(Ontario Real Estate Source)
By Brian Madigan LL.B.
The Toronto and GTA condo market is very active. More and more, homeowners are turning to condominium apartments. That is quite a change from the late 1960's when this all started.
In 2010, there were 37,041 new and resale condominium units sold in the GTA. That's just shy of the record number achieved in 2007 when 38,306 units were sold.
The demand has encouraged the developers to build more. In 2010, 18,221 units were started in Toronto, that's double the 2009 starts.
If the market is responding with increased supply, the question is: "who will buy them"?
The 18,221 number was just the starts. Generally, it's about 3 years to completion. In the GTA, there are 236 projects under construction now offering some 73,953 units for sale. The only difference is timing. This massive number of units under development and under construction is the highest number for any city in North America. However, there's not much competition because the American market is still in recovery mode with oversupply in many areas.
In Toronto, the market for real estate is at an all time high. The recovery from the 2008 recession has already taken place. The higher the price for single family homes, the more likely the buyers will turn to the more attractively and competitively priced condo market.
The price per square foot is also a matter worth noting. In the fourth quarter here were the numbers in the GTA for new construction:
2009..........$493
2010..........$530
Over the year, that's about an 8% increase.
As one moves closer to the central core the price escalates. For Toronto proper it was $643 and for the downtown or central core it was $723 per square foot (4th quarter).
Obviously, the price of land contributes to the overall cost. Units in the downtown core tend to be smaller. But, that's the price of "location". Proximity to the subway can eliminate the need for a car.
So, what about the price of location? For comparative purposes, resale condos sold for:
$374..........GTA
$487..........Toronto
$518..........Downtown core
There is a slight difference between new and resale. The price for new is often three years out. That means a deposit is paid now in 2011, but the balance is due when the project is completed and the unit ready for occupancy, which means sometime in 2014. Clearly, the price will be higher.
Speculators will purchase with the intention to flip by 2014, investors will purchase with the intention to rent in 2014, and homeowners will purchase with the intention to occupy in 2014. Of course, that's different from the resale market, where occupancy and closing are expected in 60 to 90 days.
So far, the condo market seems active and stable. Young professionals otherwise blocked out of the Toronto real estate market are viewing condos as their point of entry.
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com
