So we’ve entered new territory in the condo market. Demand and prices have gone bananas. It’s literally happening all over the city:
- A condo listed at $299,900 sold for $476,000 in the Junction Triangle. There were 36 offers. Yes, 36.
- A condo listed on the Etobicoke Lakeshore was listed at $359,000 and sold for $441,000. Just a few short years ago that whole area was a tough sell, and owners were struggling to break even. Not so anymore.
- A townhouse in Liberty Village sold for $100K over the asking price. The last sale of a similar townhouse (a month ago) sold $28,000 less.
- A 655 sqft condo at Sheppard and the 404 sold almost $50,000 above the asking price. The day after it was listed for sale.
- A townhouse near Leslieville listed for $639,000 and sold for $880,00.
- A co-op apartment in Rosedale, listed at $989,000 sold for more than $1.3 million. At least it was in Rosedale.
- A 1,500 sqft condo on King East – sold for $326,000 above the asking price, for $1,000 per square foot.
Am I cherry picking crazy sales to get a reaction from my dear readers? Of course I am. BUT…all of these sales happened over a 2-day period last week. In fact, during that 2-day period:
- 73 condos sold across the city
- Condos sold for an average of 110% of the asking the price
- There was no full moon
How does that compare to last year? In 2016, on those same 2 days, 167 condos were sold. For an average of 99% of the asking price.
So yea, things have changed.
So WTH is happening?
- The Buyer Switcheroo. The mortgage qualification change introduced by the federal government in the fall of 2016 has resulted in would-be buyers being able to afford less. Combined with year-over-year house price increases of more than 25%, a lot of Buyers have moved from the house market into the condo market.
- FOMO – Fear of Missing Out. As Toronto prices climb and the opportunity to own a home in a prime neighbourhood starts to waiver, people are rushing to get into the market, seemingly all at the same time. For many people, the Bank of Mom and Dad has come to the rescue and is increasing the sizes of downpayments and the ability to compete in a bidding war.
- Good ‘ol supply and demand. At the same time as more would-be-house Buyers moved into the condo market, more condo owners decided to stay put, thus reducing the inventory of condos for sale. The natural move up from a condo is to a house – but with house inventory tight and bidding wars fierce, moving up just isn’t practical (or fun) for a lot of people. But in deciding to not sell their condos, they’ve tightened the supply and made buying a condo nearly as crazy as buying a house.
- The oversupply-of-condos thing never happened. Remember when the media loved to talk about the fact that Toronto had more condos under construction than anywhere in the world? And how the condo bubble was just around the corner? Problem is…they never talked about immigration and the flood of people moving to the city. Or the fact that Toronto has a serious lack of rental housing. Or that interest rates and the stock market just aren’t exciting for investors these days and that investors want to own real estate. So while that media hype held down condo prices for a few years, a lot of those new condos have been built…and they are occupied…and the sky didn’t fall.
- It’s painful to rent – like seriously painful. Bidding wars for rentals have been a regular occurrence this past year, and prices have been escalating quickly. Why rent when you can buy? Or so the theory goes.
Our best advice?
If you have a condo that you’ve considered selling, NOW IS THE TIME TO SELL. Maybe it’s a hangover from your single days or it was an investment…either way, there’s a real opportunity for condo Sellers. Like NOW. Literally now. List it for sale in the next few weeks. [we can help!]
And what’s a condo buyer to do? Stay tuned for our next blog: How to Win a Bidding War: Condo Edition.