If you’ve seen MANY of my other posts & videos then you’ve repeatedly heard me say (like a broken) record that the most popular yet most poorly worded question in real estate is “How’s The Market”.
The reason (as I keep saying) is that the word “Market” is too general a term.
There are many different markets within the market.
Today I’m going to talk specifically about the Toronto Condos and the Toronto Condo Market.
The media keeps telling you that the market is hot and the market is strong.
People keep asking how my business is doing because they hear the market is amazing.
It’s true … prices are up … prices are strong … because demand far exceeds supply in many areas around the greater Toronto area and for many different types of product, such as detached homes, semi-detached homes, townhouses, & bungalows for example.
But what about Condos in Toronto? More specifically condos in downtown Toronto?
Well that market has definitely seen a change in 2020.
In the past 3 months I’ve had a few clients who have been looking at buying a condo in Toronto (downtown) get something they haven’t been able to for the past 2-3 years.
Specifically, for the past 2-3 years every time they’ve liked something I’ve shown them I’d prepare an offer for them and we’d surely be competing in a multiple-offer (a.k.a. bidding war) scenario.
And every time someone else would out-bid us to a price far beyond what me and my clients thought was a reasonable price for that product.
And in the past 3 months I’ve helped each of those clients buy a condo in downtown Toronto, without a multiple-offer situation.
And I was able to negotiate a purchase price for LESS than the seller’s asking price.
Similarly, when it comes to renting a condo or leasing a condo in downtown Toronto in the past month or two I’ve had several clients find a condo to rent.
And whereas in the past couple of years we’d have to get our Lease Offer & application submitted within hours of the condo being listed and (yes even in rentals) find ourselves having to raise our offer to compete with others, all of my clients have successfully found a condo to rent and the condo was on the market for several days (or even weeks).
And we weren’t competing with other offers. And in most cases got it for less than the Landlord was asking for rent (except one case where it was underpriced).
Now if you know me then you know I don’t just follow the herd.
It’s not just important to know what’s happening in a market while it’s happening or possibly even after it’s too late.
It’s important to understand what drives a particular market sector and why changes are happening.
So why has the Toronto condo market seen this recent change unlike other products and/or other areas around Toronto?
Well … it’s rarely just one factor.
First of all I think the downtown Toronto condo market isn’t gauged properly.
What I mean is when people go for a drive and see lots of towers under construction and/or lots of new buildings just starting to have people move in, that isn’t a sign of the current market.
Condo developers don’t start construction until a large portion of their project are pre-sold (pre-construction).
So the skyscrapers and cranes you see now are a product of the sales 2-5 years ago.
Well 2-5 years ago people were selling hype, exciting new buildings, and not looking at when will the market be over-saturated with product?
They also couldn’t force things like pandemics and Covid-19.
And so my second point is AirBnB. Since Covid-19 there are no AirBnB’s so many of those units are now being listed for long-term rent.
Or the owners have decided to list the condos for sale.
Both of which have provided a sudden increase in the SUPPLY of rentals and sale listings on the MLS.
And with increased supply and decreased demand the prices go …. down.
The third thing that might have some effect (although very hard to measure the exact effect) is foreign investment.
I tend not to believe every statistic I hear in the news because 78.35% of all statistics are actually made up.
(I’ll let you think about that for a minute).
However, based on what I’ve seen & experienced personally in this business I’d predict 50% to 70% of all of those downtown Toronto condos were purchased by foreign investors.
Toronto has been on the world map as one of the safes & most profitable places to invest in real estate.
So many foreign investors bought condos for the purpose of renting out or because their kids were coming to University of Toronto for example so they realized it’s better to own a condo for 6-10 years and then sell it for profit rather than just pay rent for student housing for that period of time.
Well now that our borders are closed for the better part of a year (or more) foreign investors can’t come here to see and invest and their kids aren’t coming for university.
Like I said, there is rarely if ever just one reason that a particular market is going in a certain direction or acting a certain way.
It’s usually many small factors that influence a market.
And just like the financial markets and financial investments, you need someone with a proven track record of success
who really understands WHY certain products or certain market segments are doing what they’re doing, to ensure you get the best possible advice and guidance.
If you are thinking of buying or selling a home anywhere in the Greater Toronto Area and want to talk more about how to do it safely and smoothly … I’m always happy to chat. Just get in touch with me by email or phone.