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New condos narrowly outsell single-family homes in February as Toronto high-rise market heats up

 

New condo sales across the Toronto region shot up in February after a sluggish period in the winter.

According to data published today by the Building Industry and Land Development Association (BILD), there were 1,623 new condos sold across the region last month, up from 665 sales in January and 857 in December.

The region’s new single-family home segment, which had outsold condos for three straight months, took a backseat in February with 1,617 sales recorded for the month.

Both market segments sold a combined total of 3,240 units, nine percent above the 10-year average for February but 34 percent below the total achieved in the same month last year.

“We need to be careful when comparing February of this year to the exceptionally busy month of February 2020, just before the pandemic hit,” said BILD President Dave Wilkes, in a media release.

“We are talking about completely different sets of circumstances. The fact is that February 2021 was a solid month when compared with the 10-year average,” he continued.

To Wilkes’ point, the new home market was on a tear in February 2020 before hitting a wall a month later when the pandemic began wreaking havoc across the country. There were 4,665 new home sales that month, a 211 percent annual increase and the highest number of sales recorded in any February since 2002.

With February’s total, new condo sales appear to be on a path to consistently achieving more typical levels, said Altus Group, BILD’s data partner in tracking the region’s new home market, in the media release.

“With additional new [condo] supply on the horizon, the spring market will likely yield its usual increase in activity; however, economic challenges related to the pandemic remain and will continue to provide some obstacles in the near term,” said Altus Group Analytics Manager Ryan Wyse.

On the pricing front, the benchmark price of a new condo in the Toronto region rose 8.4 percent annually to $1,042,064. The new single-family home segment recorded a 25.1 percent increase to its benchmark price, which jumped to $1,373,473 in February.

Has Toronto Real Estate Officially Killed the ‘Asking Price’?

 

If I told you I wanted $1 for something but you knew there was no way I was going to let you have it for less than $1.50, you might start to wonder why I had only asked for $1 in the first place.

Now imagine that situation playing out multiple times a day, for hundreds of potential buyers, on nearly every kind of low-rise real estate in the GTA.

Yes, yes, supply and demand and all that. But this seems more about ego and end result than it does about pent-up demand.

‘Sold for 50% over asking’ is a pretty good headline, after all. Hell, we’ve written those stories. At some point, however, it seems misleading or lazy (or both) to put a price on a property that has almost a 0% chance of selling for that amount.

As Toronto realtor and chartered accountant Scott Ingram noted on the weekend, nearly 100% of all properties listed within the very tight price range of $879,000 and $899,999 over the past two weeks ended up selling for over asking — with the average going for 20% over.

I looked at all Toronto sales in the last two weeks of places that had a list price of $879,000 to $899,999.

96% sold over asking (93 of 97). Average was 20% over (median 18%). Worst offender was $1456K (I was in on that one: 22 offers). Very competitive price point w/ FTHB.

— Scott Ingram CPA, CA (@areacode416) March 28, 2021


Which leads to the question, in a crowded and ultra-competitive market, why are so many realtors wasting their clients time?

The short answer to that question could be that even realtors are at a loss right now.

Speaking with Richard Silver of Sotheby’s International Realty Canada last week about one of his listings on Sackville Street in Toronto’s Cabbagetown neighbourhood, I asked the experienced realtor what he thought the property — listed at $1,999,000 — would sell for.

“I honestly don’t know,” Silver said, shaking his head in a mix of befuddlement and wonder.

“We had Hillcrest listed at what we thought was the right spot [$2.2M], and then it got 11 offers and sold for almost $2.8M.”

The property Silver was referring to was 11 Hillcrest Park, another Cabbagetown beauty that’s front door rests — quite literally — on the edge of Wellesley Park. Listed for $2,198,000 in late January, the house sold in under a week for $2,783,000.

 

“It’s really not a science,” Silver says when I followed up with him this week. “All we can do these days — because the market is so changed (and it always changes) — all we can do is put a price that we think will invite showings, and then we see what happens later.”

Speaking of seeing what happens? That Sackville Street listing sold in eight days for $2,450,000 — nearly 25% over list.

Of course, this is far from rare in the market right now. Let alone new.

Despite all the dire real estate forecasts and predictions that came out a year ago during the first wave of COVID, real estate in the GTA went on to have its third ‘best’ year on record.

And 2021 seems to have already sized up 2020 and said, ‘hold my beer’.

Whether this is all part of a bigger issue, of course, is another article entirely. (We could very well be witnessing the housing market hitting its meniscus point.)

“We bid on 5 houses, including the one we got,” says Leah Pollock, a new Toronto homeowner who spent months in the market trying to find the right property.

“All of them went over asking — big time over asking, hundreds of thousands [of dollars] over.”

Even as first time homebuyers, Pollock and her husband, who saw approximately 20 houses in person, knew the asking price was little more than a general signpost in a labyrinth of further unspecified information.

“We never took the asking price seriously. I think in the beginning, before we’d seen a lot of houses, I thought [selling prices] would be higher than the asking price, I just didn’t realize how much higher. Whenever we saw an asking price we just automatically added a bunch more to it mentally.”

None of this is helped by the blind bidding system we currently have in place. Without knowing what other potential buyers are bidding for a property, it’s impossible to know whether or not you’re going too low or too high (or way too high).

“The only concrete information you’re given is if you’re in the top three bids,” Pollock says. “And then you’re expected to up your initial bid, almost immediately. Our agent had shown us comparables in the neighbourhood and prepared us as best she could, but at some point these people [other buyers] just have money that we can’t compete with… for houses that were selling for $150,000 less just a few months before.”

In other words, not only is this not a science as Richard Silver pointed out, it’s more like living in the wild west — the rules of engagement change with every new opportunity, sometimes to dangerous degrees.

“It’s a high pressure situation,” Pollock adds, when speaking about being informed you’re in the top three bids on a property. “That was the frustrating thing, suddenly we’ll go higher than we’re comfortable with [to win the property].”

Everyone knows you shouldn’t bring a knife to a gun fight. In Toronto, that somehow now seems to mean you shouldn’t show up to a million dollar listing without another half million in tow.

Presale Condos Ready for Possession in 2020 Have Already Seen 40% Market Appreciation
 
While Toronto’s low-rise housing segment has been performing on all cylinders amid the pandemic, the condo space has renewed strength following months of declines, with investors being an integral part of this.

To put it simply, as the price of detached homes continues to skyrocket, condos are now being viewed as the more affordable option in Canada’s largest city.

To get a better understanding of this market, CIBC Economics and Urbanation teamed up to provide a closer look at condo investors in the GTA through the lens of quantitative research, using thousands of recent transactions as an input.

According to the findings, while demand for homes in the GTA remains strong, purpose-built rental developments have been rising in recent years from depressed levels, with condominiums representing just under 90% of the net gain in rental apartment units in the GTA over the last decade.

Last year, investors closed on a record of nearly 9,000 condo rentals in the GTA — which doesn’t include owner-occupiers converting their units to rental. What’s more, roughly one-third of all newly registered condos bought by pre-sale purchasers were rented last year through MLS, in addition to approximately 10% of resale purchasers who bought units as rental investments.

With the bulk of condo rental supply growth coming from new developments, the report revealed that investors who purchased presale condos that were ready for possession in 2020 have already experienced more than 40% market appreciation in their units.

What’s more, relatively low presale prices secured several years ago and record low-interest rates have resulted in the average investor of a newly completed condo last year being cash flow positive by $63 per month.

At 63%, the share of investors that were cash flow positive in 2020 was higher than the 56% share calculated three years ago for 2017 newly registered investment units.

Urbanation says investors of presale units were in a much better cash flow position than investors who bought resale units and subsequently rented them out last year, finding that a majority share (80%) of these resale investors were cash-flow negative.

Among investors with positive cash flow, the average monthly net income was nearly $400, which was higher than in 2017 when positive cash flow investors averaged just over $360. As for the cash flow negative investors, the approximately $5,900 annual net loss (not factoring in principal repayment) in year one can be offset by just a 1% increase in market prices.

The report said investing in condos is often used as a retirement funding strategy (the average age of an investor is 47), with most investors concerned with long-term equity accumulation as opposed to cash flow.

So what exactly does all of this mean for the market and investors moving forward? Urbanation says the divergent paths for condo prices and rents that have been arising lately will mean the share of cash flow negative investors will likely rise in the future. Though, this could change if they are prepared to invest a much higher down payment through savings.

“Condo investors are an integral component of the rental supply equation in the GTA, but the condo market shouldn’t be the rental market,” reads the report.

While purpose-built rental housing developments must be part of the solution and it is beginning to expand, Urbanation says we are still a long way from closing the supply gap.
Daniels and Choice Properties Announce Phase One of Golden Mile Shopping Centre Redevelopment

 

Like many areas of Toronto dominated by vast stretches of low-rise retail and industrial properties, Scarborough's Golden Mile area is on the doorstep of transformation, with multi-tower communities proposed across various large sites along the Crosstown LRT, set to begin operating in 2022. Evolved from a 2016 proposal to redevelop the Golden Mile Shopping Centre at 1880 Eglinton Avenue East, new information was revealed about the 19-acre redevelopment project from Choice Properties REIT and The Daniels Corporation in a live-streamed event yesterday afternoon.

“We have long recognized the importance of the Golden Mile as an opportunity to make a significant impact, not just within our 19 acres, but on the much broader aspiration to positively influence the entire area for generations today and tomorrow. The future redevelopment of these lands and the Golden Mile neighbourhood as a whole is about building a complete community. We are thrilled to partner with Daniels, a city builder that shares Choice Properties’ commitment to creating healthy, resilient communities through a community-based approach to development,” reads a statement issued by Rael Diamond, President and CEO of Choice Properties REIT.

Plans call for 11 new buildings to gradually transform the 67-year-old shopping centre over the coming years into a mixed-use, mixed-income community with transit connectivity, master planned by Giannone Petricone Associates. The initial phase is to include a pair of condominium towers as well as a purpose-built market rental building and an innovation hub, rising on the northeast corner of Victoria Park and Eglinton. In the site's southwest corner, these buildings will be directly opposite an Eglinton LRT stop.

The pair of condominium towers are proposed to rise 38 and 48 storeys, while the rental would rise 44 floors. A total of 926 condominium and 524 rental units are planned for the first phase, anchored by a mix of ground-floor retail uses, institutional uses, and office spaces. The mix is meant to foster a complete community, animating the pedestrian realm—with significant car-free space—throughout the day.

While residential uses will account for the majority of the development, the developers are aiming to jumpstart the community's reimagined employment base with the creation of the Golden Mile Community Innovation District, designed to foster the exchange of ideas between residents, community organizations, and financial and post-secondary educational institutions, with the University of Toronto Scarborough (UTSC) and Centennial College signed on as collaborators.

UTSC is planning to take up physical space in Phase One to house an innovative integrated college-community-university partnership dubbed the Communiversity. UTSC, partnered with Centennial College, aims to work with community partners to allow improved access to post-secondary education, co-learning opportunities, and the co-creation of sustainable and inclusive communities. UTSC's Institute for Globalization, Transnationalism, and the Advancement of Resilient and Inclusive Suburbs and Economies (GTA-RISE) will serve a similar purpose, acting as a hub to explore issues while helping to engage inclusive cultural and socio-economic development.

“The University of Toronto Scarborough is excited about this dynamic opportunity to co-design and co-inhabit a mutually supportive community for the 21st century, right here in the Golden Mile. As an educational partner we are committed to doing our part to support cultural and socioeconomic innovations and transformations that are truly inclusive, resilient and sustainable, thereby enabling all members of our communities to thrive. The Golden Mile Community Innovation District promises to be a global showcase and exemplar of how to reinvent suburbs for the good of all, and our scholars and learners look forward to sharing the knowledge gained and the lessons learned with other educators and communities in Canada and around the world,” stated Wisdom Tettey, Vice-President & Principal, University of Toronto Scarborough.

The Innovation District is also to include a 9,000 ft² BMO branch, which is being touted as capable of demonstrating "how financial institutions can make a meaningful impact within the communities they serve through financial advice and service offerings."

This project serves as just one element in the wider 280-acre Greater Golden Mile area, which is primed to welcome 40,000 new residents over the next 20 years, with this new density to be largely supported by the Crosstown LRT and its connections to other transit lines and routes.

“Our partnership with Choice Properties and this collaboration with residents, community organizations and post-secondary and financial institutions will catalyze the transformation of the entire area. Working together, we believe that Scarborough will re-emerge as an inclusive and powerful engine of prosperity, where a spirit of collaboration and community shines brightly, and where everyone has an opportunity to live, work, learn, shop, grow and thrive,” reads a statement from Mitchell Cohen, President and CEO of The Daniels Corporation.

Toronto home sales increase by 97 per cent in March: TRREB
 
TORONTO -- Home prices in the Toronto area continued to climb in March while sales were almost double that of the same month a year earlier, when the rapid spread of COVID-19 led to widespread economic shutdowns, the Toronto Regional Real Estate Board reported Tuesday.

Sales in the area reached a record 15,652 last month, up 97 per cent from 7,945 during the same time last year.

The sales growth was so dramatic because it compares with March 2020, when the first economic effects of the pandemic took hold and both buyers and sellers were wary of the market.

Those fears have long since dissipated. Realtors and housing agencies have reported a flurry of sales - surpassing many of their most optimistic predictions - since the start of the year.

They say the number of people willing to purchase now will likely more than make up for last year's low periods.

“Confidence in economic recovery coupled with low borrowing costs supported a record pace of home sales last month,” TRREB president Lisa Patel said in a release.

In the first 14 days of March, there were 6,504 sales this year, up 41 per cent from how many were sold during that time period last year.

There were 9,148 sales reported between March 15 and March 31, 2021, an increase of 174 per cent compared to the COVID period of March 2020.

Splitting the month in two is significant: the first half of March 2020 looked relatively average, but restrictions enacted after the pandemic was declared by the World Health Organization on March 11 rapidly sent home sales plummeting.

A year on, available inventory hasn't caught up to the number of people seeking new homes, putting pressure on prices.

“While the robust market activity is indicative of widespread consumer optimism, it is also shedding light on the sustained lack of inventory in the GTA housing market, with implications for affordability,” she said.

The average price of a home in the region jumped 21.6 per cent to $1,097,565 from $902,787 last year, while listings shot up by about 57 per cent to reach 22,709 from 14,434.

The most dramatic price increases were seen in detached housing, where the average price was up by 26.6 per cent to hit $1,402,849.

The average semi-detached home was sold for $1,045,519, a 17.5 per cent hike, while townhouses spiked by 20.7 per cent at $870,553.

Condos saw the smallest growth in prices. The average condo price climbed by 2.6 per cent to $676,052.

“With sales growth outstripping listings growth by a large margin, including in the condo market segment, competition between buyers in some market segments and the potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale,” said TRREB chief market analyst Jason Mercer in a release.
Is a housing market crash on the way in 2021?

 

With the real estate market experiencing surging prices, scant inventories, and a backlog of new home construction, many consumers are wondering if what’s gone up must come back down — in other words, are we headed for another housing market crash? Let’s take a closer look.

Memories of the Great Recession Are Still Fresh
Few people foresaw the housing market crash 15 years ago that ignited a worldwide recession. Fueled by low interest rates, loose mortgage lending standards, and the nation’s unshakeable faith in homeownership, home values rose at record rates year after year. When the housing bubble burst, some nine million families lost their homes to foreclosure or short sale between 2006 and 2014. Housing values plunged 30% or more, homeowners lost a collective $7 trillion, and it took nearly a decade for most markets to recover. Even today, several local real estate markets have not fully recovered.

With the robust market activity we’ve seen lately, are we in for a repeat housing market crash? The short answer is “not likely.” Today’s mini-boom cannot be sustained, but a crash as serious as the last one is highly unlikely because of a few determining factors:

Factor #1: Higher Lending Standards
Loose mortgage lending practices ultimately brought down some of the nation’s largest banks and mortgage companies. The fallout forced Congress and federal regulators to make significant adjustments that have since fundamentally changed how mortgage lending is regulated.

Since then, standards have been raised and the process of obtaining a mortgage is now more transparent. “Anyone can get one” types of loans are illegal, while borrowers must undergo rigorous income and asset checks. An entirely new regulatory agency, the Consumer Financial Protection Bureau, was created to enforce this new regulatory framework. Lenders who do not comply with these standards risk severe penalties.

As a result, the housing finance marketplace is now more robust and safe than it was 15 years ago. Any dip in the housing market will be cushioned by these stricter regulations.

Factor #2: Pandemic Mortgage Forbearance
When the housing market crashed in 2007, the influx of foreclosures pumped housing supply into areas with falling prices and weak labor markets, while also preventing recently-foreclosed borrowers from re-entering the market as buyers. According to the Federal Reserve, foreclosures during a time of high unemployment could depress prices, plunging homeowners across the country deeper into negative equity.

However, in the pandemic era, the effects of mass unemployment bear little resemblance to the Great Recession, thanks in large part to forbearance programs that have allowed homeowners to postpone their monthly mortgage payments without suffering penalties.

As of early March 2021, 2.6 million homeowners’ mortgages were in such forbearance plans. As the pandemic economy has slowly recovered, many homeowners have since resumed their employment, and thus their home payments. According to CoreLogic, by the end of 2020, overall mortgage delinquencies declined 5.8% due to the forbearance program. The share of mortgages 60 to 89 days past due declined to 0.5%, lower than 0.6% in December 2019.

It’s worth noting, however, that serious delinquencies — defined as 90 days or more past due, including loans in foreclosure — increased when owners who owed large amounts left forbearance. By year end 2020, the serious delinquency rate was 3.9%, up from 1.2% in December 2019.

Inevitably, some owners in forbearance will fail to secure a loan modification or a lengthy repayment period from their lenders. Unless the government provides a bailout for these beleaguered owners, they will lose their homes when forbearances end. ATTOM Data Solutions expects at least 200,000 defaults in 2021 and a 70% increase in foreclosures over the subsequent two years ─ a significant increase from current levels, but a far cry from the 6 million foreclosures following the 2007 crash.

Factor #3: The Cushion of Homeowners’ Equity
Equity is the difference between the current market value of your home and the amount you owe on it. In other words, it’s the portion of your home’s value that you actually own. Equity can be an incentive to stay in your home longer; if prices rise — something we’ve seen almost universally across the country in recent months — your equity increases, too.

Why does this matter? Simply put, higher levels of equity cushion homeowners from default when home values fall.

Over the past decade, American homeowners have enjoyed housing stability and growth, building up large home equity reserves. In the third quarter of 2020, the average family with a mortgage had $194,000 in home equity, and the average homeowner gained approximately $26,300 in equity over the course of the year. In contrast, 2009 saw nearly a quarter of the nation’s mortgaged homes valued for less than the amount their owners actually owed on those mortgages.

Factor #4: Price Growth Will Slow, But Not Stop
The sales boom following the outbreak of the COVID-19 pandemic in April 2020 surprised many real estate economists; like most other business sectors, real estate was expected (if not required in many locations) to lock down. But by mid-April, sales were soaring as buyers, many of them millennials, took advantage of record-low mortgage interest rates. Through the remainder of 2020, rates remained below 3%, and existing home sales reached their highest level in 14 years.

The combination of solid sales and depleted supplies drove the nation’s median existing-home price for all housing types to $309,800, up 12.9% from December 2019 and marking 106 straight months of year-over-year gains.

The multi-year run of significant price increases will end, at least temporarily, but inflationary pressure on entry-level homes will continue in most markets until new home construction will relieve it. Economists at Fannie Mae, Freddie Mac, the Mortgage Bankers Association, and the National Association of Realtors forecast median prices will rise between 3 to 8% in 2021, a significant drop from 2020 but nothing like the crash in prices seen in the last housing crash.

A Moving Target
While no one can say for sure what will happen with the real estate sector, most experts are confident that we’ll experience a market dip, but certainly not a crash. Still, it’s important to stay informed of market trends, consumer sentiments, and expert insights. Check back with Homes.com for all the latest!

Condo investors 'stealing activity' from future amid low rates: Tal
 
 
Real estate investors are piling into the condo market and taking advantage of low interest rates - even if it means withstanding short-term losses, according to a prominent Bay Street economist.

“It’s really about the supply-demand mismatch and people are looking at interest rates, they know… interest rates will rise,” Benjamin Tal, deputy chief economist at CIBC Capital Markets Inc., said in an interview. “So basically, they’re stealing activity from the future in order to be part of this low interest rate environment and take advantage of it.”

Tal, who developed the report in conjunction with real estate analyst group Urbanation to be released later this week, explained that investors are piling into the condo segment as it provides a more affordable entry into the real estate market than single, detached housing.

He said that the investors interviewed for the report are absorbing monthly losses, sometimes worth hundreds of dollars, for the longer-term value proposition. Data from CIBC found that about 40 per cent of condo investors had a negative cashflow. The investors said having a portion of their mortgage paid by someone else in the short-term will lead to profit as prices in hot markets like Toronto continue to climb.

And Tal believes they will continue to climb.

“If you think that Toronto is unaffordable now, you wait,” Tal said. “Toronto is becoming like Berlin, like London, like Manhattan. It’s becoming more and more unaffordable, and therefore we know that our kids will struggle.”

Condo sales have been taking off according to data from the Toronto Regional Real Estate Board (TRREB), up 85.5 per cent in January on a year-over-year basis. During that same time, prices had softened by 4.7 per cent. However, TRREB warns that the growth in condo sales outstripping the new listings growth may prompt a surge in prices, according to its market watch report.
 
Toronto Real Estate Is Getting So Intense There Are Now 'Bidding Wars' For Rentals

Despite rent prices plummeting in the city during the pandemic, new competition for value in Toronto's rental market is driving prices up for certain listings.

Strata real estate agent Francisco Hiebert told Narcity "strong competition for desirable units" has caused bidding wars among tenants who are "waiting out the current buying frenzy" by renting.

"Tenants are taking advantage of the lower prices," and are even submitting offers over the asking price, said Hiebert, particularly for spacious units with balconies and nature nearby. 

"I would never ask a client to do that, but many are volunteering," Hiebert said. "Seeing multiple offers on rentals is becoming more common, thanks to increased demand and a decline in inventory."

For example, an Upper Beaches one-bedroom with a den is now being rented for $300 more than it was originally listed at. The same goes for this two-bedroom unit in Markham.  

5 Toronto areas saw condo sales soar over 75% in February
 
 
Condo sales are on a sustained upswing across Toronto after spending much of 2020 in the red.

Citywide condo sales rose over 63 percent annually last month with 2,167 units changing hands. While most areas tracked by the Toronto Regional Real Estate Board (TRREB) saw substantial increases in sales, a handful recorded transaction totals that significantly outperformed the citywide growth figure.

Of the areas that saw a high volume of condo sales, five recorded annual growth that was healthily above 75 percent.

TRREB’s C08 and C10 posted condo sales totals that were more than double what they recorded during the same period last year, with gains hitting 138.6 percent and 111 percent, respectively. C08 covers the Distillery District, the eastern Waterfront Communities, Regent Park and the downtown core east of Yonge Street. C10 includes the eastern section of Yonge and Eglinton, Davisville Village and Sherwood Park. Both are home to areas with significant condo density.

C01 — encompassing Cityplace, Liberty Village and a large swath of the Financial District west of Yonge Street — posted an 85 percent sales boost over February 2020.

The area covered by W04, which includes Yorkdale-Glen Park, Mount Dennis and Briar Hill – Belgravia, recorded an 82 percent rise in condo sales over the previous year. In the city’s east, E09 — consisting of the Bendale, Woburn and Morningside neighbourhoods — posted a 77.4 percent annual sales gain.

Despite February being a shorter month, all areas with the exception of E09 also recorded monthly accelerations in condo sales compared to their January totals.

Taken together, just over 50 percent of all condo transactions that took place in Toronto in February happened in these five areas. There are 36 distinct areas in the City of Toronto tracked by TRREB.
Planned subway line will drive King St

 An argument can be made that Toronto’s downtown east is the most connected part of the entire megacity, and it stands to reason that owning a piece of real estate there will yield above-average returns.

As it turns out, Bauhaus Condos is located within a juncture that, in addition to slick connectivity to the Don Valley Parkway and Gardiner Expressway, will have a subway station seconds away. The 32-storey, 218-unit tower from Lamb Development Corp. will be located at King St. E. and Berkeley St., where the new Ontario Line subway route will have a station.

“There’s nothing better than living in central Toronto and having a subway nearby,” said Brad Lamb, owner and CEO of Lamb Development Corp. “King St. E. goes through the original 10 blocks, which are Spadina to Parliament, known as the historic city, and it’s better connected than the west side of downtown approaching Bathurst.

“King St. is also a high street, and it’s more important to commerce in Toronto than even Yonge St. It’s the most prestigious street in central Toronto, and around Bauhaus an office building and a high-rise condo are being constructed.”

That’s not all. Dream Office REIT is developing two new office towers and a residential building within a block of Bauhaus, and Lamb Development Corp. is building three other high-rises in the neighbourhood. Also, perhaps fittingly, the SAS Institute has its Canadian headquarters nearby.

Lamb believes the neighbourhood is Toronto’s most liveable because of its proximity to Corktown, the Distillery and Canary Districts, River City, St. Lawrence Market, the downtown highway network, and Union Station. It’s also near Ryerson University and George Brown College.

It’s for that very reason that Lamb, who used to sell condos for Peter Freed of the eponymous Freed Developments when units were 100 per sq ft, says owning a piece of real estate in the neighbourhood will yield returns far and above the majority of Toronto’s other neighbourhoods. There is no more untouched land in Toronto, and that means new builds will only ever be found in established locales. Lamb questions whether there’s a better neighbourhood than King St. E.

“For our financial models for three Bauhaus units, which were 434, 460 and 516 sq ft, we use pre-COVID rents, but Bauhaus won’t be completed for another three and a half years, and by then rents will get back to where they were. They will probably get back there this year or early next year—and that’s just recapturing what was lost because of COVID,” said Lamb.

“They showed a positive return on equity with 30% down, meaning that you’re making 6-6.5% on rent alone. These rents were achievable before COVID and in three and a half years, they’ll be easily achievable. The compounded returns, according to TRREB, will be a 6.6% average return over 30 years.”

Factoring in inflation, Lamb says that in 25 years a studio condo in downtown Toronto will cost substantially over $1 million.

“Inflation is not going away. It’s absurd to think in 25 years you will pay $2.5 million for a studio in downtown Toronto, but you will,” he said. “When you factor in leverage, which you don’t get with a stock but you get with real estate, you’re buying a house or investment property for 25% and your actual return, in terms of price appreciation, is 30% compounded annually plus whatever you make from rent.”

While Lamb concedes that another recession or viral outbreak could be in the cards, he noted that COVID-19 hardly made a dent in Canada’s real estate market, and that it is, therefore, unlikely anything else calamitous enough will occur.

“The six-month negative growth rate was worse than the Great Depression at minus-15%, and since then we’ve clawed back to minus-4-5% on an annual basis. What happened to real estate? Nothing. Condo prices dropped about 10% but, already in March, we’ve recovered from that and prices are already higher than they were last March.”

Oshawa condo market surges to become hottest in the GTA

 

Housing prices all over the GTA have been skyrocketing throughout the past year, but it’s Oshawa that has come out as the frontrunner in the GTA’s condo market.

A new report from Strata has found that property values in Oshawa have increased 48% over the past year. This is staggeringly higher than the increases seen in other GTA cities like Mississauga, Brampton, and Vaughan, which have gone up 6%, 11%, and 5%, respectively.

The average Oshawa condo is now priced at $483,000, or about $540 per sq ft.

According to the report, Oshawa real estate is attractive because it typically has more spacious layouts compared to Toronto, and low-rise condo townhomes — an alternative to the typical Toronto high-rise — are abundant.

“Given today’s migrational trends, it’s not surprising to see Oshawa, and Durham Region as a whole, outpace the rest of the GTA. Whitby, for example, may not be as hot as Oshawa. But it, too, is seeing an increase of 20% in property values over the past year,”

For years, Oshawa, known as Ontario’s “motor city” thanks to the General Motors headquarters located there, has been in “an auto industry slump,” the report says. But the city is now becoming more attractive to families and young professionals.

“Oshawa is no longer that sleepy bedroom community you once knew. I used to hear a lot of Toronto homebuyers swear they’d never go past Pickering,” said Van Rhijn. “But with today’s remote working options, I’m seeing more clients push their geographic boundaries and wonder what’s further east.”

And with Toronto’s condo market continuing to be much to expensive for many buyers, it’s pushing more people to further out GTA cities.

“The average selling price for a condo in Toronto is well over $700,000,” said Strata agent Jessie Pereira. “That’s why Oshawa has become an attractive option. Not only can you buy property here for much cheaper, but you’re also getting in on a market with long-term possibilities for profit.”

So any buyers looking to get in on a growing market would be smart to turn their attention to Oshawa.

The rise of the second home
 
Real estate brokerage firm Redfin recently did an analysis of “mortgage-rate lock data” taken from the analytics firm Optimal Blue. A mortgage-rate lock is an agreement between a lender and a borrower guaranteeing a particular interest rate for a particular period of time.

What’s potentially interesting about this data is that (1) approximately 80% of mortgage-rate locks apparently result in an actual home purchase and (2) buyers must specify whether they’re applying to secure a rate for a primary home, a second home, or an investment property. So there’s a high degree of intent that goes along with these applications.

What Redfin found when they looked at the data is that the growth in demand for second homes is exceeding that of primary homes by quite a wide margin. They argue that this is largely a result of people now working remotely.

But this rise in demand — at least according to the above data — appears to have started in the second half of 2019. So I think a few more data points would be helpful in understanding what’s really going on. Is what we’re seeing more about acceleration than about causation? And what does this look like a year from now?
Toronto is changing its map around to create 34 new neighborhoods

 

Congratulations to everyone living along the downtown portion of Toronto's waterfront, all 65,000 of you who, for decades, have been clumped together on the city's official map of neighbourhoods as one ill-defined, enormous blob called "Waterfront Communities — The Island."

Big ups also to Liberty Village, Fort York, West Queen West, and all of Ontario Place, which together will no longer be classified by the city as one sprawling super-hood called "Niagara."

Toronto is finally redrawing its seemingly-ancient map of neighbourhoods to better reflect how more than a dozen monolithic regions across the city are actually divided in terms of population and use.

Freshly unveiled by the municipal government, these new boundaries present a Toronto with 158 different neighbourhoods — up from the current total of 140, which has been in place since the late 1990s.

"In recent years population growth has made each neighbourhood's population unbalanced in relation to the others," reads the city's website under a headline that states "Neighbourhoods Are Changing."

"To balance population growth, the Social Research & Information Management unit (SRIM), together with partners in other City divisions and public agencies, developed neighbourhood splits that resulted in 34 new neighbourhood areas with more balanced populations."

Are you used to saying that the City of Toronto has 140 neighbourhoods? Well, that number is about to be updated to 158 (h/t @Diane_Dyson).

And, since the old numbers are being retired, we'll now have 158 neighbourhoods numbered 1-174.https://t.co/NMl0nurIdv pic.twitter.com/9EWcpLrfqz

— Shauna Brail (@shaunabrail) March 15, 2021
It's not yet clear when the new boundaries will be formally recognized, but the city has released a map showing how large areas such as Rouge, Dovercourt-Wallace Emerson-Junction and Islington-City Centre West are being divvied up.

The latter neighbourhood, for instance, will be split in half horizontally, creating two new hoods called Islington and Etobicoke City Centre.

With more than 43,000 residents as of the last Canadian census, this makes sense.

The area currently known as Willowdale East (population 50,434 as of the last census) will be split into three new neighbourhoods called Empress, Avondale and Dunforest-Hollywood, which I'm certain people will eventually call "Hollywood North (of Bloor.)"

Downtown, the neighbourhood currently known as Niagara will be split into West Queen West and Fort York-Liberty Village.

Toronto home sales break record in February as condo market storms back

 

Home buying activity hit a record high in the Toronto region last month as 10,970 properties changed hands.

February’s sales total represented a 52.5 percent increase over the same period last year, according to data published today by the Toronto Regional Real Estate Board (TRREB).

While buyer interest in suburban single-family homes has dominated headlines for months, the city’s condo market is climbing its way back into the spotlight. Continuing a trend established in December, condo sales jumped 64 percent last month with strong increases recorded in both the suburban 905 area and the urban 416.

The region’s condo market — especially units in Toronto’s downtown core — have been a notable weak spot in an otherwise robust housing picture. Despite the significant sales growth, condo prices continued their streak of annual declines in February, down 3.7 percent on the regional level and 6.4 percent in the city-proper. That said, TRREB’s Chief Market Analyst Jason Mercer sees potential for condo prices to begin posting gains again this year.

Ideaf we continue to see growth in condo sales outstrip growth in new condo listings in Toronto, renewed price growth in this market segment is a distinct possibility in the second half of the year,” said Mercer.

The balance between new listings and sales that Mercer is referring to was strongly tilted toward listings for much of 2020’s second half as many condo investors sought to offload their units while other condo owners took advantage of record-low interest rates to move-up to a larger property.

The balance has been shifting in recent months and, in February, condo sales were up 64 percent, outpacing new condo listings which grew by 42.6 percent annually. This trend will need to continue for condo prices to start increasing again, but things are moving in the right direction.

For the region’s housing market as a whole, TRREB President Lisa Patel is anticipating more supply-driven challenges this year as demand is already exceptionally strong moving into the typically busy spring homebuying season. Patel says that population growth is expected to pick up again as Canada’s vaccination campaign ramps up, so this could exacerbate the problem further.

TRREB’s Home Price Index rose nearly 15 percent annually in February while the average selling price of a Toronto region home was up a similar amount to $1,045,488. Buyer confidence and low borrowing costs have led to fierce competition in the single-family home market, where price growth has been concentrated.

“In the absence of a marked uptick in inventory, the current relationship between demand and supply supports continued double-digit average home price growth this year,” said Mercer.

It’s also worth noting that February 2020 was the last month of that year in which homebuying activity remained mostly unaffected by the looming pandemic. By the second half of March 2020, home sales began to collapse as the market froze in the face of accelerating virus transmission and widespread lockdowns. Expect some huge annual spikes in TRREB’s sales activity data during the months ahead when 2021’s booming market is compared to 2020’s lockdown-curtailed market.

Pre-construction condo vs resale: which should you invest in?

When it comes to purchasing a condo as a first-time home buyer or investor, there is a wide range of opportunities and benefits. However, when it comes to choosing whether or not to buy a pre-construction condo or a resale condo, things can get a little tricky. Either way, the condo market is thriving in Canada and you can get in the market with a good purchase price if you know where to look.

In real estate markets like Toronto, the average price for a stand-alone family home was just under $930,000 as of December 2020 whereas the average price for a condo in Toronto was just over $660,000. For someone looking for a first-time home or an investment property, they could save almost $300,000.

"The pros of it for most first-time buyers it's more affordable," said Our Expert’s said. "The reality is, if that's what your budget allows for, then you're going to do [better with] a condo. And with that being said, depending on your lifestyle there's a lot of advantages to living in a condo."

Purchasing a condo unit comes with its pros and cons, like occupancy fees, carrying costs and living in a dense high-occupancy housing community. You'll also need to pay the amount of land transfer taxes on a condo that you would on a single-family home.

Investing in condos is a great way to break into the real estate market, but once you choose to go with condos instead of homes, you have to look at the benefits and disadvantages of choosing a pre-construction or resale unit.

The benefits of pre-construction

One of the main benefits of buying a condo during its construction phase is that it's cheaper than a resale model. When you buy pre-construction, you're taking the risk of your new condo not being built on time due to delays.

Another benefit to this is that you're getting on the on-sale price before the condo is built, so you're the price you're paying will be less than that of people who are buying a new condo after the construction phase. So the market value of your condo is already increasing and working for you!

"You know if you're buying today you're buying an asset. You're buying something in 2025 [but at a] 2021 price," Our Expert’s said.

Another huge benefit to buying a pre-construction condo is that you get to choose a floor plan and your own specific finishings since your condo hasn't been built yet. Typically, developers let buyers choose their own flooring and fixtures to give their new condo a personalized touch. However, certain finishes may be pricier than you anticipated so keep your eye out for any product that looks great, but can also save you money (like laminate flooring that looks like real wood for example).

"It's a very passive investment," Our Expert’s said. "You don't have to deal with tenants and there's nothing that you need to do until the condo is ready."

The benefits of buying resale condos

Obviously, everyone wants brand new condos they can be the first to live in, but resale properties offer the opportunity to move into your condo much sooner than a pre-con. For resale condos, you'll probably need a mortgage since purchasing these units isn't the same as buying a condo during the building phase. However, interest rates are at an all-time low in Canada, which means it's never been a better time to look into real estate investments.

Resale condos also offer the opportunity for great liquidity, meaning you can do whatever you please with your condo as long as you follow building guidelines. This is specifically appealing to investors who want to invest in a rental property as you can immediately move in yourself, or rent it out and start seeing an immediate profit.

"In most areas like in Toronto, if you pay a million and a half dollars for a home on the rental market you will not be cashflow positive," Our Expert’s said. "Whereas on the condo market, in a normal rental market, you have that opportunity."

Pre-construction real estate investment properties

When it comes to paying for pre-construction condos, it works a little differently than buying a single-family house or resale condo. The pre-construction market in Ontario only requires a 20% down payment compared to other markets in Canada where you have to pay from 50-100% of the cost of the property upfront.

Unlike a mortgage, you don't even have to pay the whole down payment right away. Buying a pre-construction condo gives you the freedom to pay your down payment over the course of the first year of ownership, which means you have more time to come up with the down payment before they start building your brand new condo. This is especially appealing for first-time buyers who are looking to break into the real estate game or are just looking to upgrade from their current unit.

Selling a pre-construction condo

As the owner of a pre-construction condo, you technically can't sell your pre-construction condo because it hasn't been built yet. Sometimes it can take years to build condos and your plans change, or you're looking to put money into a different investment opportunity. An option to get around selling your investment condo is to actually sell the contract for your pre-construction condo.

This means that as the owner, you can sell off your condo unit but the buyer has to agree to the same terms and purchase price that you already agreed to. Basically, they have to be alright with what you've already agreed to in terms of condo developments, tax implications, closing costs, occupancy, maintenance fees and any other things you may have agreed to when buying pre-construction units.

Using equity for a resale real estate purchase

Using equity to buy any condo is a great option for anyone looking to use their existing home equity for investment opportunities. Pre-construction and resale condos are both great options for those looking to use equity instead of taking out another mortgage, but in order to see a return on your investment immediately, resale is where it's at.

"The price of real estate has gone up so much and people have a lot of equity, which is borrowing power in their real estate," Our Expert’s said. "If you bought something for half a million dollars, and it's now worth a million dollars you have half a million dollars in equity that you can really access."

Using equity instead of a mortgage to purchase resale units works because your resale property can become a rental property and you can make money immediately from your investment. Waiting for developers to build pre-construction condos hinders your opportunity to see a return on your investment and that's the one thing you don't want to see as an investor.

Increasing resale value

Resale condos are also one way to flip your investment for a higher profit. Since they're already built, the value of your resale property will skyrocket because the need for housing in Toronto is soaring. This will ultimately lead to your resale property being worth more money if you flip it instead of renting it out and lets you pay off the balance on your mortgage thanks to the increasing market in Canada.

"I think right now the markets on fire and especially like once there's a major reopening, everyone's comfortable, the global confidence is returned and the disease is more contained we're going to see massive appreciation," Our Expert’s said. "There's more money than has ever been on the sidelines waiting to come in right now."

Pre-construction vs resale: what makes sense for you?

When looking at pre-construction vs resale condos, it's important to note the benefits of pre-construction condos. Typically, pre-construction condos give you the freedom to break into the real estate market at a slower pace than resale condos where you have to be ready with a large percent of the purchase price upfront. Construction and resale investment opportunities are abundant in Ontario and new buildings are springing up daily in the GTA and across the country.

Property developments in general are a safe investment. The question that remains is if condos are right for you, and if they are, what are the pros and cons of a pre-construction unit vs resale? One of the main things to keep in mind is when you're looking to occupy the unit. Obviously, pre-construction condos take time to build whereas a resale condo can be moved into the week after you buy it.

A resale is a safer investment if you're looking to get into the property rental business as its main advantage is the option to move in tenants in right away. To purchase resale condos as real estate investments is purchasing the option to rent immediately, or flip the condo in a few years' time once the value has appreciated. The bottom line is when considering the pros and cons of pre-construction property vs resale, the market isn't going to let you down.

One of the safest investments

"I think what's really important that people remember is that real estate is an asset," Our Expert’s said. "Specifically Toronto real estate has done incredibly well over the last, you know, three, two decades. It's a really safe place to put your money where you can get really solid returns. And as long as you're investing with, with a long time vision. You know, historically you're going to do incredibly well."

The main advantages of both pre-con and resale investments are that the value of your condo will continue to grow and continue building until you choose to resell. When you purchase a property, there are countless opportunities in terms of how to get your unit to give you the most bang for your buck.

Post-pandemic rising markets

"We're seeing the market come back to life," Our Expert’s said. "Now that people know that there's a cure and there's that certainty because rates are at all-time lows, people really are confident on where the market is going. And as soon as we see the borders open up. We're going to see a real, real increase in rental demand as well."

This means that now is a great time to purchase a condo as an investment. A by-product of this pandemic is how quickly every city is building in terms of growth. Using a condo to get in on the floor level of real estate is a real advantage in 2021 because new condos are popping up in every major city in Canada. The market value of condos is increasing at exponential rates and guarantees a great return profit on your investment unit.

Is the condo lifestyle for you?

"Depending on your lifestyle there's like a lot of advantages of living in a condo," Our Expert’s said. "If you're someone who goes away on the weekend, who doesn't want to bother with landscaping, or it's important you don't want to own a car and you want to live close to work. I mean these are all great reasons why you would own a condo."

Living in a high-rise building comes with benefits like not having to worry about maintenance or knowing there are certain rules every tenant in the building must follow. These benefits ring true for 0wners of pre-construction and resale condos. Your unit is just a small part of a community that works together to live in harmony. Buying pre-construction just means you may have to wait a little longer before you get that sense of community belonging that comes with living in a condo.

Ready to find make an investment?

At the end of the day, choosing a pre-construction vs resale condo is up to you, but there are pros and cons to each option. Real estate investments are a great opportunity to get your money to work for you and to take part in a growing market that will only increase in value as the years go on.

Whether you choose a resale condo or one that's in its construction phase, you know that your real estate purchase will bring you a profit. Why? Because the demand for condos continues to rise (no pun intended). Either way, you can rest assured knowing that looking into new or existing condo developments for sale is the right move when it comes to investing your hard-earned money into something profitable.

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