Are you ready for closing costs?
According to RealNet, $25 billion worth of condo units are under construction in the Greater Toronto Area, and up to 20,000 units are expected to be completed in 2014. You know what that means? It’s time for people to close!
“Exactly how many units we’re actually going to see occupy (in 2014) is really hard to predict because we’re entering a phase that is uncharted in history. We’re completing more units than we’ve ever completed because more units were sold in 2011 than have ever been sold in history,” said RealNet president George Carras. More than 28,000 units were sold during the preconstruction phase in 2011.
Federal finance minister Jim Flaherty, as well as developers, will be keeping a close eye on how purchasers react. Many of the people expected to close paid small down payments two or three years ago before the new mortgage rules and higher interest rates made it more difficult to finalize a deal.
Plaza has 2,511 units scheduled to be completed in 2014. Vice President Scott McLellan isn’t too concerned though because of King West Condos’ recent success. 1,141 King West Condos units sold during preconstruction in the last two to three years, and only two buyers didn’t close. One couldn’t be located, and the other passed away.
The year of incentives
As you’ve probably heard numerous times, Brad Lamb believes that Toronto’s condo boom is over. Between 2010 and 2013, condo sales averaged 19,425 a year. Going forward, Lamb believes that the yearly average will be only about 12,000 a year as developers hold back on launching new projects.
Development consultant Barry Lyon estimates that the yearly average will range from 12,000 to 15,000, calling 2014 the “year of incentives.”
“Developers will be trying to win over markets they’ve been ignoring for the past several years, particularly first-time buyers and the end-user market,” Lyon said.
Toronto’s condo market stabilizing
2014 will see a bunch of closings, and we should expect fewer sales than previous years. This isn’t a bad thing. We repeat, this is NOT a bad thing. Developers SHOULD be appealing to first-time buyers and the end-user market! It’s going to get competitive out there, and the more developers outdo each other, the better deals you’re going to see.
Don’t get us wrong, watching thousands of investors put their faith in Toronto real estate is a beautiful thing, but we’re ready to watch some first-timers and end-users realize the dream of homeownership!