The Toronto housing market is evolving in an interesting way: detached houses are insanely hot and there's a buying frenzy out there as buyers outbid and outmaneuver each other to snap up limited listings. Right now, when it comes to houses, it's a seller’s world: buyers pretty much have to bend over backwards and pay top dollar to get into a house, especially in the high-demand under $1M category. Now is a great time to sell a house, but a challenging time to buy.
But the condo market is taking a rather different path, which is interesting. It has developed into more of a buyers market in comparison, with lots of supply and far less demand.
“I haven't seen the Toronto condo market this friendly to buyers in over 10 years,” says Julian Kashani, Sales Representative. “There are almost no multiple offers happening. And it's now actually possible to negotiate, which was unheard of pre-COVID. In my last four deals, I've negotiated a price around 5% below asking! And there's so much more choice out there that you don't have to decide instantly. You can sleep on it, even give your parents time to weigh in.”
So all of that boils down to one thing: right now is a great time to buy a condo in Toronto. But the key is right now. Kashani emphasizes the urgency of buying soon to capitalize on market conditions that could be fleeting. If we go into lockdown again (which is a distinct possibility), a lot of units could get pulled off the market. Another reason to act sooner rather than later? Fewer and fewer people can actually get into a detached property unless they have a huge budget or are looking to live way outside the city – condos may be their only choice.
“As people realize having a house is out of reach, they'll turn back to condos,” says Kashani, “I currently have clients with a $950,000 budget who are looking in the east end and are having no luck finding a detached property in that price range. But with that budget, they could get a really great condo if they're willing to change their mindset.”
The danger of the “wait and see” approach
He says there are still a lot of condo buyers out there who are in “wait and see” mode: they’re waiting for the market to bottom out so they can buy for the cheapest possible price. While that plan sounds good on paper, it doesn't always work well in practice.
“It's impossible to time the market,” says Kashani. “If you find a great place, jump on it and don’t worry that the price might go lower. Even if prices drop further, it may not be available then, and you might not be able to find that perfect unit again. And remember, as buyers return at the bottom of the market, the good units in good locations will be the first to get snapped up, and you'll be left with less ideal choices."
What about investors?
That's the landscape for buyers who want to live in the condos they buy. But what about investors who want to buy units to rent out? Airbnb is off the table for the foreseeable future, and with the rental market softening, rents are dropping and it's harder to land tenants. So does it make sense to invest in a resale condo in Toronto right now?
Kashani's answer to that question is a resounding yes. Buying a unit at a 10% discount means you can afford to charge less rent, and today's insanely low interest rates give you even more room to play. As long as you do your research so you can buy a unit that appeals to renters (a Condo Pro can help with that) – and you’re financially prepared to go a couple of months before you find good tenants, you should be good. But talking to an expert first really is in your best interest, especially if you’re not an experienced investor.
“Each pocket of the city is so different,” says Kashani. “It's our job to help our clients figure out where the best investment units are, and which ones will generate the greatest interests from potential tenants.”
What if you can't swing a purchase that doesn't pay for itself right away?
You can still invest in a pre-construction unit. Pre-con properties give you time to save a deposit over several years before committing to a mortgage. By the time the project is built, the rental and Airbnb markets will have had time to recover, so demand is likely to be higher, and you'll be able to charge more.
Related info: Is now a good time to buy a pre-construction condo?
“The price of pre con isn't going down, but resale is.” says Kashani. “If you're in a position to buy now, resale is 100% the way to go. The pandemic will end, people will travel again, schools will come back, and if you take a long-term approach to investing in real estate, you'll always come out ahead. If you can take advantage of the current Toronto condo market as an end user or an investor, there hasn't been a better time to buy in years.”
Ready to start looking?
Connect with a Condo Pro to find the best condo that’s the greatest value.