Blog

April 2010 Toronto Loft Market Report

April 2010 Toronto Loft Market Report

Author: Carl Langschmidt

Author

 April 2010 – Toronto Loft Market Summary

For those of us at MrLOFT.ca, the Spring season in Toronto is one of our favourite times of the year! Not only does it tend to herald some warmer weather, but it usually provides a more active resale market as homeowners or prospective buyers decide it’s time to make that move.  After all, Spring is the season of growth and change.

 

This year seems to be no different.  The warmer weather has arrived, allowing loft owners to take advantage of balconies, terraces, rooftop patios or nearby parks, and market transaction activity is also hotting up.  Many prospective Loft buyers were left frustrated over the past six months due to limited available inventory.  This coupled with mortgage rates at 50-year lows have seen those units which were offered to the market being snapped up quickly with many multiple offer scenarios.  Of course, such an environment puts upward pressure on prices and while there may be offers on the table from numerous eager buyers, there can only be one successful bid.

 

However, the market has responded with a dramatic rise in listings over recent weeks means we are entering a more balanced environment. Transaction activity is strong and prices continue to outperform those witnessed last year.  The growth in listings simply offers buyers a wider range of choice and reduces some of the pressure to make instant, on-the-spot decisions or else risk losing out. As of early april loft inventory is up 100% from earlier this year and there finally good opportunities for Buyers.

 

The overall residential real estate market in Toronto is also in very good health, with the Toronto Real Estate Board recently reporting that total sales volume during the first quarter of the year was the highest on record (22,418 sales).  They predict that average prices will continue to grow throughout the rest of 2010, while expecting the steep rate of incline to smooth out somewhat as demand and supply become more aligned.

 

Many of the aforementioned buyers who were frustrated in recent months - to the extent they decided to postpone their purchase - are now being inspired back into the more accessible market.

 

Additionally, recent activity has been stimulated by the upcoming implementation of the new HST on July 1st.  The effect seems to have inspired those who expect to be purchasing with the next year to step up their search and close on a property before the changes come into effect.  It should be noted that the new HST will be applicable on new construction projects only.  Resale purchasers will be affected via the increased tax on legal fees and other closing costs or services, but not as a tax on the overall sale price.  For this reason, it is not expected that the HST’s implementation will have a significant ongoing impact on the market as we move through the remainder of 2010.

 

 

The table below illustrates overall activity within twelve popular Toronto Loft buildings during the first four months of the year, and compares that against the same figures for the entirety of 2009.  The pro-rata transaction volumes are well up over last year in most buildings surveyed.

As you may have noticed, the City is abundant with cranes and construction site boardings as the development of new projects continues unabated.  Many MrLOFT.ca clients have been asking about the relationship between the asking prices for new-launch buildings, versus existing, ready-to-occupy properties.  

 

Traditionally, investors would expect a risk-return premium, or discounted price when purchasing a unit within a newly launched project rather than an existing building.  The obvious difference being that your new unit will not fully materialize for a couple of years, and so there are some risks involved that do not factor in when you buy a unit that you can walk around, see, feel and move into shortly thereafter.  In the current climate however, many of the new projects are capitalizing on the demand and launch prices are creeping up to or beyond the prices of comparable existing product.  

 

Of course each project must be judged on it’s own merits and there are many highly prestigious offerings which obviously sit in higher price brackets, but it is strongly advised that those considering an investment in a new project receive some expert advice before jumping into their new contract. Call or email the MrLOFT.ca team and we’d be delighted to offer our thoughts and advice on your various options