ERIN HENRY
Sales Representative, Royal LePage Real Estate Services Ltd. Brokerage
Erin Henry is an experienced Sales Representative providing comprehensive real estate services to home buyers and sellers with over 25 years of dedication and expertise!
erinhenry.ca
As we begin a new year, we face the unknown. 2020 was like nothing most have experienced, and we still aren’t clear where we are headed. We saw a real estate market heightened by many extenuating circumstances, such as all-time low-interest rates, a shift in economic dichotomy, and an unbalanced level of supply and demand in both the detached1 and condo sectors. Detached home sales skyrocketed, leaving us with the question, what does that mean for my condo?
At the tail end of last year, condo sales in Toronto were slowly creeping down. Not necessarily the values, with a slight decline of only 3%, but number of sales.2 It would appear the average condo buyer was pausing for the moment, based on uncertainty. This leads us to an oversaturated supply. The average investor buyer was also at a stalemate based on the decrease in rent vs purchase price. The rate of return was not as appealing, nor was the current instability of the condo resale market.
Take calculated risks. That is quite different from being rash.
— General George Patton
Now let’s reverse and see the positive. Purchasers seemingly have more choice and negotiating power. They are seeing flexibility as sellers are feeling uneasy and are using this window of opportunity to bow out of the condo market. Not to mention, as noted in our October/2020 issue, the Bank of Canada’s prime rate is not expected to rise until at least 2022, therefore mortgages are still more attainable then ever. In fact for the first time in Canadian history, variable mortgage rates had dropped below 1%! In addition, “once we move into the post-COVID period, we will start to see a resumption of population growth, both from immigration and a return of non-permanent residents. This will lead to an increase demand for condominium apartments in the ownership and rental markets.”2
The upside for an investor purchaser, is that again there is more selection and the possibility of better leverage. Although the Province of Ontario proposed legislation in September 2020, which will allow for a “rent freeze”, this should have little impact on the vacant rental market and hopes for a positive shift in occupied units as things settle.
Finally, COVID has forced many to work at home. Hence the exit from the small condo niche. However, the purchase of larger condo apartments and townhomes would not only accommodate the need for a home office, but would subsequently benefit from both the saturated supply, as well as the low-interest rates and affordability.
I believe the pandemic thus far, has begun to instill the glass half full mentality. Look at the bigger picture and take advantage of the positive aspects of any given situation, such as the condo resale market.
1 Detached including semi-detached and row
2 TRREB Chief Market Analysis, Jason Mercer
*All information correct at time of publishing and should be verified by the Purchasers and Sellers
