Thinking of buying a condo in Toronto?
There’s no doubt that home buyers have dealt with some unusual challenges in 2020. The most significant has probably been trying to understand the market, what it might do next and when is the best time to buy a condo in Toronto. In the condo segment, this task has been especially difficult. Recent shifts have many prospective first-time buyers wondering whether now is the time to purchase—or if they should put it off.
If you’re trying to decide if you should buy your first unit in the near future, here are a few things to know…
Are condos a good investment?
Before we move on to current conditions, let’s take a big-picture look at the condo market. Is buying a condo in Toronto a good investment? What has historically made units in this city such a good investment?
First, there’s the high demand. Thanks to Toronto’s multicultural makeup, strong economy, and world-class amenities, its population is growing by leaps and bounds. Impressive rents are another advantage. Many local landlords enjoy a sizeable chunk of change in their pockets every month. Lastly, while the market is bound to ebb and flow, Toronto condo owners tend to enjoy high appreciation rates.
Of course, we’re living in unusual times. The norms that local investors rely on have been called into question. As a result, you may be asking yourself if buying your first condo is a really good idea. Before you can answer that question, you should understand the current market.
What’s happening in the Toronto condo market
Even if your knowledge of the real estate market is limited, you probably know that current conditions aren’t exactly normal. There are a couple of reasons for that. The first, of course, has to do with COVID-19.
While the city’s real estate market has rebounded (and then some) in the past few months, the pandemic has put a damper on condo demand and sale prices. Put simply, many owners have decided to purchase more square footage and additional outdoor space—outside of central Toronto.
The other factor is the short-term rental registry, which was recently enacted by the city. Due to this registration system, an owner can only rent out a property short-term (for 28 consecutive days or less) if it’s their primary residence. They must also register with the city. As a result, many investors who had previously purchased condos for the purpose of operating Airbnbs are trying to sell quickly.
Together, these two factors are hindering demand for buying a condo in Toronto and slowing price growth in the condo sector. They’ll likely continue to do so for a while—possibly even for the next few years. Of course, that doesn’t mean you shouldn’t purchase a unit. What it does mean is, you should think about why you want to buy.
Why do you want to be a condo owner?
As Torontonians, we’ve become accustomed to hearing that real estate is a great investment. That said, what’s happening right now could have repercussions in the years ahead—and buyers (especially first-timers) should know that.
If you’re thinking of purchasing a condo primarily as an investment, you’ll want to give it some serious thought. Yes, buying a unit today could eventually provide a great return. That said, it may take some time.
The pandemic is far from over, and mindsets are often slow to shift. Not only that, but many companies will be maintaining the work-from-home model for years to come. In other words, if you buy a unit (especially a small one), you may not see the level of enthusiasm from renters as you would have in the past.
On the flip side, if you’re a buyer who’s looking for a condo you can make your own, now might be the perfect time to do it. There’s some real potential in the market right now—especially for first-timers.
The current opportunity for buying a condo in Toronto
First off, there’s more inventory on the market than usual, which means buyers have an abundance of choices. Since some sellers are in a rush to move on, there are also great deals to be found. Lastly, the competition for condos isn’t as fierce as it once was.
For many first-time buyers, these conditions will prove beneficial. Right now, it’s possible to get a foothold in the market for less than any advisor would have predicted a year ago. Achieving this outcome probably won’t be as stressful as you think (since you’re less likely to find yourself in a bidding war).
Of course, I would never advise anyone who’s feeling uncertain to jump into the condo search. That said, if you’ve been wanting to buy your first unit for a while now, doing so may be well within your reach. Speaking to an agent who knows the local market is the first step!
Are you thinking of buying a Toronto condo in the near future? Get in touch to learn more about the process—and how I can help!