If you want a decent condo, of decent size, in a decent building, in a decent location, that's probably what it will cost you.
It wasn't that long ago that I was telling my buyer clients that a $350k budget would get you into the Toronto condo market. Not into a studio or a junior one-bedroom, but an actual one-bedroom condo with a functional layout that you could actually live in and not feel like you were living in a hotel room. Fast forward a few years and now if a client comes to me with a $450k budget, I take a deep breath, cross my fingers and typically respond with "I'll see what I can find. But we'll have to be open-minded". And then I wait for my MLS search to come back with zero results.
I remember when I bought my first condo in Toronto.
It was the fall of 2009 and the financial crisis had more or less passed us by and the condo market was on fire. Back then it seemed like every unit on the market was listed for $299k, with a hold-back on offers. $299k! Can you imagine? And even then, there was the same amount of rhetoric going around in the media about how the Toronto condo market was in a bubble.
Come to think of it, I've never once heard an apology from anyone in the media or any economist who convinced people to continue renting and to wait for the condo "crash" before buying. But I digress.
The condos I was looking at back then were not studios, or junior 1-bedrooms. They were all 600+ sq ft units with parking. And, very similar to today, there were multiple offers on nearly every property. It took about 7 bidding wars for me to finally be successful on a 695 sq ft 1-bedroom unit, with parking, about 3 blocks from St Lawrence Market with a winning bid of $330,300. And believe me, when I won, I thought there was a good chance I overpaid by $5k to get it. That unit is probably now worth closer to $550k. Makes me laugh to think about how I almost walked away from offering that extra $5k.
Back then, $330k for a condo seemed ridiculous to a lot of folks. And trust me, people let me know how they felt.
Today, I'm working with a number of first-time buyers who are in the same position I was in 8 years ago looking for their first purchase except with much larger budgets of $500k+ and it feels like deja vu. Multiple offers, bidding wars, and units selling within 24-hrs. Want to sleep on it? Sure - but there'll probably be an offer on it in the morning from someone else.
I'm working with one awesome client in particular right now who reminds me a lot of myself. Looking for his first condo, with easy access to the subway, doesn't need a ton of space but can afford to pay a little more for a better layout, view, etc. We're focusing on the Yonge/Eglinton area and with the crazy amount of condo construction over the last couple years, you'd think finding a 1-bedroom unit for ~$500k would be a piece of cake, yeah? Well, in the past week we've seen about 8 units in the area - of those, 6 sold within 48-hours (one sold before we even made it there), and another unit we saw last night has an offer on it already. And we saw this last one about 4 hours after it hit the market. All these units were listed for between $485k and $595k, which today seems to be where qualified buyers with strong down payments, good jobs, and great credit seem to be focusing their attention to get their start in the TO condo market.
These days, if I see anything listed for $399k that isn't a studio, I don't even need to read the broker notes (notes on the MLS listing that only agents can see) to know that there is a hold-back on offers. And if there's a decent sized "starter" condo in a great location, in a great building listed for $499k, I already know there will be a dozen agents with their clients waiting at the door to get in.
So, what's the point of this blog?
Maybe you were hoping I would talk about my predictions for how the new mortgage rules will affect the condo market in 2018? I had originally planned to write about that but anyone who knows me knows that I don't like making predictions. And I actually cringe when I hear "experts" boldly make market predictions because nobody - absolutely nobody - can predict a market.
But what I can tell you is that I have not personally seen any slowdown in demand for entry-level condos and I see no reason for this demand to slow down. The buyers I'm working with will not be affected by the new stress test because they have chosen not to buy at their absolute max and there are many, many buyers like this who will keep their searches going into 2018, keeping the demand strong. Yes, the new mortgage rules will cut some buyers off at the knees but if anyone is waiting for a meltdown in prices or a complete evaporation of demand, I'll make a friendly wager that it will be business as usual right through the spring.
There, I made a prediction.
And if I'm wrong and prices actually do start to soften, don't just sit there and say "see, I told you so!" Use it as an opportunity to get into the market at a better price than today. Because isn't that what you've been waiting for?
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Your Toronto condo lover,
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)