Boom, Bust and Toronto’s condo market

Economist David Foot is not predicting any real estate crash for Toronto, but he is telling developers that they'll pay the price if they ignore some key demographic trends.

This piece originally appeared in the Toronto Star’s Insight section on November 3, 2012

By Stephen Wickens

Considering how well University of Toronto economist David Foot foresaw Toronto’s downtown boom 20 years ago, you might think condominium developers would regularly seek his views.

“No, it doesn’t happen often,” says Foot, co-author of Boom, Bust & Echo, a 1996 bestseller that argued demographics explains about two-thirds of everything. Even in retirement, Foot constantly flies about the country because various industries want insights into evolving trends.

But real estate developers? Not so much. “I’ve spoken at a few conferences and that has led to the odd email. There’s been some contact, but …”

That apparent lack of interest in demographics might be why it’s an industry that tends to repeatedly overbuild and miss clearly emerging trends at crucial points in its market cycles.

So what would Foot tell them after Thursday’s Urbanation report showing GTA condo sales are down 35 per cent from 2011?

Basically the same thing he’s been saying for years.

“What we’ve had over the past decade,” he says, “is the children of the boomers, the echo generation, leaving home, leaving the suburbs and doing what young people do, moving downtown. It’s the same reason college and university enrollments soared. This downtown boom was entirely predictable,” he adds, even if his 1996 book missed that it would come in the form of condos, not 1960s-style high-rise apartments.

Foot is not predicting a real estate crash, but he says developers have to make big adjustments in what they offer. He also says Toronto’s economic health is endangered if we don’t act fast on major transportation improvements.

He sees two crucial demographic keys to understanding where we’re headed, and again it’s boomers, who are nearing retirement, and the echo boom, babies born a 15-year period beginning in 1980.

“The echo birth rate peaked in 1991,” he says. “Add 20 to all that and 2000 is when the echo kids started leaving home, creating new households,” he says. But 2011 should be at or near the peak of the market – at least for small downtown condos. Things should keep dribbling along, but the drop-off in birth rate after 1991 was significant; the big growth is over,” he says, adding that immigration rates could skew things.

Foot sounds upbeat, sitting in beautiful natural light at the U of T’s Max Gluskin building.  He sees opportunities for wise developers and the city. He thinks the urban renaissance will have staying power – if we finally get serious about transportation problems. He sees much of the urban renaissance morphing into suburban contexts (and by suburban, Foot includes much of the 416 area code).

“The children of boomers are starting families of their own, birth rates are rising again,” he says, adding that simultaneously, lots of boomers who raised families in places such as Etobicoke, Scarborough and North York are moving to the next phase of their lives.

“I sort of say, it’s downtown in your 20s, suburbs in your 30s and 40s, and peace and quiet country in your 50s and 60s.” He still holds the concept to be largely true, though he acknowledges many echo families will raise inner-city kids and lots of boomers will downsize to a condo in town because they want big-city convenience, vitality and culture.

“Milton and Markham will keep booming because lots of people still want a big backyard for raising kids. And lots of retiring boomers will do the traditional thing and move further out, to live next to a golf course or at their cottage or in smaller cities where their real estate dollars buy much more.”

He expects many young urbanites starting families to look at houses the boomers vacate, rather than buying new on the 905 fringes. He also sees rising demand in some 1920s suburbs, especially ones close to subway stations, becoming intense.

As for downsizing boomers: “Get real! They won’t be buying 800-square-foot condos, and developers had better figure this out. At the very least, they better start providing units with knockout walls so they can be joined. The boomers, the ones who want the city and its cultural amenities, they have money and they want room.”

Aside from competing with echo-generation parents who want those rare downtown condos big enough for raising kids, Foot sees demand for large units in new mid-rise buildings out of the core, along the avenues, above mall parking lots and in largely undeveloped areas around and above existing subway stations – just the stuff city planners would love to see.

“We’re totally wasting valuable air-space above subway stations and malls, but we shouldn’t fool ourselves on transit,” Foot says. “Lots of these boomers may love city living, but they also have Audis and they increasingly won’t want to deal with stairs at subway stations and overcrowded platforms and trains, let alone the serious overall inadequacies of our transit system.”

He has only one regret, looking back to Boom, Bust & Echo, which he co-wrote with Daniel Stoffman (and Foot gives much credit to Stoffman for the book’s success).

“If I were writing with the benefit of hindsight, I would have connected the lower interest rates and boomer retirement savings to increased demand for housing and increased house prices since the mid-1990s. But I think that’s the only thing.”

Accidental tourist attractions spice up an underrated Caribbean gem

The oft-overlooked island of Grenada has everything that winter-weary Canadians might want from a sun vacation, but with a few spectacular bonuses

Vicissitudes by sculptor/diver Jason de Caires Taylor is part of an underwater art installation that made National Geographic’s list of “Earth’s 25 Most Awesome Places.”

Vicissitudes by sculptor/diver Jason de Caires Taylor is part of an underwater art installation that made National Geographic’s list of “Earth’s 25 Most Awesome Places.”

This story first appeared in the Toronto Star travel section on October 20, 2012

By Stephen Wickens

Aside from the cows and egrets, Pearls Airport sits deserted.

It’s not in Grenada’s guidebooks and not listed on today’s itinerary. But it’s a highlight nonetheless and everyone on the bus wants off to see the Cuban planes, abandoned to scavengers and the elements since the 1983 U.S.-led invasion.

“It should be a national monument,” says Mandoo Seales, a passionate guide who prefers “rescue” to “invasion” when speaking of Operation Urgent Fury, a Reagan Doctrine strike that snuffed a 4½-year experiment with revolutionary Marxism.

“It’s an archeological site. We shouldn’t let it deteriorate further.”

Ex-U.S. soldiers prompted Seales’ first tours to this 1940s-vintage airport, shut since 1984. “I bring lots of people here now,” he says. “All kinds are fascinated.”

Cuban planes have been left to rot at old Pearls Airport since a 1983 U.S.-led invasion of Grenada snuffed an experiment with revolutionary Marxism.

It’s funny how the accidental tourist attractions are often the best. And Grenada has others, including the Underwater Sculpture Park and Levera Beach leatherback turtle sanctuary.

British sculptor/diver Jason de Caires Taylor originally pitched the underwater park to Grenadians as art that might help restore coral reefs. It succeeded on both counts, with new growth gradually completing the statuary. Now Taylor’s creation is on National Geographic’s list of “Earth’s 25 Most Awesome Places” and Mexican officials have commissioned him to produce a larger version in Cancun.

I’ll be back at this underwater park, though next time, instead of snorkeling, I’ll have scuba certification and a serious underwater camera.

The leatherback project, meanwhile, was hatched to help save a remarkable species from extinction, even if it meant disruption for locals who had relied on meat and eggs from Earth’s largest sea turtles.

“We now earn revenue from people coming to see this (April to August),” says Kimron Redhead, a supervisor on the project, launched in 1999. “There are definitely more turtles again,” he says. “You can only sell a turtle or her eggs once, but tourists come back again and again.”

And it turns out that the resurgent turtle population has helped the local tuna fishery because leatherbacks feed on jellyfish who had been decimating schools of baby tuna.

Trying to snap photos of the egg-laying can be problematic as leatherbacks work at night and flash photography has to be banned because it would interrupt the mood for mama turtles. But usable photos or not, the awe seemed unanimous the night I visited.

It's tough to shoot pictures of turtles laying eggs, but if you're lucky, a mona monkey might just pose for you in Grenada.

“I must have shot 100 pictures and they’ll all be rubbish,” Ben Carroll of London, England, says, echoing others among us.

“But it hardly matters. The hair on my neck was standing. Seeing how hard she worked to dig a hole, lay the eggs and cover them. That last turtle must have been six feet. Getting to stroke the shell, that’s powerful.”

If you want casinos and nightlife, Grenada’s not for you. But it offers most of what winter-weary Canadians want from sun vacations – with several bonuses. It’s also easily reached from Toronto since Caribbean Airlines launched year-round non-stop service.

Despite being a volcanic island, it has white-sand beaches, including Grand Anse, a regular on Caribbean best-of lists. Because Grenada has just 1,200 hotel rooms, beaches aren’t crowded, even in high season.

It’s a generally affordable island, though, like the expensive ones, crime rates are low and litter is scarce. Once you’ve seen the bountiful gardens, you’ll know why Grenada’s worst finish in 13 years at England’s famed Chelsea Flower Show has been silver.

“It’s like a lusher, much-less-developed Barbados,” says Carroll, who also raved about rainforest hiking in the island’s interior.

Grenadian cuisine is interesting, too, no surprise for “the spice island.” Nutmeg is the big export (though still down 50 per cent since tree damage from 2004’s Hurricane Ivan), but there are constant mealtime reminders of the endless list of spices and fruits that grow here.

Like most Caribbean islands, there are colonial forts for history buffs, but Grenada’s have seen recent combat – battles people still calmly debate, even as the Cuban planes rot.

Graffiti remains on Grenada, thanking the U.S. for leading Operation Urgent Fury in 1983.

Locals seem to see both sides of their place in Cold War history. There’s no clamour to revive socialism, but under the current prime minister – who spent two years as a political prisoner when Communists ruled – the airport was renamed for Maurice Bishop, who led the 1979 revolution.

You’ll hear tales of corruption and brutal autocracy under Bishop, sometimes from the same people who credit him for steep rises in literacy rates and the creation of real healthcare. There’s still graffiti thanking the Americans, though some locals seem convinced the chaos and bloodshed used to justify sending in troops was initiated by a Central Intelligence Agency-driven destabilization campaign, ostensibly led by Bishop’s deputy.

And no matter how real the fears were in the Reagan White House, we’ll never know for sure if the Soviet Empire ever planned to attack the Americas from that Cuban-built runway beside the Maurice Bishop terminal building. But with the Cold War mostly just historical curiosity, we do know the landing strip is plenty long enough for jet-loads of tourists.

JUST THE FACTS

ARRIVING: Caribbean Airlines flies non-stop from Toronto on Thursdays and Saturdays year-round. Air Canada Vacations has seasonal non-stops and Sunwing operates charters.

SLEEPING: The Blue Horizons is excellent if you don’t mind a 300-metre walk to the beach. Mount Cinnamon and Spice Island  are great spots right on Grand Anse beach. LaSource will soon reopen as a Sandals Resort.

DINING: Even if you don’t stay at Blue Horizons, visit the resort’s La Belle Creole restaurant. The menu changes daily, but it’s outstanding. Other recommendations are BB’s Crabback (bbscrabback.co.uk), The Aquarium (aquarium-grenada.com) and Dodgy Dock (truebluebay.com/resort-facilities/details/dodgy-dock-restaurant).

DOING: The rainforest hike to the interior waterfalls is big fun, but expect to get muddy (grenadatours.com/hikes.htm). Also  worthwhile are tours of the organic chocolate operation (grenadachocolate.com) and the old water-wheel-driven River Antoine rum distillery, though be careful with the high-test fire-water (grenadaexplorer.com/tip/rumfactory).