Sales Of Residential Condo Homes Blow The Lid Off Expectations
Tuesday Jul 29th, 2014
Toronto's residential condo market has outpaced all naysayers’ predictions. Since the worst reports at the end of 2013, Buyer confidence has increased sales of ‘new’ condos, by a whopping 56% with 5,992 condos sold just in Q2 of 2014. And this is the 3rd highest volume ever with only 2007 and 2011 reporting more sales.
However, even with the rise in the number of new build residential condo properties sold, prices have only increased by 2.5% from one year ago. The average sale price was $554 per square foot in this year’s Q2. And in unsold inventory, prices increased only 1%.
Even the purchase of resale residential condo properties has climbed to a record 5,238 units in 2014's 2nd quarter up 12% from the same time period last year. And newly listed condos rose to 11,246 available units. Despite this high number, there’s only a 47% sales-to-listing ratio meaning that it's still below market conditions of a 50% balance.
2014's 2nd quarter prices for re-sale condos increased by 3.4%. So, while we only use cost per square foot (psf) to calculate new construction pricing, this was still enough (just as a comparison) to set the unprecedented resale high of over $425 psf.
With the out-of-reach escalating prices of single-family residential homes for sale, many Buyers are purchasing residential condo homes to get into the market.
Yet most active in buying up new condo inventory are investors who purchase 1, 2 or even 7 or 8 units at a time because they are so easy to lease out. Traditional apartment buildings can’t compete with the lure of 9' ceilings, central air conditioning, stainless steel appliances, hardwood floors, an en-suite laundry and amazing amenities like gyms, concierge services, media rooms, and pools. Renters rush in to lease these condos as quickly as they become available.
Many of our own clients rely on our help & knowledge to purchase new condo homes to live in, for their children or, upon completion, to rent out. Older city areas are becoming re-gentrified as these condo developments create exciting, vibrant new neighbourhoods for fabulous urban lifestyles.
According to Stats Canada the GTA's population is increasing by 100,000 per year. And, Toronto's condo market has reached a new milestone with over 105,000 new condo units actively being developed. Of all these pre-construction units only approximately 18,740 are unsold. It’s important to understand, though, that these condo projects (buildings) can take up to 8-10 years from site acquisition though planning, re-zoning, pre-construction sales to actually being built and ready to occupy.
Purchasing new and resale residential condo homes provides very attractive and affordable ownership to many mainstream buyers. And with the ever-increasing population, the condo market will continue to grow. The new construction of the now, with all the bells and whistles, will quickly become the successful and profitable resale of the near future. And, as more buyers gravitate to the condo market, investors could very well cash in and turn a profit more quickly than they ever expected.