Car­olyn Ire­land – The Globe and Mail

Jeanhy Shim is a cham­pion of Toronto’s condo mar­ket.

She grew up in a small house with a back­yard in Rex­dale, but Ms. Shim is rais­ing her four-year-old daugh­ter in a condo in the King West neighbourhood.

Her fam­ily doesn’t have a back­yard, but Ms. Shim is just fine with that.

“It’s kind of ironic that peo­ple don’t think con­dos are com­mu­ni­ties. They are just ver­ti­cal communities.”

Despite falling resale condo fig­ures in this city in recent months, Ms. Shim believes that the out­look for con­dos in Toronto remains strong. And to those who think the units com­ing on stream in Toronto are too numer­ous and too tiny, she points out that urban­ites in their 20s and 30s are just happy to occupy a rung on the prop­erty ladder.

Com­ment: Falling for months but then bounc­ing back up again in April.

“Get in the head of the peo­ple actu­ally buy­ing,” she tells those who won­der how any­one can live in 500 square feet. The mar­ket ana­lyst and mar­ket­ing maven is feel­ing enough brio to launch a new research firm called Hous­ing Lab. Ms. Shim recently talked about the moti­va­tion of buy­ers dur­ing a talk billed “The Condo-fication of Toronto: The good, the bad and the ugly”, at Uni­ver­sity of Toronto.

Some are young pro­fes­sion­als who find the com­pe­ti­tion in the rental mar­ket – where the vacancy rate is hov­er­ing just above 1% – intense.

“The rental market’s on fire,” she says of a mar­ket that inspires bid­ding wars for some units. So, rather than com­pete, these chil­dren of the boomers are buy­ing their own place.

Other buy­ers are investors who plan to rent the units out.

“These are not peo­ple who are flip­ping. These investors today have long-term think­ing,” she says. “It has pro­vided de facto new rental stock.”

The “bad” infil­trat­ing the condo mar­ket comes from so-called value engi­neer­ing. Some devel­op­ers are find­ing their costs so expen­sive that they have to be very hard-minded in order to turn a profit.

“You’re sit­ting down with a bud­get and have to make hard decisions.”

Other knocks against the mar­ket include some ill-conceived schemes for retail stores at ground level. In some cases, there are not enough peo­ple liv­ing nearby to sup­port the busi­nesses and the space sits empty.

As for the ugly, Ms. Shim points to the NIM­BY­ism of peo­ple who don’t want to see more high-rise tow­ers. She says the “not in my back­yard atti­tude” reflects a fear of condo-fication, but she thinks the den­sity is nec­es­sary and the new con­struc­tion revi­tal­izes older neighbourhoods.

At the res­i­den­tial builder Daniels Corp., vice-president Mar­tin Blake says the com­pany is going ahead with planned launches of new condo projects. Daniels typ­i­cally tar­gets the first-time buyer more than investors. The com­pany also offers rent-to-own schemes.

Unlike many devel­op­ers, Daniels some­times builds first and then sells the units.

“It takes away the uncer­tainty of the new condo marketplace.”

In the resale mar­ket, condo sales have been slug­gish since last sum­mer when the fed­eral gov­ern­ment tight­ened the rules sur­round­ing mort­gage lending.

In March, condo sales on the Toronto Real Estate Board’s mul­ti­ple list­ing ser­vice in the 416 area code dropped 19% com­pared with the same month last year to con­tinue the trend of falling year-over-year numbers.

Com­ment: But in April they were only down 1.3%, a rise of almost 18%. New con­dos dried up over the first quar­ter, so resales took on the slack and sold more. Plus there were more list­ings, after months of fewer avail­able units. More for sale, more sales. Easy!

Nicholas Bohr, an agent with ReMax Hall­mark Realty Ltd., agrees with Ms. Shim that the condo lifestyle is so desir­able to some that cer­tain types of build­ings will always be sought after. While many buy­ers in the past con­sid­ered a condo just a path­way to their goal of own­ing a detached house, that’s no longer true in many cases, he adds.

“I like to label it as a step­ping stone but for a lot of peo­ple it’s a lifestyle,” he says. “Some peo­ple don’t like to live in a house. They want to live in some­thing new and some­thing sexy and even to change it every cou­ple of years.”

Mr. Bohr says mar­quee condo build­ings by prime builders still remain in high demand. But own­ers who are try­ing to sell a unit in a build­ing where there are many other sim­i­lar units for sale will need to be more patient.

“Prices are based on future expec­ta­tions,” says Mr. Bohr. “Some are com­ing down and some builders make condo pur­chases a good invest­ment,” he says.

In the build­ings where there are more com­pet­ing units for sale, real estate agents also need to be more inven­tive, he adds.

Mr. Bohr recently printed up 300 cards and had them deliv­ered to ten­ants in a rental apart­ment build­ing across the street from a condo tower. “Why rent when you can own across the street?” the flyer asks, sug­gest­ing that prospec­tive pur­chasers get in touch with a mort­gage broker.

Mr. Bohr also invites res­i­dents of the entire build­ing to a wine-and-cheese open house before he puts a condo unit on the market.

He hopes that own­ers will tell their friends and fam­ily about the new unit for sale in their build­ing. He can also gar­ner first impres­sions about the stag­ing and price.

“It’s a great way to get some buzz. They can give great feed­back,” he says.

Com­ment: No, it is just a mar­ket­ing ploy to get his name out to as many peo­ple as pos­si­ble. Let’s be hon­est here…

Christo­pher Bibby, an agent with Sut­ton Group-Associates Realty Inc., says that buy­ers of resale condo units are being choosy about neigh­bour­hoods and buildings.

Units in build­ings that are not in high demand might take a month to sell – even with a real­is­tic ask­ing price and savvy staging.

But for a sought-after build­ing such as a “hard” loft con­ver­sion, buy­ers are often wait­ing and watch­ing for units to come on the mar­ket. Mr. Bibby recently sold a loft in the pop­u­lar Candy Fac­tory build­ing for an amount above the ask­ing price. Two buy­ers stepped up with offers.

Com­ment: Yeah, and that hap­pened in like a day. A $1.25m unit at One Colum­bus was gone over a week­end last month. The prime ones go fast!

“If agents are doing their job, they’ll come the first day and that’s what hap­pened here.”

Mr. Bibby says condo sell­ers need to be very sharp with their ask­ing price.

In another case, Mr. Bibby recently took over a condo list­ing after the prop­erty sat on the mar­ket for half a year.

“I think they had three show­ings in six months.”

Mr. Bibby rec­om­mended that the seller lower the ask­ing price to $615,000 from $665,000. At the lower ask­ing price, the unit was cheaper than those with sim­i­lar lay­outs for sale in the same building.

“We’ve had more show­ings now than they had in six months,” he says. “People’s expec­ta­tions have to change.”

Com­ment: But it still has not sold. Not good. I fig­ured it had high fees, but it does not. It is a new unit on a high floor in a pop­u­lar build­ing. Nice look­ing condo, fan­tas­tic view. Not sure why it is not sell­ing. Chris knows his stuff, I expect he will sell it soon enough.

Mr. Bibby says it’s tough to sell a unit when lots of com­pet­ing prop­er­ties are listed in the same build­ing. Some sell­ers point to sales in neigh­bour­ing build­ings and want the same kind of ask­ing price if their unit mea­sures a sim­i­lar num­ber of square feet. But Mr. Bibby says the build­ing across the street may offer a panoramic view, for exam­ple, while another over­looks a park­ing lot.

“You can’t just gen­er­al­ize,” he says. “Every build­ing is com­pletely different.”

Com­ment: Amen brother!

That kind of com­pe­ti­tion makes stag­ing even more impor­tant than usual “You have to be hands-on. Get the place look­ing as open and airy as possible.”

Mr. Bibby says he sees a move­ment toward low-rise and mid-rise build­ings in estab­lished neighbourhoods.

“These are the build­ings that are doing excep­tion­ally well. Peo­ple are lit­er­ally wait­ing,” he says. “The bulk of the inven­tory is right down­town but a lot of the demand is in smaller bou­tique conversions.”

In Ron­ces­valles Vil­lage and Leslieville, for exam­ple, loft con­ver­sions sell almost instantly.

“There are so few of them in com­mu­ni­ties with a farmer’s mar­ket next door and smaller cof­fee shops,” he says. “Even if they work in the finan­cial dis­trict, peo­ple want to live in a lit­tle bit of a tran­quil set­ting and not in the mid­dle of an intersection.”

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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