REDISCOVER REAL ESTATE

Ping-ponging sales set stage for active T.O. spring

Early February saw home sales fall in the GTA – the pong to January’s surprising ping.  

About 8.3 per cent fewer homes traded hands in the first 15 days of the month, said the Toronto Real Estate Board Tuesday. That falling demand came as supply also fell.

The 905 suffered a decline of 11 per cent, year over year, although the inventory drop helped to lift prices by just over 2 per cent.

But the much-worried-about condo market took it on the chin, with resale numbers falling 14 per cent and prices dipping about 8 per cent. That’s distinctly different from the 17 per cent rise in townhomes sales, likely a reflection of the scarcity of detached and semi-detached homes and any push away from condos.

Still the overall performance jives with analysts’ forecasts.

“The annual rate of price growth so far in February has been in line with expectations for 2013. The average selling price in the GTA will continue to grow this year-end, but at a slower pace compared to 2012,” said Jason Mercer, senior manager of market analysis for TREB.

But the numbers may, in fact, set up the market for an active spring, suggest some economists, pointing to pent-up demand that could explode come March as buyers realize that prices simply aren’t falling.

Source -Canadian Real Estate Wealth

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Toronto's commercial high-rise boom!

According to a new report from Cushman & Wakefield, Toronto is expected to add over 1.59 million square feet of triple-A office space in 2014 – nearly twice as much as the Big Apple.

And as it turns out, investors snapping up REITs have helped spur the boom in commercial development for Canada’s largest city. In comparison, New York City, projected to add about 916,000 square feet of commercial space next year, has lagged behind Toronto in attracting those increasingly important investment trusts.

Public offerings raised $5.12 billion last year alone, and several large Toronto-based REITs purchased commercial buildings in the city as a result.

Pierre Bergevin, CEO of Cushman & Wakefield in Canada, says the rising demand in office space will keep prices high for the foreseeable future. That poses a challenge to investors of all stripes now scouting around for properties.

“It’s expensive right now and this kind of office space should command a premium for the next few years until much more supply comes onto the market,” he said.

Prices have been rising steadily since 2009, a fact not expected to change anytime soon. Also up is the number of commercial sales, which reached the record high of $13 billion last year – a 73 per cent increase from 2009.

Toronto’s famed two seasons – winter and construction – are in full swing. Toronto currently has more high rises under construction than any other city in the world. By 2017 it is estimated ten high-rise towers will open in the city, which will draw the offices of businesses such as Google Canada and Coca Cola further into the city core. Until then, the limited supply and increasing demand will prove office space to be a lucrative option for investors.

The vacancy rate for commercial space was 5.1 per cent in 2012, and is expected to rise to 7.6 per cent next year as more inventory becomes available.

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A long and anticipated 'balanced market' unfolds?

Worries about a hot Toronto condo market turned cool may be exacerbated by numbers suggesting 2012 was a record-breaking year for construction.  

The number of starts reached a record high last year, with 24,388 units spread over 104 projects, according to the Q4 2012 market overview released by Urbanation Thursday. Other records set by the Toronto CMA condo market include 355 active developments, just under 90,000 active units and 56,866 total units under construction.

If the market conditions were spooking investors, the statistics certainly don’t show it. In Q4, sales of condos were up 16 per cent from Q3. The number of new units sold last year totaled 17,997, down just slightly from the 2011 pace.

Ben Myers, Urbanation executive VP, says the market performed well even in spite of hyperbolic fear of a correction.

“Despite concerns over the level of unsold supply in the new condominium market, the ratio of sold to unsold units has consistently been above the long-run average in recent years” he said. “There remains confusion over unsold supply and standing inventory.”

Myers notes that the number of investors switching to a buy-and-hold strategy suggests the market will level out, not crash.

“Many investors chose to hold and rent their units in 2012 rather than sell them into uncertain market conditions” he says. “This is contrary to the theory that condominium unit holders will panic and sell their suites at significant discounts during a softening market.”

Building excess inventory was a constant cause of concern, with Mark Carney leading the charge citing the city’s condo market a cause for “concern.”

But it would seem investors and developers failed to share his sentiment. In an Urbanation survey completed in December of last year, just 11 per cent of the developers, lenders and brokers polled agreed that oversupply in the market was their top concern for 2013. In fact, sales are expected to continue at a healthy pace this year, with the research firm forecasting 14,500 resale transactions and 17,000 new condominium sales throughout the Toronto area.

Source: Canadian Real Estate Wealth

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