The condo market is presently in an unusual situation, particularly in downtown Toronto. There are a few factors for this and has some people asking is now a good time to buy a Toronto condo?
And.... the answer is..... possibly
Let's go through these factors
1. Airbnb rule changes.
The government changed the laws when it comes to short-term rentals so many investors/ entrepreneurs have been impacted by this. Owners or individuals running an airbnb business can now only rent out their principal residence for a maximum of 6 months per year. There are also fees/ license requirements for those that wish to continue to airbnb their condo.
2. Foreign Students
With 2020 being what it was, many foreign students did not come to Toronto to study as they normally do. They have a large impact on the demand for condo rentals near their college or university. Most students studied online and stayed home so there was less demand for Toronto condos. Lower demand equals lower prices and higher vacancy rates.
3. Immigration
As noted above 2020 out a virtual stop on the large numbers of people immigrating to Toronto and the rest of Canada which the country relies on for growth. For individuals and couples renting or buying more affordable housing such as condos due to the lower price on average in Toronto when compared to a house, the demand dropped. For families needing more space with 3 or 4 bedrooms, they would have to opt for a house and with Toronto's pricing, many looked to neighbouring towns and cities which saw a lot of activity and bidding wars.
4. Remote work
With offices closing, many people we forced to work from home if possible depending on their job. With downtown Toronto rents and prices being high. many people decided to rent further outside the city for a cheaper price or sell and buy a house outside of Toronto as you get more value for your money if they didn't have to be so close to work or have to deal with the typical traffic or commuting to work on a daily basis
5. Investors
Many investors bought new construction condos at high prices in the $1200-1400 per sq ft. If these condos are ready this year in 2021, their expected rental incomes are going to be 10-20% lower than what was expected. Investors who are now looking to buy resale condos as they see a good opportunity to buy at a lower price are trying to buy condos based on the income it can generate not what the typical market value would be. So I'm seeing a difference with buyers who are buying and moving into the condo versus investors strictly looking at the numbers and trying to find "a deal".
To summarize, for those of you waiting for a market crash, you will probably still be waiting. I know many people who told me 3, 5, 10 years ago they would wait and they missed the boat and got priced out of the marketplace. However with the market currently being a little softer to buy a Toronto condo, now may be a good time to buy before it heats up again. As we begin to get back to a normal life, demand will increase, and hence so will prices. It hard to predict the market to know exactly when to buy or sell, my advice is always long term real estate has always gone up and you can't live in any other investment.
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