Toronto Real Estate: Condo Update January 2009

At a recent meeting of the Toronto Condo Network, our guest was N. Barry Lyons, of N. Barry Lyons Consultants Limited, well known and respected analyst of the Condominium market and through partnerships with RealNet.

Here are some of my quick scribblings from the mass of information that Barry gave (please excuse the format…..or lack of…):

We are in a Downturn but it will be a softer landing for Toronto. Going into this recession we were one of the top Condo markets in North America and will be again. Toronto did not get as expensive as quickly.

2007 was an anomaly. 2008 is still in line with what happened in 2005 and 2006. We are in much more of a balanced market. Resale market will soon take over the new sales as Builders hold back. More inventory than ever before, over 20,000. If all projects scheduled to go ahead to we would have almost a 15 year absorption rate. Majority of unsold is still in pre-construction and hopefully those will probably be put on hold.

Building Industry in general is not prepared. The number of projects must be reduced. There are still long term investors and they hold a lot of power in this market.

There are a lot of projects in Downtown West however the Downtown Core has less and is very stable, 8 Projects and 2 under construction. Downtown East is performing better than Downtown West as is Downtown North York. There are less units in those areas.

Investors today are a different breed and a huge factor in today’s market. The investors cherry pick the units and wait for the next launch. They are close to their brokers and want long term investments in Toronto. Asian, South-East Asian, Russian, Persian, etc. and they are a big part of the market place. Subway locations, Central, Entertainment, not auto reliant locations. Integration of the investor is very important. They are not flippers but hold units for family members who may migrate or go to school here. 5-10-15 year perspective…They can absorb the shortfall in monthly payments.

These investors are not the “Flippers” of yesterday and are a big part of the market place. If they decide to sell, more trouble….if they slow down and not sell they will be a stabilizing force. They are a mixed blessing and reflect the new face of Toronto; Economic Immigrants. 

Really big projects are a concern…over 600 units are too big. More luck with 125-150 units…

The Rumours: 

The Shangrai-la…is it going ahead or not?? Looks like they will be moving ahead in Toronto…

77 Charles St. W. Starting demolition and will be in the ground in April.

1 Bloor Street East Over 80% sold and lots of investors…over 600 units, so still hard to finance.Some of the loan sources have collapsed because of losses in the States..

2nd Tower of The Four Seasons might not go ahead. They are left with the top floors at very high prices as they sold the lower and middle before.

Auraat Gerrard and Yonge, mostly investor bought. Might be too big for Canadian Banks who like smaller than 600 units.

Trump Tower may stop construction after the garage is built.

One Cole at Dundas/Parliament…market housing, 30,00 s.f. Sobeys. Pre-building before marketing. Coming to market in April or July may be under $400/s.f. The old Regent Park is starting to look amazing.

The Good News…However Small:

Construction costs are coming down, maybe up to 10% or 15%.

Sales traffic has increased but Buyers are nervous and looking for a sign that it is OK to buy.

My Suggestions:

Stay away from the larger new Buildings with high investor content. Buy existing Buildings or resales. Speak to your REALTOR who has access to land registry information and REALNET. Buy the right location for the long term….strange how, good market or bad these suggestions do not change.

Should you have the scoop on these projects please add your comments below. Here are some very interesting  Presentation documents: http://www.richardsilver.com/account/77fb2a8f0efbe214/pdfs/Revised_FINAL_Handout.pdf

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