Ryan Starr – Toronto Star

For Brian Brown, 2012 started off with a smash­ing success.

The vice pres­i­dent of Life­time Devel­op­ments presided over the launch of INDX, a 54-storey tower on Tem­para­nce St. that became the top-selling condo project in the first quar­ter of 2012, with an eye-popping 642 units sold.

The impres­sive per­for­mance of INDX – which Life­time is devel­op­ing in part­ner­ship with Cen­tre­Court Devel­op­ments – had a lot to do with it being a unique offer­ing for that neigh­bour­hood. “It filled a void,” Brown says. “It’s the only pure res­i­den­tial build­ing in an area of all office tow­ers. So it really catered to the peo­ple who worked in the Finan­cial District.”

Life­time went on to sell out INDX – around 1,000 units – by December.

All in all a pretty good year for the Toronto builder, con­sid­er­ing the dif­fi­cul­ties the local devel­op­ment indus­try faced as the condo mar­ket came back down to earth.

“The biggest chal­lenges came as a result of changes to gov­ern­ment pol­icy, such as the fed­eral government’s deci­sion to change the mort­gage rules in July,” notes Bryan Tuckey, pres­i­dent of the Build­ing, Indus­try and Land Devel­op­ment Asso­ci­a­tion (BILD). “We saw con­sumer con­fi­dence dimin­ish in the sum­mer and fall months fol­low­ing that change.”

Com­ment: Yet some­one else who sees and under­stands the new mort­gage rules’ effect on the real estate industry.

And as it became clear that 2012 new-home sales weren’t keep­ing pace with a record 2011 – 31,766 homes were sold as of Nov. 30, com­pared with 44,393 by the same time in 2011, accord­ing to Real­Net Canada – the ensu­ing “sky is falling” media cov­er­age only made things worse for developers.

Com­ment: The media for­gets that 2011 was a record year, far above any year before. The sales for 2012 will actu­ally end up being 5–8% higher than the recent annual aver­age. The sky is not quite falling… but you need data and con­text to know. And these are things the media love to leave out.

Nor­mal is good

Although 2012 condo sales looked weaker on a year-over-year basis – with 18,103 con­dos sold in the first 11 months of 2012, ver­sus 27,659 by that point in 2011 – Real­Net says 2012 is actu­ally on pace to be the fourth strongest year on record for condo sales.

Com­ment: Sound the alarm! Only the 4^th best year ever! Run for the hills!

“The mar­ket had been so pow­er­ful and so strong for so long, that what we’re expe­ri­enc­ing right now isn’t a slow­down,” Brown says. “What we’re see­ing is a return to nor­malcy. And nor­malcy is a good thing. You couldn’t sus­tain what we had.”

Com­ment: Amen.

Despite all the neg­a­tive sen­ti­ment swirling around at the end of 2012, there was cer­tainly no evi­dence of a condo mar­ket in cri­sis when Tridel launched Ten York – a 65-storey glass tower at York and Har­bour Sts. The builder sold 532 of the project’s avail­able 600 units within the first two weeks of sales, mak­ing it the most suc­cess­ful launch of the fall.

Com­ment: Right when the experts said the Toronto condo mar­ket was col­laps­ing – and they sold 89% of their con­dos in 2 weeks. A sure sign of the condo-pocalypse.

“There seems to be an affin­ity for tall build­ings that are archi­tec­turally pleas­ing in triple A loca­tions,” says Jim Ritchie, Tridel’s senior vice pres­i­dent of sales and mar­ket­ing. “I think we were able to demon­strate that regard­less of mar­ket sen­ti­ment, if a prod­uct comes to the mar­ket­place that peo­ple like, they make the buy­ing decision.”

Still buy­ers out there

Paul Golini echoes that sen­ti­ment. Empire Com­mu­ni­ties’ exec­u­tive vice pres­i­dent notes that pur­chasers were attracted to his company’s lat­est project, Eau Du Soleil, largely because of its prime loca­tion on the Eto­bi­coke waterfront.

By the end of 2012, Empire had sold more than 450 of the 750 avail­able units at Eau Du Soleil. “It speaks to the fact that there are still buy­ers out there,” Golini says. “If you have the right prod­uct in a sought-after loca­tion at a com­pet­i­tive price, you’re going to be successful.”

While Eau Du Soleil sold well, Golini stresses that “we didn’t sell 450 units in a weekend.”

“This year was an adjust­ment year com­pared to 2011,” he says. “We’ve seen fewer launches and we’ve seen buy­ers take more time to make a deci­sion. Suc­cess will not come in the short time­line, like the blow-them-out-the-door-type sce­nar­ios we’ve seen over the past few years.”

Which isn’t a bad thing, says Gary Switzer. Every­body in the indus­try should take a deep breath and notes that not hav­ing as many projects released last year over the pre­vi­ous years – which was an extra­or­di­nary num­ber of projects for this city to be sup­port­ing – is a good thing, says the pres­i­dent of MOD Devel­op­ments, whose Massey Tower at Yonge and Queen Sts. was another of 2012′s best-selling condos.

Com­ment: Some­thing the media also seized upon, the fact that new condo sales were down by 38% – but they failed to men­tion the 30% fewer con­dos being launched and offered for sale.

MOD sold 486 of Massey’s 698 units in the first quar­ter of the year, before new mort­gage rules took effect and con­sumer con­fi­dence took a dive. “Our tim­ing was good,” Switzer says.

Com­ment: Con­sumer con­fi­dence is now up for the first time in the past 3 months.

The most suc­cess­ful projects of 2012 weren’t just down­town. Lib­erty Development’s Cen­tro Square – a two-tower, 800-unit condo project at High­way 7 and Weston Rd. in Vaughan – proved to be the 905′s hottest launch of the year, with 70% of the 300 units released sell­ing within the first two weeks.

Lib­erty senior vice pres­i­dent Marco Fil­ice notes that sales were dri­ven by strong demand from local pur­chasers in search of alter­na­tives to pricey single-family homes or town­houses. “There’s a lack of high­rise choices for them in the area,” he says. “When you come in with a choice that didn’t exist before, there’ll be a lot more attention.”

Out­look 2013

If 2012 rep­re­sented a return to more nor­mal con­di­tions in the Toronto condo mar­ket, what do the devel­op­ers see in their crys­tal balls for 2013?

“I think we’ll con­tinue pretty much the way that we’ve been going,” says Switzer. “The good projects in the good loca­tions will con­tinue to sell. But I think that cer­tain areas of the city are sat­u­rated, which is why some projects have not been sell­ing as well.”

“Devel­op­ers are going to start to look for oppor­tu­ni­ties in less obvi­ous loca­tions,” adds Brown.

Golini pre­dicts fewer projects will come to mar­ket in 2013, “which is rep­re­sen­ta­tive of the indus­try self-regulating,” he says. “And I see buy­ers still being cau­tious, but still buy­ing because they need to live somewhere.”

Ritchie points to one thing the indus­try can look for­ward to in 2013. “It was a chal­lenge this past year because all the reports were reflect­ing against what hap­pened in 2011, which made 2012 num­bers look pale by com­par­i­son,” he says. “Prob­a­bly we won’t see that as much in 2013.”

Com­ment: 2013 will likely look a lot like 2012… or 2010, or 2009…

—————————————————————————————————–
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.
—————————————————————————————————–

Related posts:

1. Condo Resale Mar­ket Hot as New Mar­ket Cools Fol­low­ing three quar­ters of flat pric­ing and declin­ing sales-to-listings ratio,…
2. Con­dos are city-building by any other name In real­ity, high­rise res­i­den­tial is the story of the 21^st…
3. Toronto: Bright lights, big city The Toronto CMA new con­do­minium mar­ket has quickly rebounded from…
4. As condo sales slide, 3 projects test mar­ket The flurry of big condo launches is highly unusual for…
5. Look­ing up Of the 600 units at Ten York released to…