Everyone thought that when HST hit July 1st along with other negative views that the Toronto condo market would hit the wall – at least over the summer! And I was one of those doubters.
But people are starting to realize very quickly that the world has not ended and that HST DOES NOT APPLY TO RESALE RESIDENTIAL PROPERTIES! Sure the downtown market was hit by the G20 – in fact that week did more to slow the market than any other factor. Even the Indy Weekend and the Lake Shore closing have only put a minor damper on sales. Why??
The other fear, of rising interest rates choking off the market has largely subsided. Yes, short term rates will creep up by another half per cent before year end but it is uncertain whether fixed rates (determined by the bond market will follow suit). Our rates cannot afford to get too far ahead of U.S. rates. At the same time, our rates have moved up in response to an improved economy – better job market and incomes – read more people can afford condos – and hence an offset.
Finally the long term fundamentals are very positive for the downtown condo market. More and more people want to live here – not just through immigration but a changing lifestyle among younger adults who value free time over gardening and household chores. And when investors look at the Toronto market, they still see cheap real estate when compared to other major cities around the world – even after price corrections in those other markets.