Affordability and Efficiency Will Define 2018 Condo Market
2018 will be the Year of the Condo, predicts Debbie Cosic.
While 2017 was an incredible year for condo sales in Toronto and beyond, Cosic, founder and CEO of Int2ition Realty & Brokerage in Mississauga, predicts 2018 will be a watershed year for suite sales. Int2ition specializes in project marking, merchandising and selling of new home communities and condominiums.
“I believe it will be unlike anything we’ve ever seen,” she says.
Even though new mortgage stress test rules will reduce some purchasers’ buying power by 20 percent (eg. those who qualified for an $800,000 home prior to December 31, 2017 will now be looking at $640,000), Cosic says condo builders are responding by designing smaller suites with maximum function, such as eliminating hallways to create more space.
“Efficiency and affordability is the mantra for 2018,” she says. “The pressure is on to design efficiently.”
She says innovative projects such as the Loop Urban Towns launched by Trillium Housing will help rental families get into home ownership. The program allows purchasers to put just 5 percent down, with Trillium supplying a payment-free, no-interest mortgage of 15 percent and the bank funding the rest. Trillium is repaid through some of the equity gained when the house is sold. The Loop’s 62 townhouses attracted 800 people who came to pre-qualify and Trillium will be launching more projects in Toronto and Hamilton.
Cosic says to watch for detached and townhouses to be designed to accommodate multiple families, such as with basement suites and third-floor lofts as another affordability solution.
First timers and downsizers are driving the condo market. The demand for condos is pushing outward from the 416 to places such as Milton, Whitby, Kitchener, and Collingwood. Pickering will also be a hotbed for condo development, with a five-tower master-planned community by Chestnut Hill Developments called Universal to launch soon. Pickering prices are more affordable for end-user buyers than downtown Toronto, yet Union Station is only a 25-minute GO Train ride away, says Cosic. Pickering is also attractive to investors who can expect good rental returns on their units, says Cosic.
Downtown Toronto will continue to be in big demand, says Cosic, as many millennials want to live near their jobs and more employment is being created in the tech and movie industries in the core. Cosic expects more families will embrace condo living and developers are responding by designing buildings catering to this demographic, with amenities such as stroller valets where parents can check their strollers and more play areas.
There’s been a resurgence in interest in condo living by baby boomers and Cosic says boutique condo buildings are being designed with larger suites catering to this market place.
The investor segment of the market remains strong, Cosic says, “as real estate is where people want to put their money. Many communities believe in bricks and mortar. It’s a simple equation, not a complicated investment, and good for entry-level investors.” She says more and more investors are opting to keep their suites long-term and they want to be landlords. Condos have become the new rental stock and will continue to be important to supply Toronto’s tight rental market.
Chinese buyers continue to be crucial to the GTA real estate market, says Cosic. They are the largest investor group in the Toronto area and are sophisticated and knowledgeable. Many building have been designed to cater to them including ones with names such as Panda, Life and Lotus. Asian buyers are also venturing beyond their traditional favoured communities such as Markham, she notes. While many buyers used to come from Hong Kong, the majority are from mainland China now.
“They are realizing the value in places such as Oakville,” she says. “Oakville also has fantastic schools. Thirty to 40 percent of properties are being sold to Asian buyers.”
They are also interested in communities beyond the Golden Horseshoe, such as Dundalk, an hour and 15 minutes from Brampton, or in Bobcaygeon, an hour and 15 minutes from Markham with homes prices cut in half, a popular cottage country community north of Peterborough.
So the market being driven by affordability is widening its catch net area to many new frontiers
Tracy Hanes is a GTA-based real estate writer