<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1900679320197204&amp;ev=PageView&amp;noscript=1">

What is really going on in Toronto’s real estate market place?

Posted by Roman Bodnarchuk on Fri, Aug 26, 2016 @ 17:08 PM

real-estate-headlines.png

Brad Lamb walks Toronto residents through the real estate market they are living in.

We are not going to do a very good job creating semi or detached homes anywhere close to the city. In the 416 we will not be able to add to the existing stock of houses ever again as all the land is developed. The supply is fixed in the 416 and very limited in the 905. The demand for homes is going up every year. Population growth guarantees higher prices forever, with occasional moments of recession and panic. During a recession, prices will fall but only momentarily, creating an amazing buying opportunity. The condominium market is a bit of a different story. Some think that it is due for a fall. I believe that prices are set to soar. Land in central Toronto has become scarce and very expensive. Condominiums have remained very affordable. Most development land that remains consists of sites with under utilized buildings or assemblies of multiple properties. Both options are typically seen in fully developed expensive cities (like London, Hong Kong, New York, Paris etc). This is what Toronto is becoming; an expensive international city. Local, federal, and provincial levies and taxes continue to drive development costs higher. This combination of fees and taxes currently eats up approximately 25% of the cost of new high-rise new housing in Toronto. It is only going to rise. Green technologies and other new building code initiatives like fully sprinklered buildings and ground water taxes are adding additional costs to high rise housing. Currently, the cost of delivering a high rise in Toronto before profit is edging close to $600 per square foot. In some areas, it is closer to $800 per square foot. Keep in mind that this is the cost of creating high rise homes. New sales prices must now commonly be $700-900 per square foot (PSF) to allow for a reasonable development profit. The MLS condo resale market will see a 10-15% increase in sales volume this year. It will be a record year for sales. I believe prices will rise 5-10% this year in the resale condominium market. Over the last 5 years, we have seen a more stable 2-3% increase in prices, I believe that scenario is now over. Detached and semi-detached homes will appreciate 10-15% this year and sales will be up 10-15% in volume largely because so little will come up for sale. An interesting statistic that I follow is the number of condos for sale in C01, C02, C03, C08, C09, C10, C11 (an area bounded by DVP-Eglinton-Dufferin-Lakeshore). The volume of condos for sale in the region is down 14.5% this year and the volume for rent is down by 32.3%. This all points to significant increases for both sale prices and rental rates. Condo rental rates will rise 5-10% this year alone. There are not enough condos for sale or rent in central Toronto. It is currently particularly difficult to find a condo rental in any part of the GTA.
 
Now, some of you may believe that interest rates are going to rise and rain on the parade. That is not going to happen any time soon. Low rates are here for a long time. I believe at least 5 more years, perhaps 15 years. Even when rates start to rise we will stay in a low interest-low inflation environment for a long period of time. When interest rates rise it will be gradually. Governments are huge borrowers. All the municipal, state, provincial, and federal governments around the world are essentially bankrupt. Higher interest rates makes the situation worse. I cannot see any country intentionally bankrupting itself through a high interest rate policy.
 
2016 is going to be a very big year for Toronto real estate. Prices will be significantly higher in all areas and categories. Volumes for resale homes will smash last year’s record by 10%. Average prices will soar by 10%. New condo sales will stay robust with demand outstripping supply. Toronto will continue to be a hot spot for international money as it will continue to be considered a safe haven for money and investments.

Get the 2016 Developer's Guide. It's made by us, the people who sold 367 condos in 90 minutes, and it's only a matter of time before your competitors get their copy. Take the initiative, and click the image below:

Get your free copy of the 2016 Developer's Guide

N5R's goal is to help innovative real estate developers accelerate the world's transition from single family homes to more efficient and sustainable multi-family residences with a full range of powerful and proven sales and marketing strategies powered by technology.
 
"Roman is a positive, no nonsense, no excuses individual. I was immediately eager to absorb as much information and insight and tricks of the trade to further enhance my professional development and to also become more efficient and effective in my work life. He was engaging, thoughtful and obviously very current in sales and project management techniques to lift productivity and achieve specific goals. I highly recommend to get in touch with Roman to make yourself accountable and to achieve a clearer sense of process through his clever yet simplistic mantra and software." - Alex Minicozzi, Project Consultant

Topics: condo sales, phone calls, email, day, condo sales 2016, 2016, sales plan 2016, new home sales plan 2016, sales strategy 2016, 2016 developer's guide, pre-construction sales, pre-construction sales strategy 2016, new home sales 2016, new home sales

Contact

Toronto
99 Yorkville Avenue
Suite 200
Toronto, Ontario
M5R 1C1
(416)220-5314

roman@n5r.com

Follow Us

Register for Updates