Quick recap of 2017 Predictions
Access most recent market recap with today’s figures here. Now let’s get to it!
Let’s start with sharing my 2017 predictions. At the time I got a lot of flack for predicting that condos would regularly trade at $900/PSF or more in most urban communities. When will you understand that I’m not just trying to “sell you” when I speak to you? I’m trying to help you make amazing financial decisions. When it comes to Toronto Real Estate I’m usually right…my 2017 predictions were right and so will my 2018. I’m not just guessing here. I’m using data to determine trends and consumer habits which produces facts, not guesses!
Our “buy position” on condos (especially larger suites) was correct (should have been a “strong buy”). Condos are fetching over $900/PSF in most desirable urban communities. This year also saw 16.12% increase in the number of detached homes sold over $1.5mm. This is where my crystal ball may have been off a little as I predicted a jump to closer to $2mm for detached homes. The foreign buyer tax had something to do with that I presume but there were massive gains in detached yr/yr nonetheless.
I was bang on with my Semi Detached home prediction. The average renovated semi is fetching at min a million dollars in urban communities with 75% more sales over $1.5mm and 26.3% gain in sales over a million.
Townhouses are all way up year over year and of course I was right. Honestly, you don’t need a crystal ball to determine this stuff. As predicted Townhouses with sale prices over $950K jumped an astonishing (yet unsurprising) 163.64% in volume in 2017.
Rentals. Do we need to talk about how insane the rental market was in 2017? Well, if things weren’t crazy enough this year just wait and see what 2018 brings. Thanks Premier Wynne.
Here’s what to expect (and were to invest) in 2018
Toronto condos are going to continue to outperform all other product types. Pre-construction sales will slightly slow down in terms of sales volume but overall dollar value will increase as both end users AND investors gravitate towards larger suites and townhouses. $1000/PSF will be normal across the board. Resale condos in the most desirable urban communities will be fetching $1050/PSF with the extra special units fetching upwards of $1200+/PSF.
$1000/PSF has been a level of resistance. Once we surpass that price per square foot on a regular basis the sky’s the limit. We have certain pre construction projects launching and selling out at $1350/PSF in Yorkville and another fetching $2350+/PSF for the PH units that is only going to help values in other urban communities.
Investors should focus on larger 2 bed and 3 bed condos vs. smaller units. Forget what you know and what you’ve been used to (and what some uninformed pre-con agents who are more focussed on getting the deal done than providing you with the best investment). Larger units will sell for more and get you more rent per square foot. Recognize!
Here are some charts put together by our data team at Condos.ca figures in the East End show average trends in the mid $800’s/PSF and active listings and recent sales in the mid $900’s/PSF.
Another “Buy” recommendation here. There will be a bunch of pre-con towns finally finishing construction and and potentially hitting the resale market. We’ll see some more supply here in 2018 but not enough to completely fulfil the demand from down-sizers, “step down” buyers and “move-up” buyers.
This seems to be the home type attracting the most attention along with larger condos.
We’re seeing a ton of new condo projects launch with family sized townhouses and larger apartment units. These are selling well and are selling first for $1000+/PSF in some cases. There is still a ton of room to grow here as more Buyers (and not just families) opt for the simpler condo/townhouse life.
At first it was families that were priced out of local houses opting for larger units and towns but now we’ve got folks from all demographics buying here with one common goal: To live a simpler life.
Freehold: Detached & Semi
If you can afford it and are comfortable with the physical maintenance involved with owning a house then value will always be there for you in a freehold product.
I expect prices of the typical, recently renovated semi to approach $1.3-$1.5mm in most urban communities. Want to renovate or build? I expect land value to approach $1mm for a typical detached lot (average) and $850K for the typical semi-detached lot. Some smaller detached lots like this exclusive we have will be priced more like a semi.
Margins for speculators and flippers are virtually non-existent. Expect it to get more difficult to find decent investment opportunities for short term gain in this market.
Winners in Toronto Real Estate going forward will be the buy and hold multi-unit investors. Triplexes are gold.
There is still plenty of upside on single family detached freehold product but it’ll take a couple more years before we reach the $2mm price tag I predicted for 2017. There will be a ton more activity in the $1.5-$2mm range but you should be able to snag most renovated detached home for between $1.5-$1.8mm throughout 2018.
The Rental Market
Thanks to some incredibly irresponsible “knee jerk” law making by the Ontario Liberals we’re going to see inventory tighten up throughout 2018 as developers cancel their purpose built rental projects and build condos instead.
Individual investors will still provide solid rental inventory but due to harsh rent controls, they’ll be trying to get as much cash as they can on Day 1 since their future gains are capped by closing a rental loophole that allowed Landlords to increase rents to fall in line with current market prices.
One bedroom apartments are going to coast a minimum of $2000/mth
Two bedroom apartments are going to cost a minimum of $3000/mth
Three bedroom apartments are going to cost a minimum of $4000/mth
Of course there will be options in between these estimates but by the end of 2018 we’ll see a dramatic increase in rental costs throughout Toronto’s urban communities. Time to roommate up, Tenants!
That’s it! Thank you so much for your attention. I’ll hopefully be able to add a tonne of value to your lives during this year (and many more years going forward). If you haven’t already subscribed please do so here. I’m getting ready to launch a whole bunch of new content to give you THE closest look inside the Toronto Real Estate market this year.
Of course your feedback is greatly appreciated!