Before you start reading this blog, please note that the market data charts that the blog refers to are not included here. To view the full blog with the market data charts, please view the blog here
We don't need analysis to realize that the condo inventory is going up in Greater Toronto Area (GTA). But is the demand increasing? What is the forecast?
Inflation is still in check and as such mortgage rates continue to be healthy, on the lower end. 20% of all people move within five years. As the prices move up, and the required income to buy real estate keeps up with it, the market continues to absorb more constructed real estate. The employment in Toronto has increased in 2011 from 2009 and 2010 levels.
Older people prefer condos as a lifestyle choice. With the baby boomers retiring, they are buying condos, especially in the higher price range which is driving up the luxury condo market. Contrary to the popular belief, new condo construction is going down (please see the graph). Since the deposits required to buy a condo are higher in percentage (mostly 20%), it is less likely for the new condo buyers to walk away from their units. We have less than 400 built units that are currently unoccupied. All this means less inventory on the market, which in turn maintain the prices. For example, take a look at the C01 TREB district, which includes my entertainment district. Also take a look at the Active GTA MLS Condo Listings chart. To this, add a very low vacancy rate of 1.6% in the condo rental market and we understand why the market is absorbing so many condo units.
The developers are also building relative to actual sales being made. See New Condo Sales versus Openings chart.
Caution: you have to make sure that you buy right in terms of price, floor plan, finishes and from urban planning perspective. Due to my education and experience as an Architect, all this comes easier to me than your average REALTOR. In addition, it is important to choose the right project and take the resale prices in the neighbourhood into consideration.
Watch out for all these and the condo market will serve you good.
To view the full blog with the market data charts, please click here