Mortgage 101 – Densification In Halifax | May 22, 2023

In this installment of Mortgage 101, Clinton Wilkins and Todd Veinotte discuss the current, more stable, state of the Halifax market, the benefits of condos, residential mortgages and why people might invest in apartment buildings.

LISTEN to the conversation on Spotify and Apple

Todd Veinotte 00:00
Did you take part in any ECMA events, Clinton? Or no?

Clinton Wilkins 00:02
I didn’t. But I heard you hosted a big event you did your whole show –

Todd Veinotte 00:06
We took our show on the road and you believe that? Yeah, that’s really cool. And

Clinton Wilkins 00:09
I’d asked you I’m like, this is the first time in the Todd vino show history, that you have done a remote. So that’s cool.

Todd Veinotte 00:15
That’s right. And that’s only the actually the the, I believe the second time a talk show at once was News 95.7, and now, City News 95.7 was on the road. Rick did it when they had their 50th anniversary, which was now three or four years ago or whatever. Four years ago. So yeah, it was fun to be on the road. And it was a great event for the city really was and I think it speaks, it speaks well, to the, to what Halifax can do.

Clinton Wilkins 00:17
And the talent, like obviously, The Trews had been around a long time, that’s who the last song was, and they won for rock recording of the year. That was an old song but you know, this is one of my favorite songs. So hopefully our listeners like it. And, you know, we decided this show, we’re going to do a theme of talking about all kinds of ECMA artists and music we’re gonna play on all the shows.

The Halifax market is a best kept secret

Todd Veinotte 01:06
And it’s funny because I was chatting with one of the guests that I had was Natalie McMaster, who dropped by the Rogers Square to chat and she now lives in Ontario. And she was talking about how beloved the Maritimes is, and, and the reputation that this area has, and in particular Halifax has, as a great city to live in Canada, and you would know that traveling this country a lot, right?

Clinton Wilkins 01:32
You know what, and I come across people and I talk to mortgage brokers across the country, you know, I go to events, and they all speak so highly of Halifax, that, you know, it’s like one of these places that people just, you know, it’s the best kept secret. But the secret is starting to get out. And as you know, over COVID More and more people were relocating here. And I think, you know, over the years, there was a lot of tourism coming to Nova Scotia, New Brunswick, PEI, and to Newfoundland. And, you know, the secret is starting to get out, but, you know, I’m glad that we are here.

Buyer’s have more negotiating power

Todd Veinotte 02:06
Is it an undervalued market still, though? We know that it has been in the past and we’ve talked about this before, but is it an undervalued market?

Clinton Wilkins 02:13
I think I think it’s balanced out more now. I think we’re becoming a more stable market. You know, there’s still not enough listings but there are a lot more coming on, which is really exciting. Normally, spring is the busiest real estate market of the year. So we’re seeing more and more listings. We’re not getting a lot of purchase agreements in so I think that is still slower than it normally is. For us. We’re still very steady because we’re doing a lot of renewals. We’re seeing a lot of people transferring to different lenders. We’re doing a lot of refinances, and that’s keeping us busy. We’re starting to get more purchase agreements being accepted. But I think the amount of competition is not as fierce as it was. But I am hearing reports, there are homes that are selling for above the listing price.

Todd Veinotte 02:53
Right. Some. Some. Some are sitting. Not like it was in 2022 and that was a frenzy at that point right?

Clinton Wilkins 03:01
Definitely not. And that’s why I say the market is becoming more balanced. Do I think it’s still a seller’s market? Yes, I do. But I think the buyers have more of a, you know, foot in the door maybe and a little bit more negotiating power than they did before.

The benefits of condominiums

Todd Veinotte 03:15
What are your thoughts on what they call densification? And I guess then, if you’re talking homeownership, that would be condo homeownership, if you’re going to densify the peninsula.

Clinton Wilkins 03:24
I think garden suites, I think certainly apartments, I think condos, I think yeah, that’s really important. And we need it along the through pass of the city. I think that’s really important.

Todd Veinotte 03:35
Are condos a good buy?

Clinton Wilkins 03:36
You know what, I own a condo and I’ve owned other condos in the past. I think it’s a lifestyle thing. You know what I mean? I think condos might not appreciate quite as fast as a freehold property would. But you know, as the city becomes more and more populated, I think condos are more and more popular, especially for those people who want to live downtown. That’s what I want to do. And for me, condo living is very easy, because you can turn the key and you can walk away. I love traveling. You know, we haven’t traveled a lot over the last couple of years, but we’re starting to be able to travel more now. So for right now, condo life is good for me. You know, I also like having a single family home, I will probably own more single family homes again, in my future. I’ve owned several homes. So for me, I don’t have a really an emotional attachment to real estate. For me real estate is more of a business transaction. And, you know, for buyers, I understand the emotional connection. A home has an emotional feel. And that’s the place you’re going to lay your head, potentially raise your kids, have a family, but for me, it certainly is more of a business transaction. And I think it’s sometimes hard to separate that emotion in business. And that’s why we had such a frenzy you know, the last couple years.

Differences between condos and a freehold property

Todd Veinotte 04:46
From a transactional viewpoint, a mortgage viewpoint. Is there a difference between a condo and a regular house?

Clinton Wilkins 04:53
In some cases, yes. In some cases, yes. The structure of the ownership is different So a condo corp is basically different than what a freehold property would be. And you would have to pay condo fees. So I think that’s something important to like take into consideration. And there are a lot of shared amenities. And that’s why people like condos because a lot of what’s included in the condo fee is going to protect like the envelope of your home. You don’t have to worry about the roof. You don’t have to worry about the windows. As a corporation, yes, they have to be worried about and that’s where your condo fee is going to maintain. But I think you have more certainty typically when you own a condo. Like for example, the condo that I own is like 1400 square feet. It’s the size of a bungalow, and I’m downtown. So for me, that’s quite a large condo, two bedrooms, two baths, I have enough living area. So you know, condo living certainly isn’t for everybody. In some cases, condos can be much more expensive than a freehold property, especially the more downtown that you are. You know, it’s supply and demand. You know, there’s no homes right in the downtown core. There’s apartments and there’s condos. And you move out to the south and central Halifax, north and obviously, there’s more and more homes. So, you know, you’re paying for location as much as you’re paying maybe for space when you’re buying a condo.

Todd Veinotte 06:14
Okay, what about from the apartments, buying apartments?

Clinton Wilkins 06:20
Buying apartments like as an investment property, Todd? Is that what you’re saying?

Todd Veinotte 06:23
Yeah, sure.

Are apartment buildings a good investment?

Clinton Wilkins 06:24
You know, we certainly deal with people that buy apartments to rent or buy rental properties to rent, we certainly deal with those clients. I think right now, there’s not as many because interest rates are high. And the rent cap. So we even have a lot of clients that are existing landlords, and they’re having a hard time financially. Their interest borrowing costs have increased, but the rents have not kept up. So we’re seeing some people who own rental properties that are choosing to sell. And in some cases, that’s not so good for the tenants because sometimes when they sell the property the tenants need to go or they’re doing renovations, renovictions. It’s a tough situation. But right now in Halifax, the vacancies for rentals are about 1%.

Todd Veinotte 07:11
Yeah, I’ve been, I’ve heard though, that if you have kind of five units or less, it’s more of a tough go to to own an apartment building. Even the small rentals are tough there. I’ve owned them myself. You’ve owned them yourself. Yeah, they’re tougher, right? Just because it’s a numbers game, right?

Future impacts on residential mortgages

Clinton Wilkins 07:25
It certainly is a numbers game. And coming down the pipeline, the federal government is talking and doing consultation about a new rule that could impact people owning residential rentals. Right now. As long as you qualify between your debt servicing and everything, you can typically have up to like five rental properties. So that means you could potentially have four units and each of your rentals, you could have five rentals. So you could have 20 rentals, 20 actual apartments, okay? The federal government is working on some changes that may put a cap, for example, you can only borrow in terms of a mortgage, up to seven times your annual income, maybe including the rental income. So that might reduce the amount that people can actually qualify for. So we’ll see. The federal government isn’t super keen on borrowers being able to get a residential mortgage to buy a rental property. They’re not super keen with that. So I expect there’s going to be some changes on how you get a mortgage and maybe it’s going to be maybe more like commercial financing down the road, who knows.

Todd Veinotte 08:27
Okay, what about buying an apartment just straight out, one apartment to live in?

Clinton Wilkins 08:31
I think well that would be kind of like, if it’s a condo, it would need to be a condo or co-op.

Todd Veinotte 08:36
So there’s no – You can’t really buy an apartment. You can’t really buy an apartment you can’t? Okay.

Clinton Wilkins 08:39
And coops are not very common and especially in Nova Scotia, in Atlantic Canada there’s not co-ops and financing on co-ops is completely outside of what we would normally do in our purview. We only do condo holds and freeholds. We don’t personally like in our office we don’t offer financing on leasehold property so that would be like a mobile home park type situation. We don’t offer that type of financing. There are lenders that do but in our office we’re offering financing on condos and on freehold properties and we do that every day.

Todd Veinotte 09:12
Okay, what else you want to get to in a bit?

Clinton Wilkins 09:15
You know, I really need that we need to do a deep dive on what’s going on with rates Todd. You know there’s been a lot of discussion about rates I’m going to talk to you a little bit about the trends and what you should not do.

Todd Veinotte 09:24
What you should not do, that’s always more always more important. Alright, it’s Mortgage 101 your guide to homeownership with Clinton Wilkins and myself Todd Veinotte and we will be right back