JANUARY 2008 - MARKET FORECAST
We have always been known as the most aggressive forecaster of the Toronto Condo Market. We have also been the most accurate. Most economists rely on macro statistics and techniques used to forecast other commodities. They have constantly predicted a market down turn. If you have been keeping score, the down turn started in 2004. On the other hand, Our Ten Year forecast last year said that condo prices would double!
As a real estate brokerage, we have access to stats at a micro level and also more current than other forecasters. The knock against us is that we are just 'salespeople' and we have to hype the market to make sales. So let us share with you a couple of secrets. First, over 80% of our agents have university degrees - and our brokerage actually has economists and MBA's! Secondly, people tend to buy condos for today's needs - without much thought for changing lifestyle or extra space in the future! Younger and older buyers (who either expire or move to retirement residences) make buying and selling decisions that do not reflect any economic cycle. A young couple, living in a one-bedroom condo that is expecting a child will move whether interest rates are 2% or 12%. If the unit they own has gone down in price, then the unit they want to move to has also gone down, so the impact is neutral.
What will impact the condo market from an economic sense is the investor portion, which is less than 30% in total. Economics will also impact the rate of price appreciation for condos but not the volume of sales in the resale market. Economics has the most significant impact on buyers and sellers who can postpone the moving decision - read detached houses! Our Forecast is all about the condo market in Toronto, NOT the Canadian real estate market.
WHAT YOU NEED TO KNOW ABOUT TODAY'S CONDO MARKET:
1)There is still a shortage of good condo listings. The first sign of a market correction will be when we have more listings than buyers - no signs yet.
2)'Owner occupiers' are the major buyers in this resale market - in 2007 investors all moved to new projects, which are completing in 2010/2111. That is when you will see the market change - and remember you read it here first.
3)The impact of the new City Land Transfer Tax will be minimal. The Ontario Government's decision to extend the first time buyer rebate for the Provincial Land Transfer Tax from new units to resale as well will encourage sales downtown and this will mitigate the new City tax. The new tax will however impact expensive properties that are on the 416/905 boundaries, but not downtown.
4)Interest rates are not a factor. Employment also remains strong.
5)More people/buyers still want to live downtown - not just those who work in 416 but also those who work in 905! And then you still have significant immigration.
HOW THE CONDO MARKET WILL PERFORM IN 2008:
1)2008 will be a record year for condo resales downtown - at least 8% higher.
2)Condo prices will increase by 10% (last year was the first year of double digit increases in condos and most markets can absorb three years of double digit increases before a correction)
3)Look for the Etobicoke Waterfront to increase in popularity as more buyers over 50 enter the condo market. It is lower priced than either Downtown or Port Credit.
4)One-bedroom condos are second choice. Buyers want a minimum of one plus a den.
5)While parking spots at $30,000 are quickly becoming the norm downtown, buyers are learning to live without a car or a parking spot!