Predictions for 2015 in condo land

By Andrew La Fleur
December 29, 2014

Greetings condo investors! As we kick off a new year, it’s a natural time to review the past and plan for the future. That said, here’s a Coles Notes version of 2014, and my predictions for 2015:

predictions for 2015 real estate

The year in review

The 2014 new-condo market saw more launches than 2013, and most sold quickly – especially those in prime locations.

Sales were higher than expected. On final count, we should hit around 20,000 new units sold in 2014, beating out forecasts at this time last year that were calling for around 17,000 18,000 sold.

Prices remained fairly stable, seeing slight increases over 2013 but nothing unsustainable or worrying.

Unsold inventory was actually trending down and the percentage of sold units to total inventory was at a very healthy point.

As for the resale market, 2014 was a very strong year overall, wityh what could well be the best ever for sale volume.

It was a bounce-back year from 2013’s noticeably weak sales and price figures. The skeptics are once again proven wrong and the condo market keeps pressing forward, as prices, sales and rentals continue to increase.

The rental market is showing surprising resilience. Even though more new condos that are coming online are being put up for lease than ever, they are all being absorbed and rental prices are actually still rising slightly, or in the worst case for some pockets, they are flat.

The condo market is now clearly being pulled up by the ridiculousness of the lowrise housing market. With housing prices out of reach for most average people now, condos are the only option. Combined with ever-increasing rental rates and perpetually low mortgage rates, it makes more sense to buy a small condo in Toronto than to rent one.

Predictions for 2015

On the new-condo scene, expect to see continued moderate price appreciation in the two to three per cent range, and continued strong sales in the 20,000 units range.

Projects that are struggling will either relaunch at a new price, or will chip away at their inventory at a snail’s pace, which will delay completion dates by another year or two for purchasers.

Developers will increasingly have to offer attractive incentives to buyers, like prices that are at or below resale values, extended deposit structures, and rental guarantees to keep the momentum going, but if they do these things and they have good sites in good locations, they will continue to sell well.

Developers who get greedy and see the strong sales figures from 2014 as a reason to increase pricing too quickly, or to cut back on incentives, will struggle to sell – the main reason being the average condo investor is much more sophisticated, educated, and aware of what the competition is offering than ever before.

Meanwhile on the resale condo market, expect to see continued price appreciation in the four to five per cent range. Sales volume will be up slightly from 2014, making 2015 another record-breaking year.

Rental prices will be flat overall for the GTA, but for the downtown core they will still increase in the two to three per cent range.

Two-bedroom rental and price appreciation will beat out that of one-bedrooms and studios. As more and more buyers are priced out of the detached housing market, look for them to turn to condos – especially two- and three-bedroom units – as a more-affordable alternative. Larger units over 800 sq. ft., even in older buildings in good locations, will be good units to own over the next four to five years.

About Andrew La Fleur

Andrew la Fleur is an award-winning realtor with Re/Max. Andrew’s expertise is in helping investors make money in the Toronto Condo Market. Visit TrueCondos.com or contact Andrew at 416.371.2333 or andrew@truecondos.com.  

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