Toronto Condo Buyers Feeling The Squeeze
Published Thursday, January 19, 2017
One of the big surprises of the resale market in 2016 in the Greater Toronto Area was the strength of the condo segment. The shortage of listings in the single-family home category persuaded many potential buyers to take another look at high-rise living.
The trend appears set to continue in 2017.
Last year, sales of condo units in the GTA jumped 20.3 per cent compared with 2015, according to the Toronto Real Estate Board. That compares with a 10.5-per-cent increase for detached houses last year compared with the previous year.
The average selling price of a condo unit in the GTA rose 9.7 per cent in the same period while the average price for a detached house swelled by 20.8 per cent.
Christopher Bibby of ReMax Hallmark Bibby Group Realty Ltd. says condo buyers used to be able to choose a desirable neighbourhood and then pick from a nice selection of units. These days, they have to be much more flexible, he says, because so many buyers are competing for units.
If buyers do find something they like, he advises them to put in an offer immediately.
“Should we sleep on it?” clients will ask.
“You should come to my office right now,” is his response.
Mr. Bibby was working with one couple who started out looking for a condo in a boutique building around the fashionable intersection of Bloor Street and Avenue Road. They had to expand their search farther north to Yonge Street and Eglinton Avenue in order to find something.
Mr. Bibby believes one factor is that annual price appreciation is so strong, owners will hold onto an existing property even when they are planning to move into another one. “Everyone’s reluctant to give property away. Units keep rising in value. It’s tax-free money so why are they going to sell.”
Most of the potential sellers he talks to now have a strong reason to list the property – no matter which type of real estate they own. An owner may be retiring or relocated to another city, for example. In other cases, people bought a unit from a developer three years ago and now that it’s finally ready they need to raise money by selling an existing unit.
“Everyone I’m working with now is selling because they have to,” Mr. Bibby says.
Owners of condo units are much more willing to rent them out instead of selling because the rental market is strong. Meanwhile, investors keep buying units in new developments. “All the preconstruction projects are selling out.”
Mr. Bibby says that many buyers in Toronto are comfortable now with buying from plans. They’ve become so familiar with the finishes and layouts that builders are presenting, they can look at a rendering and decide if they want to buy a unit. “Developers almost don’t need sales centres now,” he says.“I don’t think we will need that experience any more.”
Read the rest of the article here.
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