Market Update on Different Real Estate Segments

There is a lot going on in real estate in Canada and locally in Toronto and area as well. In this blog, I have tried to cover almost all major segments at a general level. Of course, you have to see how much each of these apply to you. If you are actively thinking of buying or selling in the next 6 months, either for your primary use or for building your real estate portfolio, then please give me a call to discuss how all of this applies to your situation. 

Condominiums 

As of September 30th, 49,841 units are currently under construction across the GTA. The industry has been delivering new pre-construction units at a much greater rate compared to the rate at which the new projects are starting. Which means that the new high rise inventory will reduce as time goes on. 

There are 75 projects that are more than 70% sold. That means that approximately $6 billion in building permit fees will be paid to the GTA municipalities as the construction of these units start. Think about that next time your property taxes go up. 

In year 2014, 25,571 high rise units were completed. 17,193 units were completed until end of September this year. So far, 2014 was the year with record number of units being completed in the history of high rise condos. High rise condo prices still went up in 2015. That should tell us something. Based on the projected sales so far for 2015, this year is going to look more like 2013. 

There is continuous decline in the number of high rise units under construction. 

New Detached Home Market

East Gwillimbury  (map of East Gwillimbury) new home market is the tightest market with 1.4 months of active inventory. Active inventory current listings on the market.  1.4 months is the period it would take to sell out all existing listings, if no new listings came on the market. As far as the pricing goes, East Gwillimbury pricing is now approaching Brampton pricing. 

Brampton has less than 4 months of active inventory, which is sill considered tight. 

Oakville pricing averaging at $1.3 million, still has less than 2 months of active inventory. 

This rapidly rising new low rise home price in GTA is causing a growing number of consumers, who wish to live in ground oriented (low rise) housing, to look outside the GTA and into the Greater Golden Horseshoe. 

The price gap of low rise houses in GTA versus those in Greater Golden Horseshoe (GGH) is growing. Which means that the affordability for areas like Cambridge, Guelph, Hamilton, Waterloo, is rising, especially if you are planning on selling your small home or a condo in GTA and moving out to buy a bigger home in these areas. 

Resale Real Estate

Sales are up. 2015 is a record year so far. We will be looking at over 100,000 units sold. When we look at this high activity, we wonder why people are purchasing homes and why we have this pent up demand for real estate?

Obviously, this has a lot to do with the low borrowing costs. The other important consideration is the bond yield expectations. When someone is looking to invest, what can they expect as return by putting their savings into some of the non real estate options out there. Since the return on all other type of investments is pretty much next to nothing, a lot of people are turning to real estate to get a good return on their money. 

 

Supply and Demand

We know the demand. How is the supply? The following graph will show you the number of months of inventory we have on the market. In other words, how many months it will take to sell out all existing listings, if no new listings came on the market. As you can see, even for the better supplied condo market, the active inventory is coming down effectively reducing the supply in comparison to the demand. This is why the condo prices are going up as well. 

As always for more details or information on your specific situation, please reach out to me either via email or call me at 647-287-4644

Commercial Real Estate

General increase in land prices in GTA and consequent rise in overall prices have affected the CAP rates. Even though the lending rates remain low, a drop in CAP rates has impacted how investors are looking at commercial investment properties. There are hidden gems in Greater Toronto Area that still offer better than average CAP rates. You have to know where they are or call the REALTOR that you think can help you. 

Formally educated as an Architect, Jagdeep Singh is Toronto REALTOR™ consulting on both resale real estate and new developments. Powerful Local Focus on Real Estate with a Global Perspective™.  This post is for information purposes only. Though effort has been made to ensure the accuracy of the contents, the reader is advised to verify the information independently. This post may contain contain information that is privileged, confidential and exempt from disclosure under applicable law. The reader is not allowed to reproduce it in any medium without the author’s prior written permission. Jagdeep Singh is a broker with Century 21 Heritage Group Ltd., brokerage (416) 798-7133 which is independently owned and operated. This message is not intended to solicit parties currently under contract.

Jagdeep Singh

Jagdeep Singh

Real Estate Broker
CENTURY 21 Heritage Group Ltd., Brokerage*
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