"The single most compelling reason for first-time buyers to consider a pre-construction condominium is affordability."
Cost, Baker Real Estate Incorporated CEO Barbara Lawlor explains, is a primary explanation as to why the pre-con market is an ideal option for those looking to invest in their first-ever abode.
But it isn't the only one. The way that cost is managed, too, can serve as an enabling factor in first-time buyers making their big purchase.
"[Pre-construction] provides an entry point to the Toronto residential market not only in terms of price, but also structure," Lawlor explains. "There are available units in the $400K+ range, something that no longer relates to houses even in satellite cities. Furthermore, payments are made incrementally, according to a schedule of one to two years. This allows buyers to save money as they go, rather than making one very large, lump sum down payment."
READ: Rental Rebound Bodes Well for Pre-Construction Condo Sales
While she emphasizes pre-con as a smart financial move for those shopping the market for the first time, Lawlor does also stress the importance of self-education before making any major decisions.
"The number one piece of advice is to take the time to do research and inform yourself," she says.
And there are ample places to do just that: TARION, BILD, and CMHC are all educational resources that provide fact-based information about pre-con projects, and Lawlor recommends checking them out alongside the developers of the exact builds you're interested in.
"Baker is also a great resource because we work with all the great developers and have aggregated that knowledge for clients," she says.
Beyond getting smart on the market's ins-and-outs, there's also the role of envisioning. With pre-con, some time will come to pass before you stand within your suite's four walls. As such, you'll want to make sure you understand how to plan your space without actually having been in it yet. Some might call this "the fun part."
"It’s important to learn how to read a floor plan and understand how the space is allocated and whether that’s aligned with your needs. It’s not just a question of square feet, square inches matter given how very efficiently every bit of space is used," Lawlor says.
"Spend time to consider the custom finishes available and what make the most sense for you -- and for future re-sale considerations. Location is always massive factor in re-sale as well, so check out the neighbourhood carefully and consider what it will look like in several years from now."
Lawlor says it's also critical to learn about financing and carrying costs, so you go into your purchase with a robust budget and financial plan. And prices -- while markedly lower than those of ground-level homes -- do fluctuate, just as the freehold market sees costs go up and down (ahem, well... Mostly up).
"Prices will always be determined by the balance of supply and demand. While the future is impossible to predict, it’s worth noting that a healthy inventory level is historically eight months of supply in the pre-con condo market. It currently stands at three months, even as we are facing a significant spike in demand," Lawlor says of the pre-con market's current state.
"The first source of demand is new Canadians, 400,000 of whom are expected to come to Canada next year. Of that number, about 150,000 will settle in and around Toronto. Pre-construction condos give them three to five years to settle and get established, earning along the way to make the instalment payments."
Lawlor notes that foreign students will also return to the GTA soon enough, meaning an additional 40,000 people seeking housing in the region. While some students will look to purchase their own suites, others will opt for rental accommodation in investor-owned condos.
And all the while, the "smart-size," market is, according to Lawlor, both distinct and growing.
"For this group, pre-construction condos offer the attraction of three to five years to transition -- physically and emotionally -- from a larger family home to a more manageable personal space. The attraction is the immediate community and the safety: Neighbours, a concierge, amenities and services," she explains.
All this is to say, as Lawlor does: "Purpose-built rental construction is in the planning stages, but it’s not close to meeting demand."
But even with [ever-] increasing competition to get in on Toronto's housing market, the collective desire for space in the city isn't expected to let up anytime soon.
"It never gets old: location, location, location. There’s evidence that city centres are on the upswing, including the fact that companies once considering office space reductions are reversing that," Lawlor says.
"The fact is that Toronto is a world class city and demand for proximity will only continue to grow. Not only are new residents arriving, but it’s a safe bet that many who moved outside the city during the pandemic may be re-thinking that choice as office life and commuting resume."
Perhaps, then, those who have been on the fence about whether or not to dive into pre-con should determine right now an ideal moment to do so. If competition is only to continue rising, imagine the freedom o̶r̶ ̶f̶i̶n̶a̶n̶c̶i̶a̶l̶ ̶b̶e̶n̶e̶f̶i̶t̶ that will come with having a place to call your own.
(Or, if you choose, to call someone else's.)
"These condo units provide a natural first rung on the property ladder and provide an opportunity to learn about home ownership along the way," Lawlor says. "And by no means least of all, they are terrific investments with proven returns."
