You will always find negative buzz in the mainstream media on the condo market and it primarily concerns the supposedly falling demand. Yes, I do agree that there is no buying frenzy like there was in 2011, when people literally camped out overnight to buy condos. However, the market is in no way as bleak as the pessimists make it out to be. From my personal experience and research, I can tell you that the buyers are still there in hordes and they are looking for the right opportunities. The only difference is that they have become choosier and much more discerning than before.
In fact, 2013 was not bad at all for condo sales if you look at the sales figures. Although official figures are not out yet, it is estimated that about 15,000 new units were sold in GTA last year whereas about 18,000 new units were sold in GTA in 2012. This doesn't mean that the condo market has run out of fuel. The way I see it, the market has been going through a correctional phase after a massive high, which is the most natural thing in a healthy market.
A new trend that started in 2013:
I've noticed a trend that started in 2013 and which is still going strong. The condo projects that are selling well are the ones with 2011 pricing. These condos are reaching 70, 80 and even 90% sold in just a matter of weeks. The massively successful launch of Core Condos, in the first weekend of 2014, provided irrefutable proof of that. In contrast, condos with 2012 pricing are having a tough time finding buyers, but those who have scaled back the pricing to 2011 are seeing their condo project sell out in weeks.
Since sales are likely to continue at about the same rate in 2014, the number of completed new condos will be too few to meet the demand in 4 - 5 years. From an investor's perspective, this provides a once-in-a-decade window of opportunity. If you buy a condo now that is available at 2011 pricing, you will be positioned to reap the reward from a potentially huge price appreciation when it is completed in 2018/19. This reminds me of the old saying, "make hay while the sun shines."
Another thing I have noticed is that condos in "A" locations are selling better than condos in "B" and "C" locations. It's not hard to see why when there are several condo projects to choose from. Hence, investors of today want projects that have great pricing, great locations and unique features in the building. A condo project that has these three things sells out in no time.
New condos that are creating the buzz:
Several of the new condos have created so much excitement in the market that it's already beginning to feel like the end of the lull and the beginning of the next buying frenzy. In fact, it could happen sooner than I expect. Let's take a look at some of my top condo picks that have had massive successful launches not too long ago:
- 365 Church Condos: Located in the Garden District, 365 Church Condos was one of the exciting new projects of 2013 and my favourite. This preconstruction-phase condo was the hottest selling project of 2013 due to the below-the-prevailing-resale market-value price range in the area at that time. When it was first launched to the Platinum group of agents, I had advised my investor clients on its extremely high rental potential. Those who bought were ecstatic when price increased by up to $44,000 on some of the units in just 8 months from Insider's Release (all my clients including myself bought at this stage) in February to the public opening in September 2013.
- Harbour Plaza: Located in Harbourfront, this condo project took the top-selling spot in 2013 because of its below average price and great location. Some units were actually priced below $600 per sq. ft., quite unbelievable in an "A" location considering that units at Maple Leaf Square regularly sell for about $700 per sq. ft. I received excited phone calls from my clients when prices increased by up to $40,000 on some of the units in just 6 months from the Insider's Release in May to VIP Agent Release in October 2013. It was as if the condos were tailor-made for investors and those who bought them are in for a rich picking when the harvest time arrives.
- Core Condos: And then there is the Core Condos in the heart of downtown Toronto that has a starting price of $234,900, unbelievable in the commercial and financial centre of the city which itself is the financial heart of the country, but true all the same. Currently in its preconstruction phase, this exciting new condo building is expected to be one of the exciting projects of 2014 and is already selling like hot cakes. This was proved by the fact that the price increased by up to $25,000 in one week from Platinum Agent Release in the first week of January to the VIP Agent Release in the second week of January.
YC Condos: But the new project that I am most excited about is the YC Condos at Yonge and College. In fact, in my entire career as a real estate agent, I have never been as excited by any condo project as this project. This magnificent 66-storey glass-sculptured building located in the heart of Toronto's innovation centre and surrounded by the University of Toronto, Ryerson University, MARS, TTC, Subway at the doorsteps and the hospital district along with several dining and entertainment facilities, promises to offer one-of-a-kind-amenities not found anywhere in the entire North America.
Scheduled to launch very soon in 2014, YC Condos is the one project that is going to change the face of Canada's condominium industry. It is expected to be the No. 1 condo project for 2014 and will follow the same suit as the 3 top launches mentioned above. From the plans and specs I have been shown, this preconstruction-phase project being developed by Canderel, one of the most well-known condominium developers in Canada, is going to elevate the standard of luxury at Yonge and College and give investors a rich reward when it's completed in 2018. If you are a savvy investor, then this is exactly the sort of property that you should put your money in.
There's never been a better time to invest in condos
With the country's economy humming along quite nicely and interest rates expected to remain low for the next couple of years, Canadians are in a good position to buy now. Also, the market has been getting a major boost from foreign investors who have been pouring into Toronto for several years. The only reason for the condo market to plummet is another recession, and the possibility of one happening anytime soon is about zero.
By all indications, the condo market is going to remain stable over the next 3-4 years, with there being a nice balance between the number of projects and buyers. But there is likely to be a shortage in inventory after 2018 as there will be fewer condo closings. That is when the huge price appreciation is going to happen and, with the recent launch of exciting new condos, that is when investors will stand to make unimaginable profits. So there's never been a better time to invest in condos.
My cardinal rules for investing in condos:
I've been selling condos in Toronto for many years and here are my two cardinal rules for buying pre-construction condos for the purpose of investment: (1) buy below comparable pre-construction and resale in the area (2) always buy positive cash-flow properties (considering current rates and assumptions in the market).
You will hear a lot of naysayers arguing vehemently that these two rules are difficult to achieve in today's condo market of Toronto. I want you to know that these are the same people who are psychologically stuck with the 2012/13 pricing and are missing out on a massive opportunity in the current Toronto condo market.
If you are thinking about buying a new condo in Toronto, for investment or for personal use, I cannot recommend enough that you drop me a line to see what can I do for you.
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