What’s REALLY happening in Toronto’s real estate market
December 8, 2020
Headlines about the record-setting sales in the GTA keep coming! When you look at the GTA as a whole, sales in November were up by 24.3%, with equally strong sales in both the 416 and 905. Interestingly, condo sales outside the city were up by over 23%, but in Toronto they were up by just .8%. The good news is that there were fewer new condo listings that hit the market last month while sales held steady!
Where are the opportunities now? In the downtown core, around the St. Lawrence Market area, Richmond and Adelaide, as well as along Fleet Street and in the Library District, where a lot of condos were being used as Airbnbs, there are a lot of similar condos for sale, making for lots of competition as a seller.
There are deals to be had, but the problem is that you don’t know it’s a deal until you put pen to paper. (well, it’s all virtual now, but you know what I mean).
Until you put in an offer, you don’t know how far a seller is willing to negotiate. Their bottom line is affected by a number of factors, including whether they “need to sell”, a seller’s urgency around that, as well as how long the property has been on the market. Condos in particular are sitting on the market for longer simply because there are more of them available.
As an investor today, while you may be able to purchase a condo at a great price, you also have to consider the softening rental market. Unless you’re looking at a long-term strategy, you have to crunch the numbers to make sure that the rent you can collect will cover the carrying costs. Keep in mind that until the province opens up to international students , our borders begin to open up again to facilitate immigration, and/or offices start opening up again, the rental market will continue to be soft.
Another hiccup to be aware of is that the provincial government is not allowing rent increases this year, which means that if you do land a tenant, they’ll be paying 2020 prices for the time being.
As for what 2021 will bring for the real estate market, I feel very positive but I can’t make any specific predictions due to the unchartered waters of a pandemic. I expect to see a normal seasonal slowdown between now and the spring. With interest rates expected to remain low, first time buyers still have an opportunity to find a great unit. The sellers I’m currently speaking with are those who are planning on selling in the spring and the trend I am seeing is that people are looking for more space.
I’m hoping that between the weather and the lockdown, we’ll continue to see a lower number of new listings hit the market with a steady amount of sales continuing to balance the market. However, many condo buildings have tightened their restrictions on showings due to the lockdown. Real estate is still deemed an essential service so showings to my knowledge have to be allowed in all buildings, albeit, they will occur far less frequently. I doubt this will have much of an impact on sales, although market pace generally slows anyway as we get close to the holidays.
If you have any questions about the real estate market, please get in touch.