Whenever a market is performing well, there are always people ready to downplay the results. Last weekend the Toronto Star ran an article showing how cheap Florida real estate was in comparison to the Toronto market. They showed a condo for $81,000 and then said a comparable unit would sell for $300,000 in downtown Toronto. Very interesting but that is only half the story!
Did you know you can buy a condo in Ontario for less than $50,000? There are lots of towns in Northern and even Southern Ontario that have these types of condos for sale.
At the other end of the spectrum, there are 550 sf condos in Miami Beach and South Beach for sale and that sold at over $800,000. That works out to over 1400/sf!!
Now look at the downtown Toronto condo market. You can still get into lower end buildings for 400-450/sf. Expect to pay $500 as the norm. Superior locations and finishes are now selling at $600 and the new projects (being delivered in 3 years) will run you $650 -800 ( for the relaunch of One Bloor).
My point is that these current prices are sustainable. My concerrn is really over how much higher can they go? The strong Canadian dollare will dampen non-resident buyers. Remember when our dollar was 70 cents? Also a market canot sustain price increases that average more than 5% per year on a consistent basis. We had a 15% increase in the last 12 months, so there must be at least a pause in the market as incomes need to catch up. Still our prices are lower than Vancouver (but the gap is narrowing) and other International cities. Condo owners should not get too smug in thinking that prices will keep rising at these rates. The fundamentals suggest that we are in for a levelling off of prices starting in the Fall. With mortgage rates probably moving up, we will need to wait for personal incomes to increase to handle higher prices and to qualify for slightly higher rates. The only argument to suggest that prices would actually decline is that we are somehow at the top of the market and prices can only go down. When you realize that we are coming out of a recession, not entering one, it seems absurd to think prices will then begin to decline when there are still more people waiting to buy condos in the downtown market.