Is Now The Right Time To Consider A Toronto Condo Investment?
For anyone driving through downtown Toronto these days, it's hard not to notice all the construction cranes working on new Condo Projects. Given all the talk about the state of the economy, one would assume that once the construction of these new condo buildings will be completed, there will be a large surplus of unsold condos available on the market.
However, some condo market experts believe that inventory levels of newly completed but unsold condos are still low when compared to historic numbers.
Due to a strong demand (the majority of projects can commence construction once a large proportion of condo units have been pre-sold) for condo units in Toronto, a large portion of completed condos that have come onto the market recently, have been sold.
Many believe that the condo projects currently being constructed will be the only source of supply of new condo units because of the fact that many prospective condo projects were either put on hold or canceled due to the state of the economy and problems that condo developers are facing with financing.
It's safe to assume that Toronto's condo market is probably not on the brink of a crash. Many of the conditions that are usually present in the period preceding a market crash are nonexistent in Toronto; unsound mortgage lending practices, chronic overdevelopment, large inventories of unsold condos and a run up in prices.
The Toronto real estate and condo market is experiencing a cyclical downturn, as opposed to a market crash. But the current recession has not hit Toronto as hard as the rest of the province of Ontario. Condo rental vacancy numbers are low and this makes which makes a Toronto condo investment that more attractive to potential investors. On a national level, about 20% of condo units are usually rented out, but the figure in Toronto is almost 30%.
The current low interest rates have made condo investments more affordable and this will be another determining factor that will help condo sales recover from the current market's cyclical downturn. It is expected that the median sale price of existing condos will remain at the $230,000-$250,000 range over the next year or two.
A recent survey suggests that perceptions of the Toronto condo market have vastly improved over the last year. Of the people surveyed, 44% said that current conditions for buying a Toronto condo as an investment have improved, as opposed to 21% in 2008. Their main reason for this change in perception is lower condominium prices in Toronto.
It is more affordable to invest in a Toronto condo today than it has been in the recent past. However, one needs to consider the underlying factors; the condo's location within Toronto, the condo building's age and condition, the condo corporation's financial status, vacancy rates in the surrounding area and one's own personal financial capabilities under the current economic recession strains.
Toronto Condo Market Recovering
Toronto's resale condo market has rebounded from a slow start to 2009. For the past few years experts have been predicting that the Toronto real estate market was doomed for a crash like the one that occurred back in the early 1990s. The end to a steep climb in prices and demand came at the end of 2008 and continued into early 2009. But spring 2009 brought a turnaround in sale numbers and record sales were recorded in Toronto and the GTA over the summer exceeding sale numbers from 2008.
Demand was high and sales rose due to affordable Toronto home prices and very low mortgage interest rates with the Bank of Canada pledging to keep rates low throughout the remainder of 2009. First-time buyers have been taking advantage of the historically low interest rates as well as the lower prices that existed in late 2008 and early 2009.
Spring and Summer sales of downtown Toronto condos rose by 40%. Along with the increase in sales, Toronto condo prices have also been rising steadily. With less condos been listed on the market, prices are been driven up. Since new condo prices are more costly than existing condos, resale condos are in high demand as some of the proposed condo projects are being put on hold or canceled because of the state of the economy and developers finding it more difficult to raise funds for their condo development projects.
Some experts express concerns saying that the Toronto condo market is already saturated, but in fact the current available condo inventory is relatively low when compared to historic levels.
Toronto's supply of unoccupied resale condominium units remains low and rental vacancy rates are also low which makes condo investments more attractive to potential condo investors. Due to the constant influx of immigrants coming to Toronto, Montreal and Vancouver, the immigrant population now accounts for almost 60% of the Canada's population and immigrants are more likely to purchase condos as first-time buyers.
Many baby boomers choose to move into a condo as they age and seniors find condos attractive because they offer safety, convenience and amenities. Condos offer an affordable entry point into Toronto home-ownership. With Toronto condo demand on the rise, low interest rates and the recession coming to an end there has never been a better time for investors to seek potential Toronto condo investments.
Toronto Condo offers a unique approach to effective and profitable residential income property management. Toronto Condo is a complete condo investment management company specializing in the GTA and Toronto condo market.
Services we offer include:
-Finding the right condo to invest in
-Consultation, negotiation and Purchasing
-Rental, tenant screening, placement
-Maintenance and Repairs
-Review of taxes & Insurance
-Monthly Owner's Reports services.
Our purpose is to provide the residential investor with professional management so that they can realize the income potential of their condo investment.
Feb 16 2010
Toronto Condo Prices to be Affected by Property Tax Hike, HST and a Change in Mortgage Qualification Rules
Toronto Condo Prices to be Affected by Property Tax Hike, HST and Changes in Mortgage Regulations
The City of Toronto unveiled its proposed 2010 operating budget today. If all goes according to plan, Toronto condo owners will see a yearly increase of 4% in property taxes. The proposed residential property tax hike echos the increase imposed on Toronto condo owners in 2009. The 2010 proposal will surely have repercussions in the upcoming Toronto municipal elections.
On July 1 2010, the new harmonized sales tax (HST) will go into effect, combining PST and GST for a total of a 13% sales tax. The impact of HST will be felt by condo owners, renters and builders alike. In the past, PST (Provincial Sales Tax) did not apply to services, but HST will be assessed to condo fees to cover services such as repairs, natural gas, hydro, landscaping and other contracted amenities. As of July 1, the cost of these services will be subject to the 13% HST.
Furthermore, Toronto condo owners will see a 5-8% increase in monthly maintenance fees. For those contemplating a Toronto condo purchase after July 1, you will need to allow for an additional $2000 to cover closing costs, legal fees, real estate commissions and even home inspections.
Renters will face rent hikes as compensation for increased building operating costs. Builders will be affected by significant increases in monthly maintenance fees that could trigger the "material change" provision in purchase contracts, which gives buyers the legal ability to potentially cancel their contracts.
In Ottawa today, Canadian Finance Minister Jim Flaherty dealt a huge blow to Toronto condo investors by announcing the government's intention to rein in mortgage lending. In an attempt to cool speculation, buyers of multiple properties will be required to pay a minimum down payment of 20% to be eligible for CMHC-backed mortgage insurance on non-owner-occupied rental properties. The government's goal is to control the speculative buying that has been driving up prices in the Vancouver and Toronto condo market. The previous down payment required for non-owner occupied properties was 15%; this regulation will surely have an impact on anyone considering purchasing a Toronto condo as an investment.
According to Flaherty,the government is planning to put the brakes on the lowering of interest rates that continue to fuel the current housing boom. Additionally, it will become more difficult to obtain a mortgage (even a bad credit mortgage) insured by the Canadian Home and Mortgage Corp (CMHC). Borrowers will soon be held to stricter guidelines of five-year fixed rate mortgages, even if they opt for lower interest rates and shorter terms.
Homeowners looking to refinance will be capped at 90% of their home's current value.
These changes are due to take effect on April 19 2010, as cautious, proactive measures to help prevent a housing bubble.
March 13 2010
Toronto Condo Market Poised to Heat Up this Spring
After a sluggish few months, new listings are flooding the Toronto condo market, allowing first time buyers the opportunity to investigate new and resale units in some of the more popular and affordable Toronto condo buildings.
Prices have been creeping up; as of January the median price went from $227,000.00 to $270,000.00. But, there still isn't a better value than a Toronto condo. Now is the time to get the ball rolling on a purchase before interest rates begin to climb higher, and the new Harmonized Sales Tax (HST) goes into effect on July 1. With the economy showing signs of improvement, coupled with the steady influx of both Canadians and foreign immigrants into Toronto, the Toronto condo market is exhibiting strong signs of sustainability. According to The Bank of Canada,these are the factors contributing to the condo boom, not speculative investment. Additionally, increasing numbers of resales by investors will provide ample opportunities for first-time home buyers to get great deals on first-time purchases. Demand is likely to remain brisk until the second half of the year.
Toronto's cultural and ethnic diversity has always contributed to a strong housing market, particularly the Toronto condo market. According to the Toronto Real Estate Board, "Sustained demand for ownership housing is based on population growth, which in Canada, comes from immigration. The GTA remains Canada's single greatest beneficiary from immigration."
Now more than ever, Torontonians from all walks of life are embracing life in condos for a variety of reasons, including the lack of maintenance issues, and the appeal for empty-nesters of downsizing from a larger home. These factors are what is contibuting to the Toronto condo market doing a brisk business. Prices are likely to remain steady through the second half of the year, despite an anticipated dip in demand. In the meantime, the expectation is that investors will be placing new units up for sale, and "move-up" buyers will attempt to sell the units they are currently living in.
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