Happy New Year

Happy  New Year  to  you and  your family.  May  you accomplish all your  goals in 2020 and of course if you are  in the  market for a  condominium – buying, selling or leasing  too !

Ian Johnston

Ian Johnston

TREB Q3 2019 CONDO MARKET STATISTICS

Toronto Real Estate Board President Michael Collins announced that Greater Toronto Area REALTORS® reported 6,407 condominium apartment sales through TREB’s MLS® System in the third quarter of 2019. This result was up by 11.1 per cent compared to Q3 2018.

New condominium apartment listings entered into TREB’s MLS® System were down by one per cent compared to Q3 2018, with 9,538 listings added in 2019 compared to 9,636 listings added in 2018.

“As economic conditions continue to be favourable for job growth in the Greater Toronto Area, people have continued to come to the city for work. Home ownership is important to many Canadians, and, as a relatively affordable housing option, condos in the GTA offer prospective buyers the chance to achieve their dreams of owning property,” said Mr. Collins.

The average price of a condominium apartment increased by 5.8 per cent from $552,766 in Q3 2018 to $584,564 in Q3 2019. Year-over-year price growth in the City of Toronto, which accounted for nearly 70 per cent of transactions, was slightly lower at 5.6 per cent, resulting in an average price of $628,074.

Strong price growth above the rate of inflation was driven by tightening market conditions, with sales up and listings down relative to last year. One factor underpinning the dip in listings may be the fact that, according to CMHC data, new condominium apartment completions were down year-to-date through August relative to the same time frame in 2018. This may have translated into fewer investor-owned units being listed for sale in Q3 2019 compared to Q3 2018.

“Condominium apartments are obviously a popular choice amongst first-time home-buyers. Moreover, it is also important to remember that condominium apartments owned by investors represent a huge component of the GTA rental stock and certainly account for most additions to the rental stock, on net, over the past decade. With this in mind, a well-supplied condo segment will be important moving forward to ensure that we can keep up with population growth driven by a strong and diverse regional economy,” said Jason Mercer, TREB’s Chief Market Analyst.

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The Toronto Condo Market – Trouble?

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The Changing Housing Marketplace – Condo Happy

The Canadian Housing market is changing, so get use to it. Rising interest rates and stricter mortgage requirements have reduced a home buyers’ purchasing power, particularly for those entering the Canadian market. The supply of apartment and townhome properties for sale today is unable to meet demand. On the other hand, the detached home market is beginning to be out of reach for new homebuyers especially for millennials.

Condo sales are in fact driving the number of properties sold at the moment. Due to demand, the condo market is experiencing some price recovery. Units in the lower price points of the condo market are likely moving rapidly because of the limited supply in the rental market which is yet another factor at play. The lack of availability is essentially forcing renters into condo ownership.

As we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year. Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments.

For more information on rates, qualifying for a mortgage, or have your questions answered on any mortgage/financing issues.  Please give me a call or fill out the  form  below.   Thanks  Ian Johnston – Licensed Mortgage Agent

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Condo Market Conditions Remain Tight in Q3 -2017

Toronto Real Estate Board President Tim Syrianos reported continued average price growth on a year-over-year basis for condominium apartments listed and sold through TREB’s MLS® System by Greater Toronto Area REALTORS®. The average selling price was $510,206 in Q3 2017 – up by 22.7 per cent compared to the average of $415,894 reported in Q3 2016.

“The condominium apartment market segment has exhibited the strongest average rates of price growth since the spring, relative to other major market segments. Competition between buyers remains strong, as listings remain below last year’s very constrained levels. Over the past few months, TREB has participated in discussions at various levels of government pointed at developing solutions for the housing supply issue in the GTA. As these discussions continue, it will be important to remember that the condominium apartment market is not immune to a listings shortage,” said Mr. Syrianos.

“TREB will also be paying close attention to the potential impacts of the new OSFI Guideline B- 20 concerning new mortgage rules and underwriting standards, and the possibility of a vacancy tax in the City of Toronto. We will be asking consumers about their opinion on these initiatives, from the prospective of buying and selling intentions, during our fall polling cycle,” continued Mr. Syrianos.

There were 5,684 condominium apartment sales reported through TREB’s MLS® System in the third quarter of 2017. This result was down from 7,991 sales reported during the same period in 2016.

New condominium apartment listings were also down on a year-over-year basis by 10 per cent to 9,845 in Q3 2017 compared to 10,967 in Q2 2016.

“Condominium apartments will likely account for a greater share of home sales as we move forward. Consumer polling undertaken for TREB by Ipsos in the spring pointed to increased buying intentions for condominium apartments. With this in mind, it is not surprising that we have continued to see robust price growth, as demand has remained strong relative to available listings,” said Jason Mercer, TREB’s Director of Market Analysis.  For more information  contact Ian Johnston

Compliments of TREB

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More On Occupancy Fees!

Whenever you purchase a new condo, there is a period of time between when you take occupancy of your unit and when you take ownership of your unit. This is known as the ‘occupancy period’ or ‘interim occupancy’. During this period you will be requested by the developer to pay occupancy fees or ‘phantom rent’ as it is also known.

The Condominium Act requires condo developments to be constructed to a substantial level prior to registration of the condominium plan. Title to a unit cannot be transferred until the condominium is registered.

Thus, with newly built condominium apartments, there are two “closings”. The “interim closing”, occurs at the time of occupancy and the “final closing”, occurs at the time of final registration.

The process works something like this; the developer undertakes to build a condo development by submitting a site plan with the Municipality. When the Municipality registers this site plan it becomes a “Registered Site Plan”, setting out exactly what the developer is promising to deliver.

The developer then sells the suites as “pre-construction”; based on floor plans, brochures etc. Once the developer sells enough units, say 60% or more, they start the construction while continuing to sell the units.

When construction is completed, the municipality verifies the building to be in accordance with the registered site plan and issues the “Occupancy Certificate”. The developer start to contact all the buyers notifying them of their occupancy date, at this stage your unit is ready and liveable; you take possession of it, but not ownership. This is the first or “Interim Closing”.

Since the buyer’s down payment is deposited into the lawyer’s trust account, the developer does NOT receive any money until the building registers (final closing), a process that normally takes 4-6 months.

Until such time you must pay the developer “occupancy fees” for the right to live in the unit. The amount of the occupancy fees is roughly equivalent to the interest on the amount outstanding on the purchase price. For example, a $300,000 condo with 25% down means you must pay monthly occupancy fees roughly equal to interest payments on $225,000.

When the municipality completes its process and registers the building, the second or “final closing” take place. This is where the purchasers receive title to their property and their mortgage payments starts, and this is when the developer gets his money.

During the occupancy period the buyers undertake a portion of the developer’s mortgage, also called “Phantom Mortgage”, which is equal to their proportionate share of the overall condo.

The occupancy period is normally 4-6 months, but the higher up you are in the building, the shorter the occupancy period will be. So if you buy a unit on the ground floor, you can expect a long occupancy period. If you buy the penthouse, you will likely have a very short occupancy period.

There is no way to say absolutely how long the occupancy period will be. In most cases the length of the occupancy period depends on the experience level of the developer. Experienced developers who are familiar with process and have diligent lawyers working behind the scenes for them know how to build and how to register a building as quickly as possible.

It is in the developer’s best interest to register the building as quickly as possible and to have the occupancy period as short as possible. This is because they don’t get their money from the banks until the building is registered and all the unit owners have their mortgages commence.

The “Occupancy Fee” is made up of three components and is roughly equivalent to the:

1. interest calculated on a monthly basis on the unpaid balance of the purchase price
2. the monthly maintenance fee contributed for the unit; and
3. a factor for property tax

In total it will be about the same amount as if you took a mortgage. But you cannot get a mortgage because there is no “Title” to the property, thus banks cannot issue a mortgage.

Occupancy fees will be paid to the developer when you purchase a new condo, it does not apply for re-sale condos.

The purchaser can avoid paying the interest portion of the occupancy fee should he/she elect to pay the full balance of the purchase price owing on the date of occupancy. However, in order to do this, the purchaser or his lawyer must request this during the 10-days rescission (or cooling off) period.

In all the cases it is left to the developer to include or exclude any of the above components in the occupancy fee, as long as this is made clear in writing and disclosed in the developer’s disclosure documents.

For more information, contact Ian Johnston -Realtor 905-751-9820, send me an email or fill out the contact from below. Thank you.

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Condominium Occupancy Fee

The “interim closing”, occurs at the time of occupancy and the “final closing”, occurs at the time of final registration.

The process works something like this; the developer undertakes to build a condo development by submitting a site plan with the Municipality. When the Municipality registers this site plan it becomes a “Registered Site Plan”, setting out exactly what the developer is promising to deliver.

The developer then sells the suites as “pre-construction”; based on floor plans, brochures etc. Once the developer sells enough units, say 60% or more, they start the construction while continuing to sell the units.

When construction is completed, the municipality verifies the building to be in accordance with the registered site plan and issues the “Occupancy Certificate”. The developer start to contact all the buyers notifying them of their occupancy date, at this stage your unit is ready and liveable; you take possession of it, but not ownership. This is the first or “Interim Closing”.

Since the buyer’s down payment is deposited into the lawyer’s trust account, the developer does NOT receive any money until the building registers (final closing), a process that normally takes 4-6 months.

Until such time you must pay the developer “occupancy fees” for the right to live in the unit. The amount of the occupancy fees is roughly equivalent to the interest on the amount outstanding on the purchase price. For example, a $300,000 condo with 25% down means you must pay monthly occupancy fees roughly equal to interest payments on $225,000.

When the municipality completes its process and registers the building, the second or “final closing” take place. This is where the purchasers receive title to their property and their mortgage payments starts, and this is when the developer gets his money.

During the occupancy period the buyers undertake a portion of the developer’s mortgage, also called “Phantom Mortgage”, which is equal to their proportionate share of the overall condo.

The occupancy period is normally 4-6 months, but the higher up you are in the building, the shorter the occupancy period will be. So if you buy a unit on the ground floor, you can expect a long occupancy period. If you buy the penthouse, you will likely have a very short occupancy period.

There is no way to say absolutely how long the occupancy period will be. In most cases the length of the occupancy period depends on the experience level of the developer. Experienced developers who are familiar with process and have diligent lawyers working behind the scenes for them know how to build and how to register a building as quickly as possible.

It is in the developer’s best interest to register the building as quickly as possible and to have the occupancy period as short as possible. This is because they don’t get their money from the banks until the building is registered and all the unit owners have their mortgages commence.

The “Occupancy Fee” is made up of three components and is roughly equivalent to the:

1. interest calculated on a monthly basis on the unpaid balance of the purchase price
2. the monthly maintenance fee contributed for the unit; and
3. a factor for property tax

In total it will be about the same amount as if you took a mortgage. But you cannot get a mortgage because there is no “Title” to the property, thus banks cannot issue a mortgage.

Occupancy fees will be paid to the developer when you purchase a new condo, it does not apply for re-sale condos.

The purchaser can avoid paying the interest portion of the occupancy fee should he/she elect to pay the full balance of the purchase price owing on the date of occupancy. However, in order to do this, the purchaser or his lawyer must request this during the 10-days rescission (or cooling off) period.

In all the cases it is left to the developer to include or exclude any of the above components in the occupancy fee, as long as this is made clear in writing and disclosed in the developer’s disclosure documents. If have any questions or like to know  more contact Ian Johnston – 905-751-9820 or  fill out the form below.  Thank you

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High Rise Condo Sales Increase n York Region, Toronto

In  the month of June, York Region saw a huge surge in sales of new high-rise condominium units, while sales of new low-rise, single-family homes declined sharply, according to new numbers released by Building Industry and Land Development Association (BILD)

Across the region, buyers purchased 2,266 new high-rise condo units.  That’s up more than 900% from 222 in the same month last year and from 228 in June 2015. Meanwhile, sales of new low-rise, single family homes — townhouses, semi-detached and detached — declined by 53% to 248 in June of this year, down from 532 in June 2016. The drop is even sharper compared with June 2015, when 1,070 new low-rise, single-family homes were sold.

In Toronto, for example, new high-rise condo unit sales jumped by 34% to 2,610 in June 2017, up from 1,946 a year earlier. Meanwhile, there were no new low-rise home sales recorded, compared with 78 in June 2016.

In neighbouring Peel Region — which includes Brampton, Mississauga and Caledon — sales of new high-rise condo units climbed by nearly 12% to 523 in June 2017, up from 468 last year.Over the same period, sales of new low-rise homes plummeted by more than 70% to 130 from 443.

Across the GTA, new condo sales surpassed the previous record set in March 2017, with 5,495 units sold last month.  Mind more supply is coming to the market in future years.

If you  are in the market for a condominium,  please call Ian Johnston  905-751-9820 -Condominium Expert for over 20 years of fill out the form below.  Thank you.

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Record Year for New Condo Sales

A total of 27,217 new condominium apartments were sold across the Greater Toronto Area in 2016, rising 34% over 2015 to a new high. Remarkably, sales totals topped the previous record set in 2011 on much fewer new pre-construction launches (18,466 in 2016 vs. 28,204 in 2011). Activity ended the year strong with 7,422 sales in Q4-2016, an 18% annual increase. The strength in demand combined with a 6% decline in new launches last year pushed unsold inventory in development down by 47% from the end of 2015 to a more than 10-year low of 9,932 units, which equaled only 4.4 months of supply (a balanced market for new condos is approximately 10 months of supply).

New condo sales grew the most in the suburban 905 Region last year, soaring 82% to a high of 8,703 units in 2016 and representing a record share (32%) of GTA activity. Sales also increased by a robust 57% in the outer-416 areas of Etobicoke, Scarborough and North York (7,397 units) on higher new launch activity last year, while a minimal 3% gain was recorded in the former City of Toronto (11,116 units) as launches dropped by 40%. The demand-supply imbalance was most acute in old Toronto, where unsold inventory plunged by 57% to 3,503 units, or 3.8 months of supply.

The overall average index price for sold units in active development across the GTA continued to grow at a moderate annual pace of 3% in Q4-2016 (to $598 psf), which was impacted by the shift in activity to lower-priced suburban markets last year. Within the former City of Toronto, average selling prices within projects launched in 2016 reached $746 psf, up 14% compared to new launch prices in 2015. At the end of 2016, remaining inventory in new projects in old Toronto was offered at $795 psf.

The draw down in inventory will limit the market’s ability to top 2016’s record activity. Urbanation is forecasting 23,000 new condo apartment sales in 2017, with the expectation that developers will respond to present market conditions by launching a greater number of new projects this year.

A record volume of 25,187 condo apartments were resold in the GTA in 2016, rising 22% annually and representing a high of 26% of all GTA resales last year. Sales of resale units in Q4 were up 26% from a year ago, while total listings in the quarter were down 14% year-over-year. This divergence caused the sales-to-listings ratio to hit a record 80% in the fourth quarter (up from 55% in Q4-15), which led prices to grow at annual rate of 16%. At an average unit size of 861 sf, the average resale price reached $458,000, or $532 psf. For the first time, condo apartments represented the majority (59%) of all resale activity in the GTA below the $500,000 price point.

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What are Condominium Maintenance Fees ?

When you are purchasing a condominium monthly maintenance fees are an unavoidable part of any condo. Do you know what the acceptable rate is? This is one of the unknown costs a prospective buyer wants to know.

Condo maintenance fees are paid each month by the unit-owner to the condominium corporation to cover the building’s expenses as well as to contribute to the reserve fund, which covers large repairs (like roof replacements). The condominium sets these fees and then decides how much they will increase annually. The two constants buyers should keep in mind: Newer buildings have lower maintenance fees than older buildings, and every building’s fees will go up over time.

If you’re looking at a condo with seemingly high maintenance fees that over $0.70 per square foot it’s likely that it’s at least a decade old. If the fees are $0.80 per square foot or more, it’s likely that there was a massive repair such as spending $450,000 to fix the roof that drained the reserve fund and necessitated an increase in monthly contributions.

Some buildings stick out when you compare their fees to those in the surrounding area. A building in say Toronto, with monthly fees hovering around $0.80 per square foot, but units in the building are readily available at a substantial purchase discount (as is often the case when the fees are so high). You might find a two-storey loft unit there for $339,000, whereas a similarly sized unit down the street $389,000.

It’s important to put this in perspective by calculating the price per square foot. I’ve always maintained that anything over $0.70 per square foot is expensive. It’s normal for fees to increase over time, but the extent of that increase is what buyers should pay attention to. In today’s pre-construction condo market, developers will set maintenance fees artificially low, sometimes as low as $0.40 per square foot. While the developer is responsible for any budget shortfall in the first year of the condominium corporation’s operations, it’s in years two, three and four that the condo board and its residents start to realize how ridiculous $0.40 per square foot was. There are horror stories throughout the industry. It’s always a good idea to hire a professional with the knowledge and expertise in the condo business and also have a lawyer who specializes in condos.  For more information or need advice on condominiums, buying, selling, or investing  please give me a call IAN JOHNSTON at 905-751-9820, email  me or fill out the form below  Thanks

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