Tag Archives: vacancy rates
Gazing into the crystal ball with condo pro Urbanation
Duncan McAllister – Metro
Urbanation is considered the authoritative source on the Toronto condominium market. Metro talks to editor and executive vice-president Ben Meyers. He and his team gaze deeply into the crystal ball about the future of Toronto’s condo marketplace.
Where do you think interest rates are headed and what should owners be aware of?
“I did a survey of people in the industry and asked what were some of their concerns going into 2012 and interest rates wasn’t high on their list.”
Is the market in downtown Toronto still being driven mainly by investors?
“For sure, investors are snapping up a lot of the products, certainly along the subway lines. For a lot of investors, especially foreign investors, they look at Toronto as very much an emerging city, and a great place to store their dollars. And they see in 10 years this market being significantly higher even if there are some short-term fluctuations.”
Comment: Which is why they are buying, holding and renting. That way, in 10 years, they have gained 50% in asset value, while having 50% of their debt paid by tenants.
A lot of the condos are being bought by investors and they’re renting them out. How does this affect the rental market?
“We’ve been warning that there weren’t enough people out there to rent these units, but we just started tracking the condo rental market in a new report that we’re calling Urban Rental and the market’s still very tight; it’s still very difficult to find a unit. The rents aren’t going up as quickly as the new market is but it’s still very tight.”
Comment: Toronto residential vacancy rates hover around 1.2%-1.3% which is VERY low. I have had clients lose 3 condos in the past week, rental units, to multiple offers. Rentals are getting multiple offers. Seriously…
Should the rental prices reflect the new condo prices?
“Certainly we like to see pricing in the new condominium market, the resale condominium market and the rental market moving at fairly close to the same base, but again there’s different mixes of units trading within those buildings and the age of the buildings, so it’s not always going to be 100%.”
Comment: Rents have nothing to do with sale prices.
How do you recognize if we’re in a bubble and just what the heck is a bubble anyway?
“In the new condo market it’s gone up 8% year over year, so we’ve seen that level of increase in 10 of the last 15 years. It’s hard to say that yes, this is a bubble when the bubble hasn’t burst in any of those 10 years. We just ran our resale numbers for the first course — this is fresh off the press — and it was only up about 4% year over year, so it doesn’t strike me as anything near a bubble.“
Comment: AMEN!
How do we compare to the U.S. in that respect? People are worried that their properties may go under. Would that ever happen here?
“I’m not going to say it never will. Most real estate cycles are seven to 10 years and we’re in 15 consecutive years of a strong market. The difference between the United States and us is the prudent banking system. They allowed sub-prime mortgages, they gave mortgages to people who could not afford them and that caused prices to be inflated, inflated, inflated in a lot of markets.”
Comment: And that just did not happen here.
Ben’s advice to readers? “Buy something that you can see yourself living in for five years.”
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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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Condos send demand for office space soaring
TorStar News Service
Ap/dropcap]ll those new downtown condos that are now home to bright, young workers is helping drive demand for office space away from the suburbs and back into Toronto’s core, a new report says.
Also fuelling the increasing demand — so strong that the vacancy rate for downtown office space fell to 5.1 per cent in Q3 — is interest in new environmentally sound office towers, redevelopment of the waterfront and frustration with long commutes.
Toronto isn’t alone, according to commercial real estate brokerage Cushman & Wakefield’s Occupier Insight Report released yesterday.
Major U.S. cities such as San Francisco, Chicago, New York, Boston and even downtown Los Angeles are also seeing a significant shift from the suburbs, although their office vacancy rates are still more than double that of Toronto’s.
“Major downtown office markets in North America are thriving in the face of turbulent global economic conditions thanks to smart urban planning which has opened the doors to a younger, educated and plugged-in population that prefers to live, work and play close to home,” says the report.
But compounding that demand in Toronto is an unprecedented condo boom, with some 70,000 new units built in or close to the downtown core in the last five years, notes the report. Another 17,000 are under construction or due to open by year’s end.
That’s provided an instant workforce for the 4.5 million square feet of office space has been added to the downtown core in the last two years alone, with more coming especially in the waterfront area.
Only Vancouver has a lower office vacancy rate than Toronto, at 3.7 per cent, but largely because of limited building activity.
Much of the demand for downtown Toronto space has come from the financial sector, which is increasingly expanding into the Railway Lands south of Front Street, the report notes.
But it’s increasingly coming from a raft of companies opting for the core, such as Coca-Cola, Google, SNC-Lavalin, as a way to cut commutes.
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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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Good news for baby boomers — the kids are finally leaving home
Susan Pigg – Toronto Star
The echo boomers are finally moving out of their parents’ homes and expected to be the biggest rush of renters to hit Toronto’s housing market since the early 1990s, according to projections by the Canada Mortgage and Housing Corp.
But they’re likely to be renting for quite a while — much longer than their parents, thanks to a job market that remains tentative and offers far less of the stable, full-time employment that made their parents the most affluent generation of all time.
That boom in rental demand is already being felt with bidding wars for prime units and vacancy rates for apartments and rental condos hovering at 1.6%, the lowest vacancy rate in a decade, says Shaun Hildebrand, CMHC’s senior market analyst for the GTA.
That vacancy rate has been declining steadily since 2004 when it stood at 4.3%.
There are currently 325,000 rental apartments across the GTA, says Hildebrand, but just 1,500 new units are being added each year, most of them high-end rentals aimed more at affluent, downsizing baby boomers.
Even the unprecedented condo boom across the GTA, much of it driven by investors, many of whom are putting up their units for rent, is having a hard time keeping up with demand, says Hildebrand.
That is already playing out in bidding wars for brand new and two-bedroom units, with some would-be renters offering to pay more per month or offering up to six months’ rent in advance.
The GTA has seen such an unprecedented building boom the last few years that we now have almost as many condos as rental apartments.
The total number of condos now stands at 300,000 with another 80,000 under development and 60,000 more approved but yet to start, Hildebrand told bankers, developers and housing market watchers Thursday during its annual 2012 Housing Outlook Conference at the Metro Toronto Convention Centre.
But there are now 875,000 echo boomers between the ages of 25 and 35 across the GTA, accounting for about 18% of the population.
With the average price of a GTA home expected to hit $469,700 next year — in Toronto that’s closer to $530,000 — and condos averaging $500 a square foot, echo boomers’ dream of owning a home may be just that.
A dream.
Hildebrand expects to see growing demand for basement apartments, both as an affordable place to live for those heading into their first jobs, and for homeowners struggling to pay high mortgages.
Already the shifting demographics are playing out in increased demand for townhouses and row houses which offer all the amenities of traditional detached homes, but at more affordable prices and often on infill lots closer to the downtown core, he said.
“All eyes are on the (Toronto) condo market,” Hildebrand told the crowd, because of a “healthy level of fear” that this unprecedented boom is on the verge of bust.
Instead, he predicts the condo market — which now accounts for 25% of all MLS sales — will soon start to “self correct.”
New condo prices have escalated to the point where rents can’t keep pace with costs, and that should ease demand among investors to more realistic levels, he said.
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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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