September 18, 2014
All investments are scrutinized based on the return they offer and the level of risk that they involve. Real estate investment is a safe long-term investment that historically has proven to realize an increase in value above that of the inflation rate. It is also one of the easier platforms for investors who intend to invest using borrowed money as the debt incurred is an asset-backed debt and therefore a leveraged investment with mitigated risk.
When investing in real estate, the first three rules are Location, Location and Location. Toronto, being the Commercial, Distribution, Financial and Industrial centre of Canada, continues to experience a demand for housing that outpaces supply. Let’s have a quick review of some of the statistics that relate to Toronto’s Condo Market:
From Stats Canada:
Ø Toronto (also Vancouver and Montreal, which rank as the top three) had the highest number of households in condominiums, accounting for more than half (53.5%) of Canadian households in Condominiums.
Ø One in three (34.3%) of occupied dwellings built between 2001 and 2011 were Condominium Dwellings.
Ø The higher proportion of condominium units in newer constructions was counterbalanced by the smaller proportion of non–condominium rental units. Of the dwellings built between 2001 and 2011, about one in ten (10.6%) was a non–condominium rental unit versus four in ten (41.2%) for dwellings built prior to 1981.
Ø Rented condominiums represented just over one–quarter (26.6%) of condominium dwellings.
Ø Among condominium owners, the proportion of households with a primary household maintainer aged under 35 years was about one in five (19.8%), compared to one in ten (10.5%) for other homeowners. Those over 65 represented 26.1 per cent of condominium owners.
Ø The Greater Toronto Area (GTA) is projected to be the fastest growing region of the province of Ontario, with its population increasing by 2.5 million, or 39.1 per cent, to reach over 8.9 million by 2036 (currently it is at 5.5 million). The GTA’s share of provincial population is projected to rise from 47.6 per cent in 2012 to 51.5 per cent in 2036.
Ø More than 45 per cent of condo owners are “non-family,” compared to just 15.6 per cent in other homes. More than 42 per cent are “couple-family,” with or without kids.
Ø Apartment or condominium buildings occupied after November 1, 1991 are exempt from rent controls.
Ø The Canada Mortgage and Housing Corporation’s statistics show that the condominium ( as a secondary rental market ) vacancy rate has, for the past 4 years, been below 2%. Currently it is at 1.8%.
The Millennial Generation, the generation following the Millennials (Generation Z) and Baby Boomers whose children have moved out (Empty Nesters) are joining the trend of homeowners choosing urban living over suburbia and, for these groups, condos are the preferred form of living space. Toronto cannot create more land for residential houses in it’s urban core, but there are opportunities for condo development as commercial properties and residential houses (via land assemblies) reach the end of their economic life. When you take all of this into account, it speaks well towards the consideration of investing in Toronto’s Condo Market. A Broker that is experience and knowledgable in Condominium Investing always has a few key sites that they have researched, analyzed and are ready to present to their client as their 'hot picks'. I look forward to helping you make the right decision.
Real Estate Broker, Mortgage Agent
Royal LePage/ Johnston and Daniel Division, Brokerage