A decrease in price causes investors to put their money in condos downtown Toronto.
I just finished reading a toronto Star real estate news article and it seems there's been and continues to be a spick in downtown condo sales. I went to school and Central Technical School at Bathurst/Bloor, I enjoyed the convenience of walk, busing, roller bladding to downtown locations. Conveniently located to shops, schools, nitelife, Sports. Want to watch a professional game, we Toronto has it, such as the Toronto Raptors basketball, Blue Jays baseball and Toronto Maple leaf hockey team.
This as was written by Terrence Belford in the Toronto Star
In an astonishing turnaround, the Greater Toronto Area's new condo market shot from moribund to near record-breaking in September. In August only 861 suites changed hands, while in September that number rocketed to 1,658.
Indeed the number is probably about 400 units higher, says George Carras, president of RealNet Canada Inc., which tracks the new condo homes market. Those suites, however, were sold toward the end of the month and RealNet has to wait until the 10-day rescission period is over to count them as sales.
Even the flagging detached new homes market enjoyed a small up-tick, rising to 1,064 sales from August's 936. So what happened? Experts like Mr. Carras suggests two things: A near record level of new project launches (14 and the second highest in a month on record) and the CIA.
No, not that CIA. CIA is what people like Mr. Carras call condo investment advisers. They are a new breed of real estate agents and brokers who have on-hand a healthy roster of investors both domestic and foreign. That's who snapped up new condos at a frantic pace in September, a pace that seems likely to have continued through October as well.
Insiders suggest that, in some areas, investors accounted for up to 60 per cent of sales in those newly launched projects and with about 4,000 new suites coming to market, the impact was indeed profound. Downtown West, the entertainment district, for example, saw 611 sales in September while Mississauga City Centre saw 177 and Highway 7 and Yonge 148.
So what drove investors to open chequebooks and plunge back into the market? The chief factor - aside from a smorgasbord of choice in high density, much sought after neighbourhoods - was price. Believe it or not, the index price for condos actually dropped $14,608 in September from August to stand at $410,730. Bit of smoke and mirrors really. Average price per square foot stayed nearly constant at around $493. The price drop came from builders creating smaller suites - about 831 square feet or 10 per cent smaller than August.
"Those CIAs had been advising their clients to hold off until the fall and all the new launches," says Mr. Carras. "They are really on top of things and knew builders would be redesigning projects to make suites smaller and therefore more affordable.
"Those guys know exactly what their clients are looking for, what they like, and can match new projects almost perfectly to what clients prefer to invest in."
The CIA and brokers and agents in general have become a vital part of the new condo business, says Barry Lyon of N. Barry Lyon Consulting Ltd. In the ‘good old days' builders generally relied on their own staff sitting in presentation centres as their primary sales force.
"Then if you sold 30 per cent of suites during a launch period you were doing well," Mr. Lyon says.
In today's market, however, the success of a project is heavily dependent on risk management and a large chunk of risk management is the speed with which a builder can sell enough units to reach the level of sales demanded by the institutions which provide construction financing.
"Today you shoot for 60 per cent of sales during the launch period," says Mr. Lyon. "Speed is a determining factor today."
Which is where the CIA comes in. Brokers and agents with lists of investors in their pocket are courted and treated to advance previews well before the public gets a look at projects. Generally what they want are one bedroom and one plus den suites in buildings on or near high speed transit lines and in sought-after rental areas. Price is crucial. Investors want suites where rents cover all or almost all of mortgage and monthly maintenance costs.
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