Toronto Condo and Real Estate Blog

As construction begins on 1 Bloor, analysts say investors aren’t buying like they used to

By Matthew Campbell - Globe and Mail

Torontonians at the busy intersection of Yonge and Bloor Streets were treated to an unusual sight yesterday as a tracked excavator officially began demolition for the 80-storey 1 Bloor condo and hotel development.

Onlookers - about 800, according to police estimates - thronged Bloor Street to watch the vehicle take a ceremonial chunk out of a low-rise building that will make way for the project by developer Bazis International.

The sheer size of the 1 Bloor tower and the considerable publicity surrounding its launch, including a multi-day lineup of buyers before the opening of its sales office, have made it one of the most visible symbols of the city’s building boom.

Yet it may also mark the end of an era.

Industry sources suggest that after an extraordinary year in 2007, the Toronto condo market is slowing.

Although total sales remain strong, individual projects are having a tougher time as a huge number of developers - 148 in the high-rise market, according to Urbanation, a condo tracking firm - compete for buyers.

Brad Lamb, one of the city’s most prominent real estate agents, has noticed the pinch. “Of what we expected to sell in a month,” he said, “we are now selling half. … We’ve come down to earth.”

The change appears to be the result of investors, looking to rent or quickly sell multiple condo units, beginning to balk at rising prices and reports of a weakening economy.

Although there are no definitive statistics on the number of investors in the market, Jane Renwick, executive vice-president of Urbanation, estimates they snapped up as much as 60% of units in some large, downtown developments last year. “We’re expecting investor activity to slow,” she said.

At Mr. Lamb’s firm, meanwhile, “investors would now take a quarter” of the units in a typical project, down from half in 2007, he said.

All of this implies that the “real estate market in Toronto is certainly cooling down,” according to Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

But “cooling” is relative, especially in popular neighbourhoods. City Councillor Kyle Rae, whose downtown ward includes the Yonge and Bloor intersection, has not seen “any reduction in applications” for development. But slower sales and financing may mean those applications take longer to become buildings.

Mr. Lamb is unfazed by this new reality.

“It was ridiculous,” he said of last year’s Toronto condo market. “… Nobody in our industry thought it could last.”

————————————————————————————————————

Contact the Jeffrey Team for more information - 416-388-1960

By Derek Raymaker - Globe and Mail

There is very little room left for large-scale tract development of detached or large semi-detached housing.

There’s not much that everybody can agree on when it comes to the market for new housing in Metro Toronto, which includes the former City of Toronto along with North York, Etobicoke and Scarborough.

About the only thing that is beyond argument is that there is very little room left for large-scale tract development of detached or large semi-detached housing. Low-rise communities now under way are small-scale and, if not taking the place of recently demolished residential areas, are filling land previously zoned for other purposes.

Of the 5,141 housing starts under way in Toronto in the first three months of 2008, 4,669 were condos, followed by 268 townhouses, 76 semis and 128 detached houses, according to data collected by Canada Mortgage and Housing Corp.

Even in these uncertain economic times, there is still an enormous demand for condos in Toronto and a huge volume of high-rise units constantly coming on the market in response. Condos appeal to a broad swath of the market - first-time buyers, new Canadians, empty-nesters and down-sizers, investor buyers and people who simply can’t afford a traditional house.

Yes, affordability is a growing concern. The average price of a new single detached house in Toronto proper topped $1-million in the first three months of 2008 - $1,002,534 to be exact, according to CMHC. (It should be noted that this includes lavish custom houses built for high-end buyers, which skews the average-price data.)

The exception is Scarborough, on the eastern end of the city, where the average new detached price from January-through-March was $408,070, which is significantly less than the Greater Toronto (including the 905 suburbs) average detached price of $518,103.

Launching this month is Monarch Homes’ Evergreen at the corner of Midland Avenue and St. Clair Avenue East, the site of 200 houses including a large number of single detached houses, with prices starting at the mid-$300,000s and rising to the mid-$500,000s.

Monarch is also aiming to make Evergreen a showpiece of green construction and energy efficiency that it would like to duplicate elsewhere.

Monarch has taken a shine to Scarborough, where it is building Upper Danforth Village at Danforth Road, east of Warden Avenue. Seven detached houses on 30-foot-wide lots are still available for between $497,000 and $510,000, all in the 2,300-square-foot range.

Upper Danforth Village’s large detached houses are embedded in a larger community of townhouses and semis ranging from $325,000 to $421,000. All are designed to fit in with the surrounding residential community, with brick-and-stone exteriors and a variety of façades featuring peaked roofs and Victorian-style motifs.

A similar community, with an array of dwellings ranging from detached houses to townhouses, is the Conservatory Group’s Port Union Village at the eastern end of Lawrence Avenue near Lake Ontario.

About 50 detached models are still available, all of which have a maritime feel. Ranging from $435,000 to $553,000 for between 1,680 and 2,793 sq. ft., Port Union Village resembles a standard suburban development, but features easy access to the lakeshore and a variety of conservation land nearby.

In the same area, but on a more exclusive scale, is North Star Homes’ Eastlake Village II development. Only eight lots on 40- and 45-foot-wide properties were for sale, with five still available, ranging in price from $570,000 to $663,000 and in size from 2,400 to 3,309 sq. ft.

Eastlake Village’s designs take on a more stately dimension with imposing classical facades with brick construction, blending into existing houses as an infill development near the lake shore.

Also in the Port Union neighbourhood is Laura Ellis Gardens, a detached community by Fairglen Homes featuring 21 lots with 50-foot frontages. Similar to Eastlake Village in the size and stature of its models, eight detached houses remain for sale here, ranging from $590,000 to $660,000 and up to 3,402 sq. ft.

Similar detached houses can be bought at a bit of a discount in the 905 suburbs, but the proximity to the city and the lake shore make the Port Union infill communities a fairly popular niche product.

————————————————————————————————————

Contact the Jeffrey Team for more information - 416-388-1960

By Lori Mcleod - Globe and Mail

House prices in almost all Canadian neighbourhoods have doubled over the past 10 years, good news for long-time homeowners but an ongoing setback for those looking to enter the real estate market.

An unprecedented 10-year boom in the real estate market, which ended earlier this year, saw the price of a two-storey detached home rise by an average of 129% in urban centres to $522,999, according to a study.

In the 10-year period ended March, 2008, the price of a similar property in the suburbs has appreciated by 110% to $334,380.

The largest national price gain of any housing type is that of an urban condo unit, which has gained 132% to an average of $284,312, the study said.

“A look back at the last 10 years in Canadian real estate growth reveals that typically, home prices in urban markets have grown faster than those in the suburbs, with both areas showing impressive appreciation,” said Phil Soper, president and chief executive at Royal LePage, in a statement.

Mature homes near subway stations in city centres, and suburban homes with large yards, have both seen large gains in the past decade, the study said.

Home sales have been cooling this year as listings far outstrip supply. In April sales fell by 6.1% year-over-year, while listings rose by 17.7% from the previous month to the highest level on record.

Thus far, however, economists are predicting that real estate prices will continue to rise slightly in 2008.

————————————————————————————————————

Contact the Jeffrey Team for more information - 416-388-1960