Toronto Condo Market
Toronto experienced a 27.4 per cent increase in overall condo starts in the month of April. Some continue to worry if there is too much development going on and if supply is outweighing demand, contributing to the so called ‘condo-bubble’ in Toronto’s downtown core.
With projects such as the “Tall Buildings Initiative in Downtown Toronto” in the mix and being unable to build outside of the of the downtown area, the only option is to build up vs. building out.
Is the Supply Sustainable?
Yes! The Government supports the idea of intensifying the population in Toronto. Realistically, 75-80 per cent of units are sold upon completion and the other 20-25 per cent are sold quickly afterwards. In an interview with CTV news, Brad Lamb (President of Brad J. Lamb Realty & Lamb Development Corp.) had mentioned that there are currently 500 MLS listings for condos, nowhere near the suggested 25,000 empty units which would represent an excess supply in Toronto.
Keeping it Local: Is Foreign Investment Causing a Bubble?
There are rumours that up to 80 per cent of condo constructions are owned by non-Canadian residents meaning that foreign investors are the ones driving the condo bubble. Some are wondering if Toronto is turning into a globalized market and are concerned that these units are left vacant as foreigners never actually set foot in Canada.
Brad Lamb commented on how he does business, addressing that his buildings are not allow to be purchased by anyone other than a Canadian resident or citizen, with a Canadian address and provable domestic income.
Yes, some developers do allow purchases regardless of your residency; and Canada continues to experience an influx of capital towards condos, stocks, REITs, as well as industrial and commercial developments. But all of this is good news for the Canadian economy. What would you do if you were a foreign investor? I think that your head would turn a safe market like Canada over investing your hard earned money in the unstable global economies headlining the news every other day.
To Increase or Not To Increase … That is the Question
This isn’t new news; CMHC is quickly approaching their $600 billion limit for insured mortgages. So what should they do? Experts are saying that “this recession is different than the last” (I think that the States made the same claim in 2008, and we all know how that one ended). But the fact of the matter is Canada IS much different from the U.S.
Canada is not issuing zero down payment mortgages or making it really easy to gain approval. Also, the quality of the CMHC borrower is impeccable – with an average of 44 per cent equity in their home and a credit score of 724! The burst to the American housing bubble should have come to no surprise after reviewing the quality of borrower and lenient guidelines – if you can even call them guidelines at all.
In fact, even when you take a look back to the last recession in Canada and the large downturn in the real estate market back in the 90s vs. today, the hairstyles aren’t the only notable difference. The 90s had its own set of problems when property values deflated (on average) by 30 per cent. Today interest rates are not even CLOSE to the 13 per cent mark, inflation is in check and the government is not trying to stifle growth (psst – if you want to know where to find all of the key economic figures each month – check out RatePulse, it’s amazing!).
The population in Toronto has taken off since the 90s and has transformed into a diverse and rich city! There is a growing interest and demand to live downtown whereas 10-15 years ago Torontonians headed for the suburbs. The demographic shift and trend is to live in cities, so keep on building!
RateSupermarket.ca Week in Review
I’m sure that some hearts were broken this week as the 2nd most popular searched rate from the best mortgage rate page increased by 15 basis points. I’m talking about the 5 year variable rate which lies at 2.90 per cent (last week 22.9 per cent of visitors were searching for this rate). The only other note-worthy mover in my opinion was the 1 year fixed rate which increased by 5bps. Everything else remained in and around previous levels, unfortunately all rates were on the up and up and we did not see any decreases.
Do you want to know when the best mortgage rates change? Be the first to know and sign up for RateAlert, RateSupermarket.ca will e-mail you a daily digest of the mortgage rates that have changed in your area!
The 5 year fixed mortgage remains the most popular searched rate with nearly half (45.3 per cent) of RateSupermarket.ca’s visitors seeking the most competitive rates available! Just under a quarter (22.9 per cent as mentioned above) were looking for a 5 year variable rate. Next the 10 year fixed (7.6 per cent), 3 year fixed (5.7 per cent) and 1 year fixed (5.5 per cent) were the most sought after mortgages.