Toronto condos: 2014 to be the year of The Big Move

Original article By: Susan Pigg Business Reporter, Published on Tue Dec 31 2013


An estimated $25 billion worth of condominiums are under construction across the GTA. A record number of units — development research firm RealNet estimates close to 20,000 — are slated to be completed in 2014.

Currently 63,909 new condo units are under construction across the GTA as of the end of October, according to RealNet.

“Exactly how many units we’re actually going to see occupy (in 2014) is really hard to predict because we’re entering a phase that is uncharted in history. We’re completing more units than we’ve ever completed because more units were sold in 2011 than have ever been sold in history,” says RealNet president George Carras.

“If 2011 was the strong takeoff year (for new condo sales), in 2014 they are all coming in for a landing.”

Well, not quite all of them.

More than 28,000 condos sold in the preconstruction phase in 2011, the most by far in a single year. Many are unlikely to be completed for another year or so because of construction bottlenecks — a shortage of skilled trades and equipment — that have limited completions to about 16,000 units a year.

But so many are already well underway, Carras believes we could see closer to 20,000 new units open for the first time in one year. And that’s left developers scrambling to make sure all goes smoothly, not only with The Big Move but, more importantly, with The Big Close.

Developers, and federal finance minister Jim Flaherty, will be watching closely to see how many condo buyers struggle or fail to close on units they bought in the preconstruction phase two or three years ago with meagre down payments, before tighter mortgage lending rules and last year’s slight bump up in interest rates made finalizing deals more difficult.

In the past few months, mortgage brokers, realtors and developers have seen a surge in people, especially the self-employed, “scrambling” to get final financing from institutions that have not only toughened lending requirements, but grown more leery of the condo sector.

Already, some buyers have had to walk away from deposits or borrow from family or secondary lenders at higher rates. Others have sought developer approval to put their units up for sale on the so-called “assignment market” as the project was just coming to completion, in hopes they could find a new buyer before final payments were due.

Veteran condo developer Scott McLellan of Plaza, whose company has an unprecedented 2,511 new units coming to completion in 2014, on top of more than 1,100 that closed in Liberty Village in late 2013, acknowledges the coming surge of closings is being watched closely.

“There is a concern in the industry,” acknowledges Plaza’s senior vice president. “There are a lot of bigger projects closing” in 2014.

But McLellan believes the closings at Plaza’s King West Condominiums in Liberty Village are a sign that all will be fine in 2014.

Of the 1,141 King West units sold in the preconstruction phase over the last two to three years, just two buyers did not close. One died and the other could not be located.

About 100 units were sold on the assignment market before final payments were due and all the new buyers have closed, he says. He estimates that 40 per cent of the project is owned by investors, and most are leasing out their suites for hefty rents rather than flipping the suites for a profit: Just 36 (or three per cent) of the units have been sold on MLS so far and another 21 units are up for sale.

McLellan believes the biggest issue for Toronto’s condo industry in 2014 won’t be finalizing closings as much as “getting sales back.”

Condo realtor turned developer Brad Lamb believes “the great Toronto development boom is over” and that condo sales, which averaged about 19,425 units a year from 2010 to 2013, will slip to an average of 12,000 a year as developers continue to hold back on new project launches.

(Lamb, who claims an essentially unblemished record of accurate predictions over the years, expects condo prices to “rise meaningfully” and rent to climb by mid-2016 as the “ample supply” of units begins to dwindle.)

Veteran development consultant Barry Lyon believes sales will average 12,000 to 15,000 units a year going forward, more in line with demographic demand. He sees 2014 as the year of incentives — from free parking or lockers to breaks on maintenance fees — as a way for developers to entice buyers back to their showrooms.

“Developers will be trying to win over markets they’ve been ignoring for the past several years, particularly first-time buyers and the end-user market,” says Lyon.

“I think developers are going through withdrawal pains from their addiction to investors. They are going to have to wean themselves off their dependency.”

That should mean more of a focus on small or midrise condo projects where owner-occupants actually care about the look, size and feel of the unit because they plan to live in them, rather than own them as investments and rent them out.

“The new sweet spot will be buildings with 100 to 150 units” along main streets just outside the downtown core, Lyon believes.

Migration To The Suburbs


   The reasons to abandon the overcrowded, overpriced, not-so-livable city are beginning to outnumber the reasons to stay. More and more of us are tempted by the 905 and beyond. Screw Jane Jacobs. We’re outta here

By Philip Preville | Photography by Stephanie Noritz


The New Suburbanites


   Brian Porter and Carrie Low thought they’d hatched the perfect plan to avoid the eight-lane gridlock they faced every week on their drive to the family cottage in the Kawarthas. Porter, a soft-spoken 41-year-old Toronto firefighter, would arrange his work schedule to be home on Friday. He’d pack the car at noon and pick up his daughters, Lily and Amelia, from daycare shortly after lunch. Then, rather than head from their home in the Beach to pick up Low downtown, he’d drive to a strategic pit stop in Oshawa. Low, a slim 41-year-old redhead, works as a lawyer with RBC in the financial district, her days and nights packed, respectively, with meetings and paperwork. Her role in the escape plan was to get off work early and catch the GO train to Oshawa Station. Often, she’d end up working a pressure-packed day until 5 p.m. anyway, leaving Porter and the girls waiting at the station for hours. In the end they never gained that much time—it could still be a challenge to get to the cottage before nightfall. But at least they’d avoided the worst hours on the DVP and the 401.


   Porter and Low’s weekend escape strategy was symptomatic of their over-engineered city lives. To juggle all their needs and obligations—two careers, mortgage payments, bills, kid drop-offs and pickups, groceries, meals—they had built a life that resembled a Rube Goldberg machine, and any misstep threatened to collapse the entire contraption. Grandparents were often called in to shuttle the kids to lessons and play dates and birthday parties. “My mother-in-law would phone me at work and ask, ‘Where is Amelia’s dance outfit?’ and my stress level would go through the roof, ” recalls Low. “I’d say, ‘Why are you calling me at work for this? It’s in the house somewhere. Don’t ask me, ask Brian.’ ”

   Porter’s more flexible hours allowed him to handle most of the household duties (he typically works seven 24-hour shifts every four weeks), while Low would often leave the house at 7 a.m. and return 12 hours later. When Porter was on shift Low would pick up the slack, but the moment he returned she’d play catch-up at work. They didn’t realize, at first, that the routine was taking a toll on their marriage. “Sometimes I’d come home from a shift and she’d hand me the baton and head out the door,” Porter recalls. “I’d barely be able to stand up, but I’d feed the girls and send them off on their day. Carrie and I were like two ships passing in the night.” You might even say they were behaving like an already-divorced couple sharing care of the kids. “If we kept it up, I could not be sure that we would still care about one another five or 10 years down the road,” says Low.

   The problem, they decided, was not each other or their careers or their kids, but the city itself—a surprising diagnosis given that they had both grown up in Toronto, happily, in the Beach. They bought their 1,600-square-foot detached home on Benlamond because they wanted to raise their family there, too. “The Beach tends to keep people,” says Porter. “I can walk along Queen East any day of the week and meet friends from high school who run businesses on that street.” But living in the city required too many contortions. They decided to divorce it.

   They spent months searching for a new home, pushing the outer boundaries of the GTA as they went. Low was adamant: “I didn’t want a suburban house.” In the end they moved as far away from Toronto as they possibly could for a couple whose livelihoods still depended upon the city: Cobourg, the Lake Ontario town with its own lovely beach and boardwalk, just this side of Prince Edward County. The only thing separating the gigantic walkout basement of their new, 2,700-square-foot detached house from the Lake Ontario waterfront is a municipal park. And the cottage run is a one-hour scenic drive along quiet secondary highways.

Tips For Investing In Toronto


   The Toronto real estate market is one of the most popular in all of North America. Whether investing in a new downtown condo, commercial real estate or a family home, the Toronto real estate market has opportunities at all levels. If you decide to purchase real estate in Toronto rest assured that you will be living in a city with great amenities, services, facilities and entertainment.
   Toronto’s real estate market and availability is ultimately based on demographics: there has been an influx of over a million new people to the Greater Toronto Area over the last decade and there is still a massive shortfall of housing to meet the demand of these new residents.
   Furthermore, the sub prime market crisis in the United States has many home buyers wondering what the affect will be on housing markets in Canada, opening the door to uncertainty and speculation on the Canadian market. The good news for Canadians is that the housing market has been setting records for volume and units sold for five consecutive years now despite the problems coming to light in the US.

   “The statistics show just how dynamic the Canadian housing market was in 2007 in virtually all parts of the country,” said Ann Bosley, president of CREA. Historical analysis of the Toronto market in particular shows that real estate for the city, despite occasional dips, continues to do well. Take the Toronto real estate luxury market as an example with house sales in the million dollars plus range across the Greater Toronto Area (GTA) increasing by more than 20% in 2007 over the 2006 figures.

   A thriving Canadian economy has many suburban dwellers leaving the burbs behind to move back into the cities. If you fall into this category, when searching for Toronto homes or condos for sale, you will need to collect information about the different areas of the downtown core to determine if you are looking in a “buyer’s market” or a “seller’s market”. Market competition in Toronto is high which helps to ensure that the pricing cannot be easily raised artificially ensuring that investors are not speculators.

   Not only is the Toronto housing market doing well, but newly constructed Toronto condos are also in very high demand. With each passing year, Toronto condos are becoming a bigger part of total Toronto real estate market. Exciting new homes and condos are being constructed in areas like Eglinton / Yonge and King St. / Bathurst that offer residents access to the excitement of downtown Toronto while still being in a calm, clean and safe area. The most popular areas to invest are projects along the subway, close to downtown and at key intersections along the Yonge – Bloor corridors.

   The Toronto condo market is an excellent alternative to home ownership particularly if you are a first time property buyer or looking to downsize your current investment. The ever increasing cost of a home in todays Toronto real estate market is making it very hard for a large percentage of the population to become home owners. Condos also represent sound Toronto real estate rental investments allowing would be owners to increase the value of their equity. Most home buyers want to get good value for their money while at the same time getting a property that is in an area geographically that they are comfortable with.

   If and when you do decide to invest in the Toronto real estate market make sure to secure the services of a professional real estate lawyer. In any real estate transaction a real estate lawyer will handle; the deed, the bill of sale, mortgage arrangements, promissory note, title commitment and the closing statements on your behalf. Getting a good interest rate on your mortgage is also crucial to being able to afford your investment and avoiding foreclosure.

   There are many stories in the news recently about small towns in the United States that are full of new homeowners that are not able to afford the mortgages for their new homes and are losing money in their investment due to the sub prime crisis. While this situation may be an unhappy one for the people involved, buying in an urban market such as Toronto can help to mitigate problems by offering increased investment flexibility. Whether you would like to purchase a new family home, commercial real estate for your business or a luxury condo, Toronto can provide you with numerous options to choose from.




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