One of the interesting surprises of the resale marketplace in 2016 in the Greater Toronto Area was the strength of the condo market. The lack of listings in the single-family home category persuaded many potential purchasers to take another look at high-rise living.
The trend appears to be continuing in 2017.
In 2016, sales of condo units in the GTA increased by 20.3 per cent compared to the condo sales in 2015, according to Toronto Real Estate Board. That compares with a 10.5 per-cent increase for detached houses in 2016 in comparison with 2015.
The average selling price of a condo in the GTA rose 9.7 per cent in one year while the average cost for a detached home swelled by 20.8 per cent.
Mr. Bibby, real estate agent, says condo purchasers used to be able to choose a desirable community and then select from a nice selection of units. For now a days, there is a requirement to be much more flexible, he says, because so many purchasers are vying for units.
If purchasers do find something they like, he advises them to put in an offer immediately.
“Should we sleep on it?” patrons will ask.
“You should come to my office right now,” is his response.
Mr. Bibby believes one factor is that annual price appreciation is so strong, owners will hold on to an existing property even when they are planning to move into another one.” Everyone’s reluctant to give property away. Units continue 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. A seller is retiring or relocated to another city, for example. In other examples, people bought a new condo from a developer three years ago and now that it’s finally ready they need to raise money by selling an existing unit.
Owners of condo units are becoming more willing to rent them out instead of selling because the rental marketplace is strong. Meanwhile, investors continue buying units in new condo developments.” All the pre-construction projects are selling out .”
Mr. Bibby says that many purchasers in Toronto are comfortable now with buying from Developer’s projects. They have become so knowledgeable about the finishes and layouts that builders are presenting, they can look at a rendering drawing and decide if they want to buy a unit.” Developers almost don’t need sales centers now,” he says . “I don’t think we will need that experience any more.”
Ms. Holmes, real estate agent, believes the federal government’s tighter regulations surrounding mortgage qualifications will continue to push some purchasers towards the condo marketplace in 2017.
In December, Ms. Holmes sold a condo unit at the Chocolate Company Lofts building on Queen Street West. It was the middle of the holiday season but that didn’t stop 13 bidders from putting their offers on the table on offer night. The unit was listed with an asking price of $749,900 and sold for $931,500.
Ms. Holmes had advised the owner that waiting for the stated deadline, in that case a Sunday morning, would allow a smooth process and the bullies are very likely to return.” If they truly crave the house, they’ll come on offer night .”
The owner decided to sell at the end of 2016, she says, because of the uncertainty facing the real estate marketplace in 2017. Some financial institutions have raised mortgage rates and the brokers believe more hikes may be on the way. There has furthermore been a big shortage of listings throughout 2016 so the seller figured demand would be high.” People with a $ 1-million budget struggle to find something,” she says.
Ms. Holmes says she agrees that the Feds’ most stringent “stress test” for purchasers who need mortgage insurance is understandable, but she sees first-time buyers who are being forced to switch strategies as a result.
One couple looking for a condo in downtown Toronto decided to search in Etobicoke instead. The couple was able to find a pleasant two-bedroom condo unit, she says, but also with some competition.
Ms. Holmes says first-time buyes in the Greater Toronto Area today battle more than ever with the dilemma of deciding whether to save a greater down payment or whether to enter into the market. The average price for all housing forms rose 17.3 per cent in 2016 compared with 2015.” You could wait another year and save some more money but where are the prices going to be in one year later?”
This week, Canada Mortgage and Housing Corp. announced it will raise mortgage loan insurance premiums as of March 17, 2017.
Source: Globe And Mail
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