Ryan Starr – Toronto Star

For Brian Brown, 2012 started off with a smashing success.

The vice president of Lifetime Developments presided over the launch of INDX, a 54-storey tower on Temparance St. that became the top-selling condo project in the first quarter of 2012, with an eye-popping 642 units sold.

The impressive performance of INDX – which Lifetime is developing in partnership with CentreCourt Developments – had a lot to do with it being a unique offering for that neighbourhood. “It filled a void,” Brown says. “It’s the only pure residential building in an area of all office towers. So it really catered to the people who worked in the Financial District.”

Lifetime went on to sell out INDX – around 1,000 units – by December.

All in all a pretty good year for the Toronto builder, considering the difficulties the local development industry faced as the condo market came back down to earth.

“The biggest challenges came as a result of changes to government policy, such as the federal government’s decision to change the mortgage rules in July,” notes Bryan Tuckey, president of the Building, Industry and Land Development Association (BILD). “We saw consumer confidence diminish in the summer and fall months following that change.”

Comment: Yet someone else who sees and understands the new mortgage rules’ effect on the real estate industry.

And as it became clear that 2012 new-home sales weren’t keeping pace with a record 2011 – 31,766 homes were sold as of Nov. 30, compared with 44,393 by the same time in 2011, according to RealNet Canada – the ensuing “sky is falling” media coverage only made things worse for developers.

Comment: The media forgets that 2011 was a record year, far above any year before. The sales for 2012 will actually end up being 5-8% higher than the recent annual average. The sky is not quite falling… but you need data and context to know. And these are things the media love to leave out.

Normal is good

Although 2012 condo sales looked weaker on a year-over-year basis – with 18,103 condos sold in the first 11 months of 2012, versus 27,659 by that point in 2011 – RealNet says 2012 is actually on pace to be the fourth strongest year on record for condo sales.

Comment: Sound the alarm! Only the 4th best year ever! Run for the hills!

“The market had been so powerful and so strong for so long, that what we’re experiencing right now isn’t a slowdown,” Brown says. “What we’re seeing is a return to normalcy. And normalcy is a good thing. You couldn’t sustain what we had.”

Comment: Amen.

Despite all the negative sentiment swirling around at the end of 2012, there was certainly no evidence of a condo market in crisis when Tridel launched Ten York – a 65-storey glass tower at York and Harbour Sts. The builder sold 532 of the project’s available 600 units within the first two weeks of sales, making it the most successful launch of the fall.

Comment: Right when the experts said the Toronto condo market was collapsing – and they sold 89% of their condos in 2 weeks. A sure sign of the condo-pocalypse.

“There seems to be an affinity for tall buildings that are architecturally pleasing in triple A locations,” says Jim Ritchie, Tridel’s senior vice president of sales and marketing. “I think we were able to demonstrate that regardless of market sentiment, if a product comes to the marketplace that people like, they make the buying decision.”

Still buyers out there

Paul Golini echoes that sentiment. Empire Communities’ executive vice president notes that purchasers were attracted to his company’s latest project, Eau Du Soleil, largely because of its prime location on the Etobicoke waterfront.

By the end of 2012, Empire had sold more than 450 of the 750 available units at Eau Du Soleil. “It speaks to the fact that there are still buyers out there,” Golini says. “If you have the right product in a sought-after location at a competitive price, you’re going to be successful.”

While Eau Du Soleil sold well, Golini stresses that “we didn’t sell 450 units in a weekend.”

“This year was an adjustment year compared to 2011,” he says. “We’ve seen fewer launches and we’ve seen buyers take more time to make a decision. Success will not come in the short timeline, like the blow-them-out-the-door-type scenarios we’ve seen over the past few years.”

Which isn’t a bad thing, says Gary Switzer. Everybody in the industry should take a deep breath and notes that not having as many projects released last year over the previous years – which was an extraordinary number of projects for this city to be supporting – is a good thing, says the president of MOD Developments, whose Massey Tower at Yonge and Queen Sts. was another of 2012’s best-selling condos.

Comment: Something the media also seized upon, the fact that new condo sales were down by 38% – but they failed to mention the 30% fewer condos being launched and offered for sale.

MOD sold 486 of Massey’s 698 units in the first quarter of the year, before new mortgage rules took effect and consumer confidence took a dive. “Our timing was good,” Switzer says.

Comment: Consumer confidence is now up for the first time in the past 3 months.

The most successful projects of 2012 weren’t just downtown. Liberty Development’s Centro Square – a two-tower, 800-unit condo project at Highway 7 and Weston Rd. in Vaughan – proved to be the 905’s hottest launch of the year, with 70% of the 300 units released selling within the first two weeks.

Liberty senior vice president Marco Filice notes that sales were driven by strong demand from local purchasers in search of alternatives to pricey single-family homes or townhouses. “There’s a lack of highrise choices for them in the area,” he says. “When you come in with a choice that didn’t exist before, there’ll be a lot more attention.”

Outlook 2013

If 2012 represented a return to more normal conditions in the Toronto condo market, what do the developers see in their crystal balls for 2013?

“I think we’ll continue pretty much the way that we’ve been going,” says Switzer. “The good projects in the good locations will continue to sell. But I think that certain areas of the city are saturated, which is why some projects have not been selling as well.”

“Developers are going to start to look for opportunities in less obvious locations,” adds Brown.

Golini predicts fewer projects will come to market in 2013, “which is representative of the industry self-regulating,” he says. “And I see buyers still being cautious, but still buying because they need to live somewhere.”

Ritchie points to one thing the industry can look forward to in 2013. “It was a challenge this past year because all the reports were reflecting against what happened in 2011, which made 2012 numbers look pale by comparison,” he says. “Probably we won’t see that as much in 2013.”

Comment: 2013 will likely look a lot like 2012… or 2010, or 2009…

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.
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