Toronto has never had more choice in location or greater numbers on the market
With stock markets, commodity prices and even the dollar bouncing around like numbered balls in a bingo caller's cage, the question has to be asked: What will happen to luxury condominiums in the GTA?
Toronto has never had more choice in location or greater numbers on the market. but can all those suites find eager buyers at a time when rrsps and other investments have shrunk like popsicles in the August sun?
The consensus among the men and women who build, market and sell these luxury condos is that it is a bit too soon for definitive predictions. if past history is a guide then those projects offering suites at the very top end of the market may only be marginally affected, if at all.
The ones at risk are most likely to be those in the $700,000 to $1 million range. but even then a host of factors will be coming into play.
First, look at what is at risk. according to Jane Renwick, Executive Vice-President of Urbanation inc., there are 14 projects that could be defined as luxury condominiums on the market today. Urbanation defines luxury buildings as those where prices start at $600 a square foot.
Seven of those sell for more than $1,000 a square foot. that list includes 77 Charles, 155 Cumberland and the St. Thomas, all located on streets of the same names, museum-House on Bloor Street west of Avenue Road, the East and West towers of the Four Seasons project in Yorkville and the Wentworth on avenue road just south of Upper Canada College.
They may indeed suffer the least, she says. the reason is that men and women willing and able to plunk down anywhere from $2.5 million to $30 million for a new condo tend to have long-established wealth and the ability to weather economic cycles. When they decide to buy a condo the decision is lifestyle driven and not linked to economic factors.
"If you go right back to the 1980s, monthly sales of luxury condos have varied little in either boom times or bad times," she says. "the range is between about 2.6 and 2.9 sales a month. Granted there were fewer properties on the market back then but those average sales stayed within that narrow range."
Expand the luxury category to include high priced suites in mid-market buildings and you get a different picture. Realnet Canada inc., which also tracks the real estate market says there were 32 projects in the Greater Toronto Area where the average selling price for all suites in the building was over $653 a square foot at the end of September. that works out to 7% of everything now available or 1,327 suites.
In the super luxury class - projects where the average selling price for all suites was above $869 a square foot - there were 14 projects at the end of September and eight of them sold for more than $1,000 a square foot.
Will the strong market for luxury product continue despite hard economic times?
"You have to ask yourself if there are 1,327 people in the GTA willing and able to write a cheque for $2 million or more for a new condo," says George Carras, Realnet President. "it is really too soon to tell; there are a lot of factors at play."
Those factors include things such as the liquidity of investments. if buyers were planning on selling stocks or mutual funds to finance that purchase, will they be willing to do so at a time when share values are a fraction of what they were a year ago?
Will resale home prices start to fall? Will luxury condo buyers be able to easily sell existing homes or will they put a hold on downsizing plans in a hope that the market turns back up again?
Also, will projects still in pre-construction sales be able to hit higher pre-sales requirements set by mortgage companies or will those projects be cancelled?
But if that is the negative side there are a lot of pluses in the ledger as well. Ms. Renwick points out that every indication is that the GTA's population will continue to grow by about 100,000 new immigrants a year and that demand for retirement condos among wealthy baby boomers is still in its early stages.
"At the same time, an 80 cent plus Canadian dollar has to look pretty good to foreign buyers," says Mr. Carras. "What they see is prices discounted by foreign exchange in the largest city in a country least affected of all industrialized nations by the economic slowdown."
Also, "wages are still rising steadily and if you remove auto sales then the retail sales figures reported by Statistics Canada for the third quarter were up 4%," she says. "We will have to wait and see what the fourth quarter figures are."
Sam Crignano, a partner in Cityzen Group developments, which has both pier 27, just east of the foot of Yonge Street, and the shores at the mouth of Bronte Creek on the GO, sees another bright hope for continued demand.
He points out the Bank of Canada says to expect even further interest rate cuts, which means mortgage rates will continue to decline. at the same time, unlike those in the United states, Canadian banks continue to lend to qualified buyers.
"It is natural to go through a period of uncertainty," he says. "but i think that uncertainty is not likely to last. i can see great promise still in the luxury condo market."
David Pylyp A well written and thoughtful piece from the National Post. The West Toronto, Etobicoke waterfront is a destination that will continue to draw residents to the west end. the Humber Bay Shore Community of Condos continues to be a demand destination.
Etobicoke Real Estate Agent
Accredited Senior Agent for York Peel and Halton Regions
As we move forward It would be good if you also circled me on Google +