Sustainable condo market good for all
By Bob Finnigan,The Condo Guide
I have to be honest and tell you that I cringed when I saw the Toronto Star’s article about the investors lining up overnight to get first crack at purchasing a suite in a waterfront condo project. I would always prefer to see a long line-up of first-time buyers taking advantage of a great market opportunity, which is exactly what was quietly happening at the same time at a different development of affordable townhomes in Mississauga.
What concerned me about the lakefront condo example was the impression that some readers might have been left with – that the housing market has been taken over by investors, which is simply not the case, even at the project in question.
That said, investors always have and always will play a role in the Toronto real estate market, and it’s not a bad thing, within reason. Without investors, the rental housing supply in the GTA would be much lower, and rents would be much higher. Investor condos, many held by regular, hard-working individual owners, represent a solid 25% share of the rental housing supply.
According to condo market analyst Jeanhy Shim, the expansion in total annual condo sales over the past three years has come from increased activity in the 905 areas together with condo projects appearing in new locations and neighbourhoods within the 416 area code.
Shim says investor activity has increased of late, but she believes it has more to do with the launch of several high-profile projects that are attractive to investors based largely on their location than any dramatic change in the market. As for line-ups, Shim says they are “nothing new, we’ve been seeing them for years.”
Shim points out that in recent years, some Toronto brokers have actively been going overseas to Singapore, the UK, Korea and India to promote Toronto condos as a great long-term investment because prices are so affordable compared to other international cities.
“These are not the stereotypical 1980’s style investors. Most are still looking at the long-term hold, and it makes sense because condo rents have bounced back and the condo vacancy rate (in contrast to purpose-built rental vacancies) remains at record-low levels (below one per cent),” she says.
Shim says the latest census data on population demographics statistically shows why we’ve been experiencing a condo boom. And interestingly, these stats suggest that the boom will continue for several more years to come, particularly as the baby boomer generation really starts to enter the 55-plus age. “So, the demand for condos is still likely to be driven by real buyers whose housing needs are changing,” she asserts.
I agree with Shim, and I think it’s a good explanation for the 28% increase in condo sales in June, as reported by RealNet Canada Inc. The same RealNet report reveals that high-rise condo sales are up 7% in the first six months of this year, yet the condo price index is up just 1.7%, from $314,370 last June to $319,698 this June.
So while investors are certainly a real factor in the Toronto condo market and are helping to drive the sales, they are not driving prices up dramatically or impacting affordability in a big way. And, that’s a good thing.
A healthy, sustainable housing market is good for us all, and that’s what our Toronto condos market is.
The Building Industry and Land Development Association (BILD), formally known as the Greater Toronto Home Builders’ Association and Urban Development Institute (GTHBA-UDI), is the voice of the residential land development, home building and professional renovation industry in the Greater Toronto Area. For more information, visit www.bildgta.ca.
Bob Finnigan is the 2007 President of the BILD (Building Industry and Land Development Association), and Principal and Executive Vice-President of Heathwood Homes and The Heron Group. He can be reached by e-mail at president@bildgta.ca, or by fax at 416-391-2118.
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 condos across the greater Toronto area.
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