Is Now a Good Time to Buy a Downtown Toronto Condo?
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Buying a new home or getting your feet wet as a real estate investor in Toronto has never been easier than it has today. Despite the country experiencing several economic headwinds as a result of the COVID-19 pandemic, the Canadian housing market has shown no signs of slowing down.
In fact, November was one of the best months on record for resales, far exceeding the previous mark by more than 30% set back in 20181. But despite increasing consumer demand for homeownership coupled with cheap mortgage financing, many buyers are concerned about a weakening condominium market.
While the Toronto condo market has softened over the last year, an increasing supply of inventory offers opportunity if you are looking to expand your real estate portfolio, setting yourself up for massive gains.
If you have been on the fence about buying a condo located in downtown Toronto, here are a few reasons why now is a great time to buy.
Increasing Number of Renters
It is no surprise that the supply of condos in downtown Toronto is increasing. Many real estate investors have decided to sell off portions of their holdings because the tourism markets that they relied on have dried up (at least for the interim) as a result of the COVID-19 pandemic.
But even though inventory is creeping higher, the silver lining is that the number of renters is also increasing. In fact, the number of leases signed in July was up nearly 12% compared to the same period in 20192.
Although vacancy rates are a concern if you are a real estate investor, consider that these might see downward pressure with the recent announcement of approved COVID-19 vaccines.
Furthermore, if you are looking to call downtown Toronto your home, you may be able to find a real estate investor eager to sell you that unit with the perfect skyline view for cheap. Lock in a low interest rate on a new home loan and you can call that a win-win.
Mortgage Rates to Remain Low
The Bank of Canada has, on numerous counts over the last few months, dedicated itself to holding a policy of suppressing interest rates until the economy recovers, labor markets stabilize, and inflation reaches an appropriate target level.
The next schedule rate announcement is set for January 20, 2021 and is expected to remain at 0.25%3. This trend for the benchmark interest rate is forecasted to continue through the end of 2022, with an incremental increase in 2023 only if economic trends become favorable3.
Effectively, this means that mortgage interest rates will remain low for the foreseeable future, fueling the Canadian housing market. If you are looking to buy a downtown Toronto condo, you may never get an opportunity to lock in a lower interest rate again.
Since most mortgage loans span terms of many years, that could be a massive savings over the life of your loan.
Low-Maintenance Life
Sales data supports the notion that homebuyers over the last few months are skewed towards buying detached single-family housing. But the problem with buying a house is that there is a lot of maintenance that goes into keeping it functional and modern (or else it begins to impact safety and market value).
However, if you are seeking a low-maintenance experience, a condominium is great because your monthly condo fees go towards normal maintenance tasks such as lawn care and snow removal.
Most condo buildings also offer amenities that many detached homes cannot provide such as gyms, recreational areas (i.e., basketball, volleyball, tennis courts, etc.), or even pools. While you can install many of these with a traditional single-family home, you will be stuck floating that $50,000 bill to have that heated pool installed and you may not even recoup all of your investment when it comes time to sell.
Lastly, location can be a considerable driving factor. There is not a ton of inventory in downtown Toronto in terms of single-family homes compared to condos or townhomes. While COVID-19 does have many concerns about health risks living in more urban epicenters, understand that at some point society will have to return to some sort of normalcy. Why not set yourself up to live by all the attractions that Toronto has to offer once that time comes.
Sources
1 Hogue, R., & RBC. (2020, December 15). Canada’s Housing Market Kept on Rolling in November. Retrieved December 16, 2020, from https://thoughtleadership.rbc.com/canadas-housing-market-kept-on-rolling-in-november/?utm_medium=referral&utm_source=economics&utm_campaign=housing
2 Punwasi, S. (2020, August 14). Toronto Rental Market Hit by 82% Spike in Apartments for Rent. Retrieved December 16, 2020, from https://wolfstreet.com/2020/08/13/toronto-real-estates-latest-problem-is-soaring-rental-inventory/
3 MortgageSandbox. (2020, December 14). Canadian Mortgage Interest Rate Forecast to 2023. Retrieved December 16, 2020, from https://www.mortgagesandbox.com/mortgage-interest-rate-forecast