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Buying in an Upcoming Neighbourhood? Don’t Assume Gentrification is Imminent

Originally posted in The Huffington Post - July 13, 2012

Buying a property in a neighbourhood that is in the early stages of such a process is generally considered one of the best ways to build equity in terms of real estate investments. The media constantly runs stories along these lines. Unfortunately however, they couldn't possibly be further from the truth.

Gentrification is defined as the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents.

Buying a property in a neighbourhood that is in the early stages of such a process is generally considered one of the best ways to build equity in terms of real estate investments. Clients of mine who purchased homes a decade ago in neighbourhoods that have undergone tremendous gentrification, such as Leslieville, have benefitted from extraordinary gains in value. The media is constantly running stories about Toronto's next hot neighbourhoods, knowing a large and eager audience is searching for future opportunities to reap the rewards of gentrification. The concept has become so ingrained in us that buyers often believe it's safe to assume that any dilapidated part of the city will eventually become gentrified, so long as you're willing to wait. Unfortunately, they couldn't be farther from the truth. The sad reality is that most neighbourhoods in this city are actually in decline.

The Toronto Star recently re-ran a graphic illustrating the changes of social classes throughout the city over a 35 year span. The key point and title of the graphic is the shrinking middle class, but the maps help us understand gentrification as well. If gentrification is defined as "the influx of middle-class or affluent people" into poorer and deteriorating areas, then this graphic should quite clearly indicate which areas have become gentrified over the last 35 years, as it in fact does.

Using the example again of Leslieville, you can see that is has gone from being predominantly low income to mostly middle income. King West, another neighbourhood that has become famous for the gentrification it has experienced, went from very low income all the way to very high income. Investors who bought land in that part of the city during '70s have literally made fortunes. In fact, the maps do quite accurately illustrate neighbourhoods that have been gentrified, but what's more startling is the number of neighbourhoods where quite the opposite has taken place.

Neighbourhood decay, the opposite of gentrification, where middle-class and affluent people migrate from a neighbourhood, is actually the most common process seen in Toronto over the last 35 years. Even pockets of the city such as Parkdale, which is often marketed as being on the cusp of gentrification (as it has been since I can remember), has actually moved in the opposite direction.

As the middle class continues to shrink, being replaced for the most part by low income earners, neighbourhoods that actually experience gentrification will become fewer and fewer. So if you're planning on buying a home in a more affordable part of the city in hopes that it will eventually become gentrified, be sure to do your homework.

The graphics have been borrowed from a report called "The Three Cities of Toronto," by J. David Hulchanski at the University Of Toronto.

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Inequities in Ontario Real Estate Contribute to Housing Crisis

New report from OREA identifies systemic racism as an issue in Ontario real estate, makes recommendations to advance diversity, equity, and inclusion

The housing affordability crisis is a growing problem across Canada, one that is disproportionately affecting BIPOC and LGBTQ2S+ communities who experience higher barriers to housing attainment due to historically discriminatory practices and social injustices that are still being perpetuated in today's housing market.

A majority of both consumers and REALTORS® believe Ontario’s rental process suffers from discrimination: 93% of Black REALTORS® and 60% of all consumers surveyed believe discrimination exists in the rental process, according to research conducted in partnership with Ipsos. In fact, 4 in 10 REALTORS® say they’ve seen a rental deal fall through due to discrimination, according to Fighting for Fair Housing, a new report from the Ontario Real Estate Association (OREA) looking at diversity, equity, and inclusion in housing.

“There is a saying in real estate: today’s renters are tomorrow’s homeowners. For disadvantaged communities who have a hard enough time finding a great rental in a thriving community because of all the obstacles they face along the way, the dream of home ownership is just that – a dream,” said 2022 OREA President Stacey Evoy. “We cannot hope to solve Ontario’s housing affordability crisis without addressing the systemic racism that undermines fair and equitable access to homes across the housing spectrum.”

Through research and consultations with Brokerages, REALTORS®, government officials, regulators, consumers, sector-related organizations, and Ontarians, the Fighting for Fair Housing report makes 19 recommendations to eliminate racism and inequality in real estate and housing. These recommendations include:

  • Advocating for a review of Ontario Residential Tenancies Act (2006), with the goal of improving access to affordable homes for disadvantaged communities
  • Reducing government-imposed costs on new rental projects, including duplexes, triplexes, and walk-ups
  • Building 99,000 community housing units over the next decade, to clear the current backlog and accommodate future growth
  • Encouraging expansion of affordable homeownership programs for disadvantaged communities, including rent-to-own programs

“As the rising cost of housing and lack of supply continue to push prospective buyers out of the market, home ownership remains out of reach for many – and disadvantaged communities are at risk of falling even further behind. Building more homes alone isn’t going to improve accessibility to housing for BIPOC and LGBTQ2S+ communities,” said Davelle Morrison, Broker at Bosley Real Estate Ltd. and Chair of OREA’s Presidential Advisory Group on Diversity, Equity, and Inclusion. “ As professionals in the industry, we have a unique opportunity to help more people in our province find a place to call home. The Ontario Government also has a key legislative role to play, especially when it comes to increasing equity and reducing discrimination in Ontario’s rental market or offering new, affordable ownership programs.”

In 2020, OREA struck the Presidential Advisory Group (PAG) on Diversity, Equity, and Inclusion (DEI) to better understand, address, and dismantle systemic racism in Ontario’s real estate and housing sectors. Through this work, the PAG has identified three areas for action, that seek to change policy, perceptions and attitudes around sector systemic racism through education, advocacy, and research.

Within organized real estate, one early achievement in this regard is the addition of a discrimination provision within the new Trust In Real Estate Services Act (TRESA) Code of Ethics, which explicitly requires compliance with the Ontario Human Rights Code. This change is a direct result of the PAG’s work and recommendations.

OREA will also be taking steps to review internal governance structures, board selection processes, policies, and more in order to increase BIPOC in leadership positions within real estate associations.

To read the full report, including three identified areas of action and all 19 recommendations, visit orea.com/News-and-Events/FairHousingReport

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