if so, are they to a degree
that would have a material effect. In our view, there are enough conventional
and locally-based explanations for our housing conditions in this region.
Occam’s Razor and all that…
Having said that, we
fully agree with at least one of the proposed mechanisms by which outside
demand has been imported into our local markets: the proliferation of
short-term rentals. The number of housing units in our communities now
dedicated exclusively to providing short-term accommodations on a commercial
basis has exploded since the global advent of AirBNB and its imitators just a few
years ago. While there are some interesting and ultimately beneficial facets to
this trend, what demands the most attention currently is the resulting reduction
in housing supply available for traditional forms of tenancy. In response, we
have invested in access to world-leading data services covering this new sector
of the real estate market. Currently we have market data coverage for all of
Nova Scotia at the individual listing level, updated monthly. We have a few interesting
extra-curriculars in the works for this resource, but alas, these are busy days
and client needs come first (seems like a certain provincial government should
be beating down our door on this one, but I digress). In the meantime, here is
why Short-Term Rentals have our attention: 
This chart shows the growth of
housing units (CMHC tracked housing completions) against growth in what we
estimate to be commercially operated STR units (i.e. entire-home AirBNB
listings that spend the majority of the year available on the platform rather
than housing a long term resident). Starting with only a couple hundred in
2016, commercial STRs have grown rapidly, peaking at nearly 1,700 units in
2019. This negates about 18% of the 9,300 housing units completed in the
municipality over the same timeframe. In a time when we need all the supply we
can get, this is an unnecessary headwind. At the same time, these overall
numbers are not earth-shattering; it’s hard to imagine that conditions would be
that much different if the industry had been able to pump out 11,000
units instead of 9,300 over those three years.
However, those are the overall
numbers. The short-term rental market is not dispersed evenly throughout the
housing market, it is having vastly different impacts within Halifax. Some
locations have no loss of housing availability, others are under significant
pressure. To illustrate, though STR units peaked at 18% of completions for HRM
overall, if we narrow our analysis to just the Peninsula, that figure jumps to
about 30%. You can imagine how that may escalate further looking at some of the
high-demand neighbourhoods.
More on that in the future. [1][2].jpg)
Whew, you made
it to the end, but when it comes to housing issues there are no shortcuts! This
is an immensely important challenge and we’re trying to do our part. We are
proud to support the work of Nova Scotia’s Affordable Housing Commission
through our involvement in their Data and Financial Modelling Working Group. Of
course, Turner Drake is also engaged in numerous consulting assignments,
including non-market housing feasibility studies, and Housing Needs Assessments
from coast to coast. To see how your community can benefit from the unique
expertise of our Planning and Economic Intelligence team, call Vice President
Neil Lovitt at (902) 429-1811 or nlovitt@turnerdrake.com.

Among the fun things to look forward to at this
time of year is PNC’s annual (37 years now!) Christmas Price Index, in which
they calculate the prices of the twelve gifts from the classic song, “The Twelve
Days of Christmas”. The highest increase
year-over-year was for the two turtledoves, up 50% to $450, which contrast to a
few of the other avian gifts: swans, calling birds, and a partridge will cost
you the same this year as last…as will minimum wage milk maids. This year’s index accounts for cancellations
of many live performances: the unavailability of dancing ladies, leaping lords,
pipers, and drummers means that the total cost of these gifts is down over last
year. How far down, though, is a matter
of measurement. If you were to buy just
one of each of the gifts – one goose, one ring, one French hen, etc. – you’d
pay 58.5% less than last year, for a grand total of $16,168.14 (USD). But you can also measure by the full cost of
all the gifts – both the turtle doves,
all the geese, none of the performers – to arrive at grand total for 2020 of
$105,561.80, down just 38% since 2019.
Or, and I’m assuming this is based on the one-of-each option, PNC also
provides a “core” index, which excludes the Swans-a-Swimming, the price of
which is apparently the most volatile.
The core index for 2020 costs $3,043.14, down 88.2% from 2019.
So, the same index has three different
year-over-year price changes. That
provides a perfect segue into a discussion of the critical thought, and careful
consideration required before relying on Price Indices for decision making,
planning, and policy purposes…there are many available from which to choose, including
the overall, oft quoted, Consumer Price Index (CPI). This is not to say that price indices are not
a valuable tool – just that care needs to be exercised in choosing and using
them.
Twice a year, we undertake a comprehensive market survey of rental office
and warehouse space;
the summary results include average net rental rates, realty taxes and
operating expenses, and gross rental rates.
As part of our analysis, we look at the relationship between the
All-Items CPI and the total for realty taxes and operating costs (RTCAM), over
a five-year period. The CPI is a measure
of the cost of a certain “basket of goods”, and as such generally measures the
rate of inflation – which is expected to be reflected in the costs to operate a
building. The fact that the cost to
operate a building includes a different basket of goods than that required to
run a household – more cleaning and heating, fewer sneakers, school supplies,
and food items – makes it unsurprising that, while these two measures usually move
generally in concert, there can be significant variation. This year, where costs have shifted up and
down across various sectors, particularly highlights the challenge of relying
on the CPI as a surrogate for other baskets of good: the five-year ratio
between CPI and RTCAM, describing how the RTCAM moved for each 1 percentage
point change in the CPI, varied from a 1.14 percentage point decrease in office
RTCAM in Saint John NB, to a 1.01 percentage point increase in Fredericton,
with Moncton, St. John’s NL, and Halifax falling at varying points along that
range. December’s survey includes both
office and warehouse space in Halifax, and there is a differential between the
ratio of CPI to RTCAM for the two sectors, with office RTCAM coming in at 0.59
to 1 percentage point change in CPI, and warehouses coming in at a ratio of 1.2
to 1.
PNC says
about their index:
The PNC Christmas Price Index® is an annual tradition which shows
the current cost for one set of each of the gifts given in the song "The
Twelve Days of Christmas."
It is similar to the U.S. Consumer Price Index, which measures the
changing prices of goods and services like housing, food, clothing,
transportation and more that reflect the spending habits of the average
American.
The goods and services in the PNC Christmas Price Index® are far more
whimsical, of course. And most years, the price changes closely mirror those in
the U.S. Consumer Price Index. This year, the approach to PNC’s CPI takes into
account the sociopolitical environment brought on by the pandemic by using the
Index to provide an analysis of current market conditions, while including the
impacts of COVID-19 as highlighted by the data.
It’s a fun way to measure consumer spending and trends in the economy.
So, even if Pipers Piping or Geese-a-Laying didn’t make your gift list this
year, you can still learn a lot by checking out why their prices have increased
or decreased over the years.
It’s definitely worth checking out. And if you’re interested, we publish the
summary results of our market surveys on our website and through email
distribution. Watch for them in the New
Year – or contact us to subscribe. Wishing
you and yours all the best for the holidays, from all of us at Turner Drake
& Partners Ltd. 
Alex Baird Allen is the Manager of Turner Drake's Economic Intelligence Unit. If you'd like more information on market research or our semi-annual Market Survey, you can reach Alex at 902-429-1811 Ext.323 (HRM), 1-800-567-3033 (toll free), or email ABairdAllen@turnerdrake.com
Photo
Credit: istockphoto
The Asking Price is a critical element when
listing a commercial property. If it is too low you may under sell your
property. If it is too high it will scare away prospective purchasers and the
listing will go stale: it may then be necessary to withdraw the property from
the market and re-introduce it at a later date, or alternatively reduce the
price substantially to reignite interest. But while property sells at Market Value, owners often measure its
worth in terms of Intrinsic Value. This
can give rise to a difficult conversation between real estate broker and
property owner.
Market
Value
is generally defined as "the most probable price which a property should
bring in a competitive and open market as of the specified date under all
conditions requisite to a fair sale, the buyer and seller each acting prudently
and knowledgeably, and assuming the price is not affected by undue stimulus”.
More specifically, market value is based upon a property’s Highest and Best
Use. The Highest and Best Use of a property is the probable and legal use of
land, or an improved property, that is physically possible (what can be
physically built on the site?), legally permissible (what uses are permitted
under the current zoning?), financially feasible (will the purchaser achieve an
acceptable return within a reasonable investment horizon?) and maximally
productive (what use generates the highest return?). Simply put Market Value is
the highest price attainable assuming the property is expertly marketed to the
widest pool of prospective, knowledgeable purchasers.
Intrinsic
value
is the owner’s perception of the inherent value of their property to them. This
value can be based on the actual amount of money they have invested in the
asset, any sweat equity by the owner, emotional attachment, or just their
perception of current market conditions. Sometimes the property owner may be
constrained by the debt burdening the property, or the net cash they need to
realise on sale after paying capital gains tax and transaction costs.
How do you bridge the divide between Market
and Intrinsic Values? It starts with the acceptance by both parties, broker and
property owner, that they have a common goal… to sell the property on the most
advantageous terms to the owner. Before we undertake to market a property for
sale, we sit down with the owner (vendor) to go over the marketing plan for their
property, the pricing strategy, and the listing agreement, to ensure the vendor
understands the selling process and each party’s obligations under the contractual
arrangement. Since an appropriate asking price is critical, we research the
property, its zoning and planning considerations, and sale prices of comparable
properties, to develop an asking price based on the Market Value. Because Intrinsic
Value frequently differs from Market
Value the vendor may have price expectations that cannot be realised on
sale and it may be better to withhold the property from the market until prices
increase…. realising of course that there is always the risk that prices may
fall too, as is the case currently in some market sectors. However if the owner
is serious about selling, it is imperative that the asking price be reflective
of Market Value plus a negotiating
buffer (every purchaser likes to feel like they have negotiated a good deal for
themselves). Otherwise, the overpriced property will sit on the market and become
stigmatised: potential purchasers will wonder why it has been on the market for
longer than is typical, if there is something wrong with the property, or will want
to try to use the long marketing exposure as negotiating leverage. On the other
hand if a property is reasonably priced and is properly exposed to the market,
a vendor will have much better chance of consummating a sale at a price, and
within a time frame, that optimises their sales transaction.
Reduce
Stress: Live Longer
Selling your property, even commercial real
estate, is rarely anybody’s idea of fun… so we have compiled a list of the
difficult questions you meant to ask your real estate broker but were too
embarrassed, simply forgot… or did not know you should ask. Questions such as “I don’t want my staff to know I am selling:
what can I do to keep it quiet?” or “I
am already talking to a prospective purchaser: do I still have to pay you a
commission if I sell to them?” and even “Why do I need a real estate broker anyway?”. Better still we have
provided our answers in the way we do best… frank, forthright and brutally
honest! Call or email me, I will happily send them to you. 
As Senior Manager of our Brokerage Division, Ashley Urquhart assists both landlords and tenants meet their space requirements, and vendors and purchasers optimise their property portfolios. For more real estate brokerage advice, you can reach her at aurquhart@turnerdrake.com or (902) 429-1811.
Residential fires are soaring, causing millions of dollars in damages, and claiming the lives of many. While this headline may sound shocking, this has become a catastrophic reality for many apartment owners across Canada and worldwide. It’s quite clear how the ongoing pandemic has changed our daily lives in a socio-physical sense - most notably the way in which we interact with others, and how we navigate the shopping malls and hallways in our apartment or condo buildings. What many have not considered however, is the increased risk of fire-related emergencies resulting from higher daytime occupancy levels in multi-unit residential buildings. National Fire Prevention Week runs from October 4th to 10th. This might not be something you typically note in your calendar, however, if you are an apartment owner or manager, you should! If you have yet to equip your building and tenants with clear evacuation plans, or reviewed your latest fire-insurance policy, these items should be top of mind.

Given the ongoing COVID-19 pandemic, and the attempt to abide by physical distancing protocols, employers worldwide have been forced to encourage remote, work-from-home policies. According to StatsCan, 32.6% of companies reported 10% or more of their workforce were teleworking in the month of May, compared with just 16.6% in February. Furthermore, 22.5% of companies expect 10% or more of their staff to continue working from home post-pandemic. It’s a typical noon hour on the fourth floor of your apartment building, and you’re finishing up a conference call while lunch simmers on the stove. The kids are racing around the apartment while the laundry machine chugs through the spin cycle. There’s a knock on the door - another amazon delivery… Sound familiar?! Working from home has allowed significant flexibility in a world of fast-paced multitaskers however; it also raises concerns surrounding at-home fire emergencies. Building owners, managers and insurance companies are quickly growing concerned as the slightest distraction can have severe (and sometimes fatal) consequences. A recent article by Greg Meckbach of the Canadian Underwriter noted that the number of fatal at-home fires in Ontario has risen by 65% compared to this time last year. Local sources including the Halifax Fire Investigation Summary also highlight this issue, shedding light on the growing frequency of fires in predominately multi-residential apartment buildings across the Halifax Regional Municipality. It is crucial that building owners ensure the safety of their residents by establishing a formal fire emergency and evacuation plan. To the surprise of many, this is also a requirement set forth by most municipalities and within the National Fire Code of Canada (see our March blog post for specific details/requirements).

Sadly, the majority of buildings do not have adequate fire plans or procedures in-place. These protocols are an added level of insurance that are typically overlooked until it’s too late. Now more than ever, apartment owners and managers should be establishing or reviewing existing fire protocols for their buildings. We also suggest reviewing your current fire insurance policy to ensure you are equipped with adequate coverage. On the face of it, these suggestions may seem like an added expense however; they could be invaluable in the event a fire arrives at your doorstep. In my dual roles of Manager of Turner Drake’s Lasercad® Division and consultant in our Valuation division, I have experience in both the preparation of Fire Escape floorplans, and the completion of Fire Insurance reports. I have worked with a number of building owners and managers to implement Fire Safety Plans in apartment buildings throughout Atlantic Canada. If you have any questions regarding our Fire Safety Plans or how to go about reviewing your current Fire Insurance coverage for your property, feel free to contact me at 902-429-1811 or mjones@turnerdrake.com
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It
goes without saying that the COVID-19 pandemic has directly and abruptly affected
both short-term cash flow and long-term economic prospects for real estate
owners in the Atlantic region. Commercial and investment property has been
particularly hard-hit, with hospitality and retail property profoundly (and in
many cases, irreversibly) impacted.
Not
surprisingly, my colleagues and I field multiple inquires a week respecting the
potential for property tax relief. Unfortunately,
we find ourselves delivering the unwelcome news that there’s very little
immediate aid available; in some cases, not for years to come. A little
background will help to explain why this is so.
Property
taxes are the product of a property’s assessed value (a point in time estimate
of market value which is calculated as of a legislated date: in assessment
parlance, the “base date”), and the applicable tax rate. In most Atlantic Canadian jurisdictions,
assessment and taxation are separate functions.
Assessed values are calculated by assessing authorities (the Property
Valuation Services Corporation in NS; Service New Brunswick in NB; the
Department of Finance in PEI; the Municipal Assessment Agency and the City of
St. John’s in NL); mil rates are set (and taxes collected) by the
municipalities.
In
providing relief, Atlantic Canada’s assessing authorities and its municipalities
are stymied by legislative authority that varies from jurisdiction to
jurisdiction. The ability for the
pandemic to be reflected in assessed values (which, in all four provinces, are
to market value) depends to large degree on the base date: 
On the taxation side, we have prepared a reference
guide detailing the myriad of programs available in various Atlantic Canadian cities,
towns and municipalities. It
is available on our websites at https://www.turnerdrake.net and https://www.turnerdrake.com/products/propertytax.asp. The vast majority have been limited to extension of tax deadlines and
reductions in interest rates applied to arrears.
There is little that can be done with
respect to the tax rate applied to your property; your tax management
strategy should therefore focus on your assessed value. What will be the impact of the pandemic on
values? In my opinion, few property
types will escape unscathed, and for many, recovery will be protracted. While I
don’t have a crystal ball, we do have a rear view: experience in the aftermath
of historic cataclysmic events- e.g. the recessions of the early 1990s and
2007-2009; 911; and SARS, for example- will all provide guidance in
establishing the penalties on the value of ICI real estate.
Property taxes can be an enigma under
conventional circumstances. COVID-19 has created a property tax quagmire. My
colleagues and I would be happy to provide advice on a property-specific basis.
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