Toronto Condo and Real Estate Blog

By Derek Raymaker - Globe and Mail

Every year for the past five years, the same question has cropped up about the forecast for the Greater Toronto Area’s high-rise condominium market: Is this the year sales will finally decline?

It’s hard to believe, but there was a time when the experts thought the GTA couldn’t possibly sustain 250 to 300 new condo launches a year. Conventional wisdom was that the only thing pushing condominium sales ever higher in the early 2000s were historically low interest rates and a pent-up demand among first-time buyers.

If either of these two components changed, so the experts thought, developers who were late to the game would be in for a rude awakening.

If Toronto’s condominium market trends prove anything, it’s that conventional wisdom does not apply. In 2005, the city recorded 17,693 new condo sales, crushing the 2004 mark of 13,750 sales, according to data collected by RealNet Canada.

A year ago, as the winds of January blew bitter and frosty, no one thought that 2006’s sales could possibly come close to the record-breaking condo sales of 2005 — not even the notoriously optimistic developers who were putting up the suites.

But demand continued strong, fuelled by affordable pricing, strong launches of attractive mixed-use projects in suburban “city centres” such as Markham and Mississauga, growing interest from empty-nesters, and skyrocketing low-rise prices that essentially pushed many young couples and families out of that market. The final numbers aren’t in yet, but sales from January to November of last year were 16,948, so the final total will easily top 17,000 for the year.

Condo watchers are understandably reticent to predict sales trends this year, but they are universally bullish on what areas will see a lot of activity from both developers and buyers, and most of them are not in downtown Toronto.

Sheppard Avenue East will see an eruption of high-rise units this year, according to veteran marketing consultant Barry Lyon. “The Sheppard corridor will boom this year, and we’ll finally be making sense out of the investment in that subway line,” he said, referring to the controversial subway spur off the Yonge Street line completed five years ago.

Mr. Lyon said major multiphase developments are in the works for nearly every subway station between Yonge Street and Victoria Park Avenue. But there will be a huge one at the corner of Leslie Street and Sheppard, on the current site of the Canadian Tire distribution centre.

Vancouver developer Concord Adex Investments purchased the nearly 40-acre site for about $150-million last fall and plans to build a 20-tower community with more than 4,000 suites. Residents will have easy access to the subway, TTC buses, GO Train and Highway 401.

Concord Adex is no stranger to condo development on a massive scale. It’s putting the finishing touches on CityPlace at the foot of Spadina Avenue on the former railway lands.

Following the successful launch of Markham City Centre’s condominium component — four buildings that sold out in very short order last year — there are plans to redevelop Vaughan’s city centre at Jane Street and Highway 7. Current proposals call for about 2,000 suites to be built in a mixed-use complex of four or five buildings. The development will be nicely situated at the end of a planned subway line extension to York University.

“I think developers are trying to include more mixed-use components in the 905 region as an added bonus to make it more of a community,” said Pat Baker, who handles sales for Markham City Centre and several other new projects around Toronto.

Most market watchers agree that Vaughan has lagged behind in condo projects, and needs to do some catching up.

The long-awaited redevelopment of the West Donlands will move a step closer to reality this year.

Toronto Waterfront Revitalization Corp. is expected to issue a call for proposals, with the first development to be built near King East and River Streets. The funky and popular Distillery District nearby has already made it a much-anticipated project.

Another high-profile redevelopment, the once poverty- and violence-plagued Regent Park on Dundas Street East, also kicks into high gear this year.

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From the Condo Guide Magazine

Running from January 18 through to January 21, 2007 at the Metro Convention Centre, the Metro Home Show is a dynamic showcase of urban living products and services plus design and decoration tips for every homeowner. As the year’s first one-stop destination for design-savvy shoppers and do-it-yourself renovators, it’s the perfect place to get a first glimpse of the most innovative products and new trends in the market.

This year’s show promises all of the necessary stops for the do-it-yourself home renovator along with special features to intrigue even the newest homeowner. Designed to help those looking for advice on how to improve on their home, the Ask An Expert feature delivers free consultations with experts from all areas of home improvement and décor: interior design, destination renovation, kitchen and bathroom renovation, and garden/landscape design.

It is with special features such as BARK All Terrain Cabin (ATC) that the Metro Home Show will highlight the importance of eco-friendly additions to metro living lifestyles. Making its Toronto debut, the ATC is a 480-sq.-ft., fully outfitted cabin engineered to fully function as a contemporary cabin capable of supporting a family of four and a pet!

On hand to share their knowledge and expertise of home décor with patrons of this year’s show are celebrities Lynn Spence and Ramsin Khachi of CityLine, and Karl Lohnes of Style at Home magazine. These special guests can be found on the main stage throughout the weekend, teaching everything there is to know about home renovations, the newest decorating trends and demonstrating how to use small spaces to their full potential.

Produced by dmg world media, in partnership with GTHBA-UDI, the 2007 Metro Home Show will be held at the Metro Convention Centre in the North Building, 255 Front St. W., Toronto.

Metro Home Show Hours:

Thursday, January 18, 11 a.m. - 9 p.m.
Friday, January 19, 11 a.m. - 9 p.m.
Saturday, January 20 10 a.m. - 9 p.m.
Sunday, January 21 10 a.m. - 6 p.m.

Admission: adults $12; seniors and youth (under 17) $10; children 12 or under are free.

Tickets are available at show entrance, or for a discounted price online at www.metrohomeshow.com.

For more information on the 2007 Metro Home Show, call the general information line at 416-385-1880 or visit www.metrohomeshow.com.

The Condo Guide Magazine is an excellent source of housing information for those looking for information on new condos in Ontario, Canada. We offer the most up-to-date information on new condominiums across the greater Toronto area.

By Bob Finnigan, President of the Greater Toronto Homebuilders Association-Urban Development Institute

If I had to choose one word to describe the housing market in 2007, it would be opportunity.

The year ahead will be one of opportunity for homebuyers based on strong competition among home builders, mortgage lenders and mortgage insurers, combined with the wild-card factor inherent in a pre-election environment.

The housing market – new, resale and renovation – is coming off yet another excellent year and we have no reason to expect any dramatic differences in 2007.

Housing in the GTA remains relatively affordable, certainly compared with the late 1980s and with markets such as Calgary and Vancouver.

In its December 2006 quarterly report RBC Royal Bank noted that “affordability is likely to improve across a number of markets in 2007 as the lagged effects of mortgage rate declines, easing energy prices and a topping-out of home price appreciation have positive effects for homebuyers.”

As for mortgage rates, a key component of housing affordability, the expert consensus is that rates will remain in their current extremely low range, if not decline a bit further, throughout 2007.

Even if rates don’t decline (how low can you go?), intense competition among lenders means homebuyers will continue to benefit from rate discounting.

The mortgage insurance market is also very dynamic. The federal government has introduced legislation that would allow consumers to buy homes with a 20% down payment without having to buy mortgage insurance, 5% lower than the longstanding requirement of 25%.

At the same time, the number of companies offering mortgage insurance is expected to grow from just two to as many as five this year.

The threat of increased competition has already brought about cost savings for buyers of new homes, as well as new product offerings including 100% insurance and 30- 35- and 40-year amortizations, which help to lower monthly carrying costs.

On the matter of housing prices, buyers remain in a very opportune position.

The 1% cut in the GST on new homes, effective May 2, 2006, has been completely worked into the price list already as projects on the market at the time have been sold out and new projects introduced.

Aggressive competition between builders ensured that the GST reduction was passed through, and that same price competition will continue to benefit buyers in 2007.

The overlay to these specific market circumstances is the fact of a provincial election later this year and the distinct possibility of a federal election.

Governments in pre-election mode rarely interfere with the housing market in any negative way, but the competition for the attention of the electorate sometimes results in positive promises (such as the GST reduction) from the government or opposition.

We’d certainly love to see a commitment from the federal government to finally index the GST rebate thresholds.

Currently, only homes under $350,000 qualify for the highest level of rebate – a threshold price that has not changed in 15 years although prices have risen considerably in that time frame.

Combine this with a major commitment to infrastructure in the GTA and we would be on the right track.

Provincially, infrastructure investment and streamlining of development approvals in the growth plan areas should be top priorities to ensure a healthy housing market for years to come.

If any party or leader wants to step up and be the champion of the Canadian dream of homeownership, we would certainly welcome it.

Finally, if I had to choose another word to describe the year ahead, it would be competition.

Clearly, competition between builders, lenders, mortgage insurers, even politicians, is creating opportunity for new home buyers in 2007 – it’s up to you to seize that opportunity.

Do you have a question about the home building industry? Email Bob Finnigan, president of the Greater Toronto Homebuilders Association-Urban Development Institute at president@gthba.ca or fax 416-391-2118. The views expressed here are those of the GTHBA-UDI president.

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