Toronto Condo Market Update for 2015

  • On December 14, 2015 ·
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Following years of slow growth, the condo market in Toronto finally came back to life at the beginning of this year. In January, builders were completing more than 10,000 new condo units, representing eight times more than the monthly average for the number of condos under construction in the last 10 years, according to a report published by The Globe and Mail. Most of the new condo units had already been sold. Even so, the vast number of new condos assisted in increasing the number of unabsorbed units to a historical high. Local Condo Market Rebounds from Previous Economic Concerns The news was certainly good for the local condo market, which had been surrounded by concerns from both international organizations as well as federal regulators regarding increasing household debt throughout Canada. An increasing condo boom in Toronto also served to underscore the fact that lenders finally began to venture back into the market this year. In the past, largely due to pressure from federal regulators, banks had fled the condo market in Toronto, opting to work only with large-scale developers and typically requiring developers to prove a large percentage of presales prior to issuing an agreement to finance construction of a new building. With the condo market finally beginning to boom again, lenders this year became willing to finance up to 75 percent of a project's value. Many lenders have also eased presale requirements, requiring fewer presales while demonstrating an increased confidence that builders will locate buyers for unabsorbed units. Moving further into the year, the Toronto Real Estate Board announced that condo sales remained strong year-over-year. In the third quarter of this year, condo sales were up by nearly 11 percent compared to Q3 2014. The Toronto Real Estate Board went on to report that the local condo market has proven to be a critical contributor to overall home sale growth this year. Such sales growth is expected to continue into the fourth quarter, with Toronto on track to hit a new condo transaction record for the year. Both Demand and Sustained Sales Growth Remain Strong in Local Market While the condo unit absorption rate continued to grow over the past year, increasingly tighter market conditions helped to drive sustained price growth. During the third quarter, annual growth in both average selling prices and median selling prices outpaced the annual inflation rate. The average condo sales price increased by 5.4 percent year-over-year, while the median condo selling price increased by 4.4 percent. An increase in the supply of listings in the local Toronto area has further benefitted the condo market. During the first three quarters of 2015, sales growth exceeded the level of growth in listings, which could indicate the presence of pent-up demand in the Toronto condo market. Investor-held units listed for sale were absorbed rapidly even while new projects were completed. Moving forward into 2016, the local condo market should remain well on track for another banner year. Read More >>

PreConstruction condo advantages vs Resale

  • On December 14, 2015 ·
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Preconstruction condos have become all the rage. If you are considering buying a condo, you may wonder whether your best option would be to buy a condo in the preconstruction phase or buy an existing unit. There can be advantages and disadvantages to both options, and understanding what to expect in both scenarios can help you determine which option is right for you. Pros of Buying a Presale Condo Among the biggest benefits to buying a preconstruction condo is the fact that since the unit has not yet been constructed, you have far more flexibility in your ability to customize the unit to truly make it your own. With an already existing unit, this would be much more difficult, time-consuming, and often expensive. Therefore, if you have specific tastes or have a certain idea in mind for your future home, a presale condo can be a good option to ensure your home is exactly how you would like it. Additionally, buying a condo early in the development phase typically allows you to take advantage of the lowest pricing. In most cases, condo prices appreciate over time. If you wait until the unit is constructed, you will usually pay a higher price. While you will generally need to put a down payment on a presale condo, just as you would when buying an existing unit, when you decide to sell the unit, you can still bring in 100 percent of the unit's value. A longer closing period also means that you have more time to save for the down payment. There can also be numerous timesaving benefits to buying a condo in the preconstruction phase. Along with having more time to save, you also have more time to downsize and determine how you wish to furnish your new unit while it is under construction. If you are under a lease or other type of contract for another property, the construction period would also give you more time to complete that contract. Cons of Buying a Presale Condo While there are obviously many advantages to buying a presale condo, there are also a few drawbacks to consider. For instance, when buying a presale condo, your money will be tied up during the construction period with no return on that investment until the condo is completed. Developers strive to ensure projects are completed on time, but the reality is that there can be potential delays in completion due to labor shortages, weather, inspection problems, supplier issues, etc. Keep in mind that layout plans are subject to change, as the developer has the right to make such changes. During the construction period, a number of factors could come into play that could result in the developer needing to make changes. It should also be kept in mind that market values can potentially change during the course of the construction period. Prior to buying a unit, make sure you have considered all of the pros and cons of purchasing a presale condo. Doing so can… Read More >>