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Condo Sales Prices Up Rental Listings Increase
Condominium sales in the Greater Toronto Area (GTA) in Q1 2014 were up by 9% over the same period in 2013, and the average selling price for Q1 2014 transactions was also up by 5.6% year-over-year as compared to the same period in 2013 according to the Greater Toronto Area REALTORS® in a Condo Market Report on ‘First Quarter 2014′ activity released by the Toronto Real Estate Board. While sales activity has so far allayed any fears of oversupply as was previously reported, the “supply of condo apartments listed for sale also edged up in the first three months of 2014,” meaning that similar robust activity in sales for the rest of this year would be welcomed.
That having been said, home buyers – including those purchasing for the first time, as well as current or past home owners – in the Toronto area kept up their show of confidence in condominium apartment purchases which has helped to keep pace with the increased supply, thereby pushing up average selling prices. This, according to Toronto Real Estate Board President Dianne Usher, in the April 15, 2014 report. Could this mean that 2014 is the year of surging listings of condominiums for sale? While there is certainly that viewpoint, any surge in condo listings must be complimented by similar strong sales activity; so the only question is whether or not such continued strength will be evident in the Toronto condominium market in the remaining three quarters of 2014.
As for now expectations are that, based on a substantial increase in the number of “new condominium apartment completions”, there is the probability for increased listings by the number of investors who prefer to sell their units instead of holding them for rent. But while the condo buyers will be beneficiaries of a larger number of units to choose from, which in turn could increase their price negotiating leverage, as suggested by Jason Mercer, Senior Manager of Marketing Analysis for the Toronto Real Estate Board, it is unknown whether the addition of several thousand condominium units will actually translate to a proportionate number of increased sales that will keep the housing economy growing at a steady rate.
With condominiums listed at an average price of $351,213 (up 5.6% from Q1 2013) across the GTA and $376,226 in the City of Toronto, the suggestion by real estate agents that condos may be the only affordable option left for first time home buyers might be one of the most credible explanation for the continued growth in the condominium marketplace. Further support of this view can be found in the downtown location, and areas with transit lines proximity where red hot “bidding wars” for purchase of low-rise houses have resulted in considerably less available units; and those units which remain unsold are listed at prices beyond the reach of first time buyers.
Could the continued strong growth of condominium listings and sales – at least in the first quarter 2014 – be partly boosted by their use as “stepping stones” to the higher-priced, more traditional single family houses? And is the single family house the preferred (ideal?) type of home for Toronto residents? If this is so, as the report suggests, there is certainly no harm in this approach to home ownership; but it might also be that the condominium lifestyle – with less personal time spent on landscaping and snow removal – is one that buyers aspire to, based on the freedoms such a lifestyle encompasses. Consider for a moment that the purchase of a condo may be based more on choice than on need, since many condo buyers could opt to rent a condo or house instead of buying a unit for temporary occupancy.
There are many condominium rental listings in the marketplace and the available units will soon be increased in view of the approximately 20,000 new developments that are expected to be completed this year; and this increased number, according to the report, is expected to increase rental inventory and “potentially” drive rental prices down, making condominium rentals more affordable for qualified tenants, some of whom might prefer to rent and put money aside for a more sizable down payment on a home of their preference, whether it’s a low-rise single family home or a high-rise (luxury) condominium apartment.
Be that as it may, the condo rental market is said to be “softening” as some investors prefer to make their units available to an increasing number young people (college students, new job market entrants, newly-weds, etc.) and others, including downsizing baby boomers, who – for a variety of reasons – prefer to live in the downtown vicinity, some closer to their work places, and others for the urban nature of such a neighborhood. However, increases over 2013 figures were not limited to condo sales and listings; the reality is, that condo “rental transactions were up 17.8 per cent in Q1 2014, year over year…” also. However this increase was eclipsed by an increase of 27.7% in rental listings during the same period, based on completion of more investor owned units.
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