Media sends mixed messages on real estate: Toronto condo boom will continue (until it doesn’t)
Toronto’s skyline has changed dramatically over the past decade as condominium towers have sprouted from the Etobicoke lakeshore to north Scarborough. Condos have been both a growing market and pretty smart investments. If the past few years have taught us anything, though, it’s that as far as real estate goes, what goes up must come down. Or does it? This week’s news presents two opposite points of view: the CBC has a report from Re/Max saying the market is scorching hot, while the Toronto Star warns that things might be getting ready to take a tumble. Who’s right?
Let’s start with the Star’s worry that huge amounts of new units are coming on the market in the midst of a still-sluggish economy:
With 275 projects in the GTA currently being marketed by developers, the Toronto area is considered to be the most active condo site in North America.
However, after a strong start to the year the market is now showing signs of strain.
There is an 18 per cent decline in sales in the third quarter of 2010 compared with last year, market research firm Urbanation said in a report Monday. In the existing condo market, transactions are down by 25 per cent over the same time last year.
Enter the CBC, with its predictably cheery report from Re/Max:
Condo sales are booming in major Ontario cities and increasing in seven of eight regional markets in the province, Re/Max Ontario-Atlantic Canada said Monday.
Ottawa saw an 11.9 per cent rise in condomium sales during the first nine months of 2010 compared with 2009, while sales in the Greater Toronto Area were up 10.4 per cent.
The report goes on to state that the condo market will remain strong because of “lifestyle changes.” Basically, it’s expensive to live in the city and own a detached home, so young couples are buying up funky condos in hot neighbourhoods instead.
It’s tempting to leave this all to duelling arguments, but as with anything real estate related, we should heed the lessons of our neighbours—in this case, the U.S., circa 2008. The housing market always looks hottest right before it starts to crater.