In: Real Estate News16 Sep 2010
There’s little doubt Toronto is at the heart of Canada’s condo craze, and with continued strong sales, new construction and appreciation, it’s quickly becoming the epicentre of the condo boom in all North America.
Toronto Condos Beat Out New York and Miami
Toronto condominium sales have long since outpaced Miami’s, the continent’s former condo mecca. In 2005, Toronto condo sales more than doubled the output in Miami, and since the housing and economic crisis hit the US, the gap has widened even further. Last year’s 16,000 new units doubled New York’s offerings. Today, Toronto is adding up to 20,000 new units annually, and there is little sign of that the appetite for this chameleonic form of home ownership is sated.
Condos are a relatively recent development in Toronto, which began with a wave of high-rise towers erected along the waterfront, the row of towers thickening until the waterfront became largely invisible from the downtown core. Initial resistance was quickly silenced when the frenzied demand drove resale prices up; investors and developers alike knew they had a winning formula.
Not Just For Retirees: Toronto Condos Attract Professionals, Immigrants
In the 1980s, retirees were the driving force behind the condo boom, but today, first-time buyers – such as young professionals and immigrants – as well as investors are the main purchasers of the thousands of condo units that go up each year in Toronto.
Nor does demand appear to be cooling significantly, though most experts are calling for a tapering off from peak building and sales activity in recent months. The Canada Mortgage and Housing Company forecasts 17,000 units will be completed this year, and 16,000 in 2011.
Part of the vast appeal of the condominium is its enormous flexibility – a condominium is a form of shared ownership, not a particular building style, thus taking on a wide variety of shapes and sizes to suit the urban or suburban environment, the wealthy investor and first-time homebuyer alike.
Toronto condominiums take on the shape of high-rise towers gleaming sharply along the downtown waterfront, or fashionable lofts in renovated historical buildings along King St West, or charming rowhouses tucked away on quiet residential boulevards in Cabbagetown. On the outer suburban edges, a condominium project may resemble nothing more than an elegant family community of sprawling detached homes in Etobicoke, or townhouses overlooking a golf course in Markham.
Toronto Condos’ Broad Appeal
Toronto’s allure is multi-fold. As Canada’s largest metropolis and the driving force of its economy, Toronto is the top destination for the estimated quarter million immigrants welcomed into the country each year. Roughly 40,000 new housing units are needed each year to meet the demands of immigration, and competition for limited ground space has encouraged upward growth.
Toronto’s condo industry is governed by the provincial Condominium Act, which allows for a wide variety of development options: standard, phased, leasehold, common element and vacant land, as well as the conversion or consolidation of existing buildings.
Investors Place Their Bets on Toronto Condos
In addition to this, Canada’s economic stability through the worldwide financial crisis has attracted a great deal of investor attention, keen on placing their money in a safe and prosperous harbour. Some estimates place investor holdings in Toronto’s condo market at 30-40% of the total, many of these overseas investors.
The reason for this is clear: condominiums in Toronto gain value. In fact, Toronto’s condos have appreciated in value year over year for the past 14 years, sometimes modestly, sometimes astonishingly, but with an unstoppable upward impetus that spells good value to the canny investor.
For example, new condominiums in Toronto sold for an average of about $300 a square foot; just seven years later, prices now average nearly $600 a square foot. Now this is not to say that a new condo bought in 2003 will sell in 2010 for twice the original price, for by then it is a seven-year-old resale condo. But the fact is, buyers hungry to take advantage of a stable investment environment, affordable downtown living, or just rock-bottom mortgage interest rates, have ensured that Toronto remains a focal point for the condominium industry.
Despite this meteoric rise, Toronto is still not nearly as expensive as other major urban centres. For the domestic purchaser, this may not mean much, as affordability is tied to earning power, and Torontonians may not earn as much as other major urban dwellers. But for the foreign investor, it means strong purchasing power, a fact likely to sustain the industry for many years to come.
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