One of the major surprises of the resale marketplace in 2016 in the Greater Toronto Area was the strong condo market. The deficit of listings in the single-family home category persuaded many potential purchasers to take another look at high-rise living.
The trend looks like to continue in 2017.
In 2016, sale of condo units in the GTA market went up 20.3 per cent compared with 2015, as per the Toronto Real Estate Board. That compares with a 10.5 -per-cent increase of sales for detached houses in 2016 compared with 2015.
The median selling price of a condo unit in the GTA market rose 9.7 per cent in the same period while the average price for a detached home swelled by 20.8 per cent in 2016.
Mr. Bibby, real estate agent, says condo purchasers used to be able to choose a desirable community and then picking from a nice selection of units. These days, they have to be much more flexible, he says, because so many purchasers are competing for units.
If purchasers do find something they like, he advises them to put in an offering immediately.
“Should we sleep on it?” clients will ask.
“You should come to my office right no ,” is his present response.
Mr. Bibby believes one factor why is the annual price appreciation is so strong is that owners will hold onto an existing property even when they are planning to move into another one. “Everyone’s reluctant to give property away. They retain for rising in value. It’s tax-free money so why are they going to sell .”
Most of the potential sellers have a strong reason to listing the property – no matter which type of real estate they own. A seller may be retiring or relocated to another city, for example. In other instances, 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.
Owners of condo units are much more willing to rent them out instead of selling because the rental marketplace is strong. Meanwhile, investors retain buying units in new 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 familiar with the finishes and layouts that builders are presenting, they can look at a project and decide if they want to buy a unit.” Developers almost don’t need sales centers now,” he says.
Ms. Holmes, real estate agent, believes that 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 unit at the Chocolate Company Lofts building on Queen Street West. It was in the middle of the holiday season but that didn’t deter 13 bidders from including their offers on the table on offer nighttime. 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 would likely return.” If they genuinely want the house, they’ll come on offer evening.”
The owner decided to sell at the end of 2016, she says, due to the uncertainty facing the real estate marketplace in 2017. Some financial institutions have raised mortgage rates and the marketer thinks more hikes may be on the way. There has also been a dearth of listings throughout 2016 so the seller figured requirement would be high.” People with a $ 1-million fund struggle to find something,” she says.
Ms. Holmes says she agrees that the feds’ more stringent “stress test” for purchasers who need mortgage insurance is understandable, but she sees first-time purchasers 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 unit, she says, but not without competition.
Ms. Holmes says first-time buyers in the Greater Toronto Area today struggle more than ever with the dilemma of deciding whether to save a greater down payment or whether to enter into the market. The median 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?”
This week, Canada Mortgage and Housing Corp. announces that it will create mortgage loan insurance premiums as of March 17, 2017.
Source: Globe And Mail
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