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Condo prices surge in second quarter

GTA condo prices surge in second quarter

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GTA condo prices surge in second quarter

Condominium prices jumped 5.1 per cent to $619,707 in the second quarter of 2020, from $589,622 in Q2 2019, despite sales dropping more than 50 per cent.

Condo prices surge in second quarter

The Toronto Regional Real Estate Board (TRREB) recently announced that second quarter 2020 condo sales amounted to 3,459 – down 50.8 per cent from 7,024 sales in Q2 2019.

Listings were also down, 21.6 per cent to 8,717 in Q2 2020, compared to 11,114 new listings in Q2 2019.

“The condominium apartment market experienced a dip in sales and new listings in the second quarter of 2020, as many potential buyers moved to the sidelines as a result of public health measures taken to combat COVID-19 and the resulting economic downturn,” says TRREB President Lisa Patel. “With the overall housing market trending toward recovery in June, condo apartment sales will likely improve in the third quarter.”

“It will be important to watch the relationship between condominium apartment sales and new listings as we move through the second half of 2020,” adds Jason Mercer, TRREB’s chief market analyst. “If economic recovery is sustained, the demand for condo apartments will improve. However, the prospect of stricter regulations on shortterm rentals and softer rental market conditions could fuel increased listings of investor-held units. If we see more balanced market conditions, condo price growth could be more moderate compared to lowrise home types.”


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Why do condo prices rise even when the economy is down?

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Why do condo prices rise even when the economy is down?

If you keep up with new home real estate in Toronto and the Greater Toronto Area, you likely know that between May of this year and last, the price of lowrise homes stayed the same, and that between April and May 2020, there was a -0.7-per-cent difference. Yet from April to May of this year, condominium prices were 0.1 per cent higher, and were 26.4 per cent higher than May 2019.

Why? It’s a great question, and there are several reasons why condo prices continue to rise, even during economic downturns.

The first has to do with two ongoing situations. First, demand continues to be much higher than supply. Second, we have approximately 120,000 new residents settling in the GTA each year. We also have Millennials coming of age and wanting to own homes, and they represent a big chunk of the population in the Greater Golden Horseshoe. Plus, we also have Baby Boomers retiring en masse and looking to move down in housing size. There simply are not enough residences – especially condos – to accommodate everyone who wants to buy. Before the pandemic, we were selling slightly more than 30,000 units a year, and even the COVID pandemic slowdown didn’t abate those numbers. We have been selling online throughout the past few months, and some projects have sold out right away. Purchasers have embraced the electronic methods in place to prevent in-person contact as much as possible.

There is something else critical to consider: Builders’ costs keep going up. Most trades worked throughout the pandemic, and once contracts are up for renewal, it is only logical to believe their prices will go up. Then, there’s land. Everyone knows that land prices across the GTA will not go down in price. In fact, the opposite – as land becomes scarcer, it also becomes more expensive. Builders have to anticipate these costs, along with materials and the umpteen other costs incurred as they carry on the process of creating communities. As they bring new homes and condos to market, they are holding steady with prices and even raising them.

In Mississauga City Centre, we helped to launch a condominium that was sold 95 per cent within a short time, and when the remaining suites were released, they sold out online at prices that were the same as they were in January and February. And believe me, builders are bringing new projects to market. At In2ition Realty, we are gearing up for six upcoming launches this summer. We’re experiencing high call volumes from real estate agents and we have huge registry lists. People are looking, COVID or not.

Also, although some existing lowrise inventory may have dipped a little in price, this seems to have been short-lived, as we’re now back to pre-COVID pricing and in some cases – even higher. For some buyers, a lowrise home is the perfect choice. Again, however, pent-up demand, our aging population and continued immigration to Toronto and the GTA will only make condos even more desirable in the future – and rising prices will reflect that.

Debbie Cosic is founder and CEO of In2ition Realty, an innovative real estate brokerage that specializes in project marketing, merchandising and selling of new home communities and condominiums. In2ition assists clients with land assembly, market research, sales and marketing, design services, broker relations and leasing and property management. in2ition.ca

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Is this the right time to buy?

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Is this the right time to buy?

Summer has come and gone, and it was a nice one in the GTA as far as climate is concerned. As the Labour Day weekend kicked in, we felt the change in the temperature, and started putting away the short sleeves.

It’s a good time to reflect and be thankful for travel, reconnecting with friends and maximizing whatever time you could with family and those who matter most. It’s also a natural time of year to reflect on work, progress and betterment. To take the seasonal run before the shutdown again around the holiday season.

Home and condo builders, too, find themselves in a busy mode, with dozens of new projects opening this fall. A new buying and selling season is here. The cost of land, both in terms of processing and the mere outright cost of it, hasn’t gone down. There has been some slowing in the constantly rising price of new homes, in particular, and it was necessary. New homes aren’t inexpensive, with the GTA average now exceeding $1 million. Condo prices, meanwhile, have increased, as all the factors that influence their costs also continue to rise. Bottom line? New home pricing is not likely to improve any time soon.

In fact, despite our conservative outlook, there’s no reason to think pricing won’t continue to rise. It simply costs more to build and buy new homes. Supply seems far below adequate, and that hasn’t changed recently. Borrowing costs are low, rents are high, vacancies nonexistent, and the city is growing annually. Competition is fierce. The products we offer are extraordinary, a good testament to the efforts of so many in this world-class mecca of new home and condo development that we live in.

So, is this the right time to buy? You bet it is. It’s not going to get any better any time soon. Do your homework and do your shopping. Be ready to buy. Go for it!

Mark Cohen is a founding partner of The Condo Store Marketing Systems, a firm specializing in the design, marketing and sales of condo and new home communities in and outside of the GTA . condostorecanada.com mark@condostorecanada.com

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Selling your condo in 2020? Here’s what you should know

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Selling your condo in 2020? Here’s what you should know

The real estate market has been indecisive lately, so if you are planning on selling your condo in the near future, it’s understandable that you have lots of questions you need to find answers for. Is it a good time to sell? Will you be able to get the desired price? Is the market strong enough?

Real estate experts have some predictions for 2020, but whether they will come true is yet something everyone has to wait and see. Last year, for example, it was predicted that the mortgage interest rates in the U.S. will be increasing for 2019, but now, after the start of the second half of the year, things are turning out to be quite the opposite. If you do plan to sell your unit in the year to come, there are some things to keep in mind, no matter how the economy changes.

Condo prices may drop considerably

A possible recession has been on the lips of everyone in the first half of the year. If this is going to happen, then the real estate market is going to shift on the buyer’s side and prices may to drop considerably.

In fact, financial experts think that a possible recession is going to hit Canada harder than it will affect the United States, for various reasons. To determine this, experts have taken into consideration factors such as the savings rate, which fell to 1.1 per cent in the first quarter of the year, as compared to the U.S., where the rate is 6.7 per cent. This means that, in the case of an economic crisis, Canadian households will have to work harder to get back on their feet.

But the real estate market is quite unpredictable and a lot can change in the second half of 2019. Bottom line is, if you want to sell your suite in 2020, you might want to do it in the first half, to avoid prices dropping too low. At the same time, if you plan on buying a new home, it is suggested to wait a bit more until the market turns on the buyers’ side.

Buyers are becoming pickier

In the events of a recession, buyers will have more power over the market, as there are simply going to be more condos for sale, than people looking to buy one. This means that the power will shift in their favor and they will become more pretentious.

If you want to have a higher chance to sell your unit, make sure it is an extremely desirable one. Make some small adjustments, invest in some modifications that will increase the value of the condo, such as making it more energy-efficient.

Millennials are going to be the next homebuyers these next few years, so you are going to want to make the condo appeal more to them. The Millennial generation is more interested in how they affect the environment, so they are going to look for homes that are more environmental-friendly.

You may have a higher chance with an agent

If you want to sell your apartment fast, hiring a real estate agent who knows the market may be your best shot. Agents are up to date with all the changes happening on the market and will be able to advise you to make the best decision. Make sure you find a reputable agent that has your best interests at heart and is not only in it for the money. Look online, ask for recommendations from friends and family and meet for a discussion before deciding on an agent.

Homeowners are often trying to sell the house by themselves, to avoid having to pay a commission for the agent. Truth be told, yes, you can end up saving quite a significant amount of money if you are looking to sell the house by yourself, typically around five per cent of the sale price. But real estate agents are charging these fees because it is their job to expose your house to a much bigger list of potential buyers. This way, they are making sure you get the best possible deal out of it. Without an agent, you are going to have to take care of preparing and marketing the house yourself, as well as reviewing all the offers that are going to come your way. Not an easy job, to be honest.

Certain areas sell better in particular months

Market dynamics are a strong indicator when it comes to determining when is the best time to sell your condo. While the national market trends are something you need to consider, you also have to keep in mind that, in some months, buyers prefer to look for homes in certain areas.

Experts analyzed the sales activity in the city of Toronto for the past 18 years and have discovered some interesting facts. While some homeowners may think that spring is the best time to sell their condo, it may not always be the case. Some areas are more searched for in the fall season. Oshawa and Pickering are, indeed, more attractive in late spring, while Simcoe sellers are advised to list their condos in February for a chance to get a higher price.

In Vancouver, fall seems to be the best time to sell your condo in various areas, such as New Westminster, North Vancouver, as well as Surrey. If you live in Abbotsford, Mission or Port Moody, then the summer is the right time to put up the “For Sale” sign. For those living in Chilliwack, Richmond or Whistler, spring may bring the best possible prices.

As the economy continues to bring up surprises, the real estate market seems to shift the power towards the buyers. If you are planning to sell your condo in 2020, you need to pay close attention to the way the market is evolving. The less stressful option is to hire an agent that can take care of these things for you and ensure you will be getting the best possible offer.

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New condos in Toronto hit record high in prices

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New condos in Toronto hit record high in prices

Toronto condos web

The new condo market in Toronto heated up in the third quarter, with average prices exceeding $1,000 per sq. ft. for the first time, and sales jumping four per cent year-over-year to reach the highest third-quarter volume in the last 10 years.

“The condominium market has performed exceptionally well during its transition from an overheated 2017,” says Shaun Hildebrand, president of Urbanation Inc., in releasing the firm’s Q3-2018 condo market results. “Low supply and stabilized demand should continue to provide structural support for prices. However, signs of a slower pace of price growth ahead, from factors including rising interest rates and higher completions, should be factored into decision making with respect to purchasing investment units.”

Quarterly new condominium sales have settled into a relatively steady pace in recent quarters, following frenetic levels in 2017, Urbanization says.

However, the market appears poised to receive a boost in the final months of the year as a significant number of new units launch for pre-sale, which should be met by strong demand, given current trends.

The average opening quarter absorption rate for new launches has remained above 55 per cent for 11 straight quarters dating back to Q1-2016 (averaging 58 per cent in Q3-2018). This was not solely reflective of increased investor activity, as projects with a mix of buyers, as well as those geared primarily to end-users, have been achieving high absorptions upon opening.

Not every project is selling quickly, Urbanization cautions. Eight of 17 projects launched in Q3-2018 sold less than 30 per cent of their units, compared to only one of 15 launched in Q3-2017 — illustrating increased price sensitivity, a dispersion of new projects across the GTA region, and the importance of a strong marketing campaign. High price points in the current new condominium market should prevent another sustained resurgence in sales activity in the immediate future.

Other highlights include:

  • New condominium apartment sales in the GTA increased four per cent year-over-year to 4,738 units in Q3-2018, reaching the third highest Q3 volume of the past 10 years
  • Year-to-date sales of 14,055 units were down 46 per cent from the record high of 25,839 sales recorded during the same period last year
  • Resale condominium apartment sales grew two per cent annually in Q3-2018 to 5,253 units, marking the first annual increase since Q1-2017
  • Unsold inventory of new condos in development increased two per cent quarter-over-quarter and 22 per cent year-over-year to 9,927 units, although remaining 33 per cent below the 10-year average of 14,806 units. Unsold inventory equaled 5.2 months of supply, rising from 5.1 months in Q2-2018 and 3.0 months a year ago in Q3-2017
  • Despite the growth in supply, the average sold price for all actively marketing projects in Q3 increased 11 per cent annually to $745 psf, with asking prices for unsold units up 19 per cent to an average of $972 psf. Within new projects that opened for pre-sale during the third quarter, prices averaged $745,416, a 33-per-cent jump from a year ago ($562,340). The average size of a new unit launched in Q3-2018 was 714 sq. ft., resulting in average per square foot prices for new launches rising past $1,000 for the first time ($1,044 psf)
  • Average resale condominium prices grew by 6.5 per cent year-over-year to $690 psf, or $577,000 based on an average size of 837 sq. ft, representing a sharp deceleration from the 27-per-cent annual pace recorded a year ago in Q3-2017
  • Construction started on a record 8,150 new condominiums in Q3-2018, raising the total number of condos under construction to a new high of 67,581 units in 236 buildings. Projects under construction were 95-per-cent pre-sold on average.

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