Despite what many headlines suggest about entering today’s Canadian condo market, now may be the perfect time to think bigger.
It's no secret that the current new-home market has been slow, especially in urban centres like Toronto and Vancouver. If you have read my column before, you know that sales are down, and developers have pulled back on new construction. However, this shift in activity presents a unique opportunity — particularly in the realm of larger two- and three-bedroom condos.
If you need some convincing, here are six reasons now may be the time to buy a bigger condo:
1. Developers Are Motivated
There are a multitude of presale buildings about to complete construction and, of those, there is a lot of inventory left to sell in the next 6-12 months. Of that remaining inventory, the majority of suites are larger two- and three-bedroom layouts. Of course, developers don’t want to have to close or hold these homes themselves, so they are very motivated to move them, which means there are plenty of deals on the market.
2. Overall, Larger New-Home Supply Remains Low
Despite developers being motivated to sell these available homes — because the supply and gross value is a lot for them to personally hold — the total supply is low and, for some time now, nobody has been adding to it. Affordability has all but stopped the single-family market, townhome product is not pacing at any rate to pick up that slack, and very few condo projects have launched at all. This is a momentary supply blip in time, which will be followed by a long gap until anything new is built. Once the current supply is gone, this gap will only drive rents — and prices — up for this housing type.
3. Demand For Larger Condos Is Growing
As a function of affordability, the lack of support from all levels of government for single-family ownership, and a population shift toward adult immigrants (as fewer babies are born and baby boomers die), the number of new housing formations — and the demand for family homes — is only growing. What may be available today will likely not be tomorrow (and by then, it will be in very high demand). This means your investment today is likely to hold or increase its value, and that your ability to sell or rent the property out, if needed, would be promising, with lots of buyers and renters available to draw from.
4. Governments Are Stacking The Decks Against Ownership
The government has penalized families who need a mortgage helper by making untenable tenancy and nightly rental policies, and are now only funding rental buildings owned by institutions — which is all that is being built. Very soon, only the rich will own a single-family home and, soon after that, you may have to be rich to own a home at all.
The condo you can afford to buy today may very well be the condo you could not afford to rent in the future.
5. Interest Rates Have Lowered (And Still May Have A Bit More To Fall)
Interest rates are down to the degree that today, it’s a much safer bet to buy a home, and economists are suggesting we still may see another 75bps drop this year, to get closer to the 2% target. Now may be the perfect time to lock in one of the deals currently available — before they are gone.
6. Homeownership Is The Only Path To Housing Cost Stability (And Long-Term Affordability)
Homeownership has long been the best way to lock in your monthly housing costs today and to know you’ll see that cost go down over time, as it’s paid off. Conversely, rental prices are very high right now, and they’re only going up over time. When it’s all said and done, when renting, you come away with nothing invested to sell (and you are subject to market rates), all while you’ve slowly paid off your landlord's mortgage on their behalf. This is why the wealthy buy real estate.
To Conclude
It is not lost on me how confusing the real estate market is right now, with doom and gloom headlines casting fear and doubt on what could be your most important financial decision. I also know that to date, condos have largely been thought of as tiny urban shoeboxes, made for a very specific time in life. But if you can see through the murky headlines and look at the data — and the larger homes that are available — you’ll agree that, whether they own it or not, a growing number of families are already calling condos home. And many more are currently lining up to do the same.
With all of this in mind, now may be the perfect time to secure your family's home for the future — while you still can.
This article is authored by Ben Smith, President of AVESDO: a Canadian software company harnessing the power of data to help real estate professionals make better, faster, and more informed sales decisions.
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This article was produced in partnership with STOREYS Custom Studio.
