Zoe Ackah – Epoch Times

The year 2013 was pivotal for the GTA condo market. According to Urbanation, a provider of in-depth analysis of the Toronto condo market, a modest 13,965 units were sold last year.

Although new condo sales slowed down by 20% compared to 2012, new condo pre-construction prices stayed rather flat, shrinking by only 2%.

Comment: But new condo offerings dropped by more than 20%. There were simply fewer available to purchase, which is why sales are down.

“We’ve been used to prices rising around 5% a year,” says Shaun Hildebrand, senior vice president at Urbanation.

Consistently rising prices made buying condos and selling them on completion a profitable endeavor in the past. Today’s market is different.

Comment: But everyone forgets that buying any real estate and holding it for 3-5 years results in higher prices. New condos, resale condos, houses…

“Condo investment is no longer a short term play,” says Hildebrand.

It’s now a landlord’s game.

Comment: Because there is more money to be made in the long game. Buy, hold, prosper.

Although 20,000 units will come to completion in 2014, there is slow growth on the resale front, with resale prices rising 2% so far, similar to 2012’s increase.

Comment: Except that TREB says resale condo prices were up over 5% in March, 6% in February and 7.6% in January. Kind of a little more than 2%.

As new buildings closed in 2013, there was no wave of new listings; in short, there was no “condo crash” and flipping was minimal.

Comment: Because the units were 96.5% sold by the time they registered. And most people keep their condos, to live in or to rent. There just aren’t that many sold at registration.

Instead, a record number of new condos entered the rental market in 2013. “Demand was strong enough to absorb pretty much all of them,” Hildebrand says.

Counting only MLS-listed units (sorry Kijiji), numbers indicate that 24% of all newly registered units were rented out last year.

Comment: Add in Kijiji and private rentals and I bet that number doubles. Well, maybe no double the new condos rented out, but the MLS condo rental market is probably only half the overall condo rental market.

“The total increase in rental supply in the condo market last year was almost 14,000 units,” says Hildebrand. As a result, vacancy rates went up from 1.2% to 1.8% in the GTA — in other words, from very low to very low.

Comment: And that was the entire GTA, 905 included. I bet the rate is halved in the 416 alone.

Hildebrand figures vacancy rates won’t pass 2% and the CMHC concurs, predicting they will hold at 1.8% in 2014. This number factors in the 20,000 condo units slated for completion in 2014, a large number of which are investor-owned.

Comment: I wager the 416 doesn’t see vacancies hit 1.5%.

Holding off selling and instead renting out has never been smarter, because it may take longer for prices to appreciate in the foreseeable future.

Hildebrand believes condo investor landlords will play an increasing role in the GTA housing market considering the “huge pent-up demand for rental” he sees in the downtown core.

Urbanation measured the average rental appreciation growth around 4% last year. Hildebrand feels it is still a landlord’s market with demand slightly outpacing supply, but rental inflation rates will slow down to around 3% annually in 2014.

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

Laurin Jeffrey is a Toronto real estate agent 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.
—————————————————————————————————–