Condo Growth Rate % (Toronto)

[simonvee]

Hi,

Does anybody know much about the growth rates of condoniums in Toronto?
Perhaps can suggest me to websites illustrating the % of growth in the past years and the predictions in the years to come of condos in Toronto?
I'm tired of paying rent, I want to buy a condo which I can live in and obtain as an investment.

 

[scylla]

As you have probably heard, Toronto has more condos under construction than any other city in the world.

There are various schools of thought on what this means (i.e. what will happen when thousands of condo units become available over the next few years). Some believe condos will maintain their prices and continue to appreciate. Others believe we have a condo real estate bubble that's just waiting to burst (and when it bursts, we're going to see a significant drop in values).

As someone who lives in a downtown Toronto loft, I really have no clue what is going to happen. So I'm not going to offer advice.

If you want to read some lively discussions on the subject of the Toronto real estate bubble (or lack thereof), try here (338 pages of it):

http://urbantoronto.ca/forum/showthread.php/10523-Baby-we-got-a-bubble!/page338

 

[simonvee]

Thanks for the input!


The reason for the bubble bursting in the united states was that greedy banks lent out money to people who could not afford such properties. They were loaning to the poorest people and subsequently seizing their property when they could not pay there mortgage. I'm not sure how the banking/lending system works here in canada.

 

[scylla]

It's not a lending issue here (Canada has different lending rules than the US) - it's a real estate supply and demand issue. See the following article for a good explanation:

http://business.financialpost.com/2011/10/18/torontos-condo-boom-about-to-bust-report/

 

[scylla]

Here's another article about the number of construction projects currently underway:

http://www.thestar.com/news/article/1064773--highrises-we-re-tops-on-the-continent

As you can see, there are varying opinions regarding what is going to happen with condo prices over the next few years. It's really anyone's guess...

 

[simonvee]

Does maintainence fees include hydro, water, and gas (ie. unlimited use)?

If you don't mind me asking, how much is the property taxes for your condo? How many rooms does it have? I am strongly considering purchasing a condo in Toronto.

Thanks in advance for feedback

 

[scylla]

What the maintenance fees include depends on the building (it's different for each - so you have to ask when buying). Most include water. Some even include cable (basic TV stations). Mine includes water and gas - but not hydro. Buildings will have higher fees if they have more facilities (e.g. gym, pool) and other amenities such as security guards.

My condo is a little over 1000 square feet. It has two bedrooms and two full bathrooms. The living room / dining room / kitchen is one huge room (open concept). My fees are around $675 per month - taxes are around $225 per month. I also own a parking spot and a large locker located on the same floor as my condo.

My condo is located in the King / Bathurst area. We have a gym but no pool. We also have 24/7 front desk security guards/concierge.

Note that new condos tend to have artificially low maintenance fees which go up substantially in the first few years. So if you see a relatively new condo with great (low) maintenance fees in comparison to other buildings in the area - don't assume they are going to stay that low.

 

[simonvee]

Sounds like you have a very nice condo close to the entertainment district. You are paying a little bit over $10,000 in tax and maintanence. In order for it to be an investment the appreciation should exceed $10,000. Nevertheless, you won't find a 2 bedroom and 2 bathroom APARTMENT for anywhere near $10,000 per year in downtown Toronto. That's why I'm hoping to move out my apartment sometimes next year.

Thanks for the advice on the concept of new condos and their rising rates after the first few years.

 

[scylla]

Yes - we are in the middle of party central. Don't hear it at all in the condo (it's dead quiet). But we sure see it out on the street.

And yes - the rental rates are high. We are looking to buy a house downtown and are still deciding if we will sell or rent the condo once we buy. We did some research on rental rates and our condo would fetch somewhere between $1950 and $2150 per month.

 

[simonvee]

From the market value of condos within your building or at least, the surrounding area, would you say your condo has appreciated? If so, how much do you think?

From the rent alone seems like a very good investment!

 

[scylla]

Yes - my condo has appreciated. I purchased in Feb of 2006 for $290K. I have put in about $25K of renos since then. Today it would probably sell for around $430K.

There are two reasons why we are thinking of selling if we buy a house. First of all, once we buy a house, our overall portfolio will be very real estate heavy (we also have a couple of small rentals in the US). Also, with so many buildings going up in the immediate area, we think there's a chance that there could be a valuation hit on our property and are considering locking our profit now by selling. Given the number of condos going up around us, I don't think the appreciation I saw over the last six years will happen again over the next six years. Having said that, I really have no clue what's actually going to happen with condo prices. Maybe the appreciation will continue.

Hope this helps at least somewhat.

 

[steaky]

The reason for the bubble bursting in the united states was that greedy banks lent out money to people who could not afford such properties. They were loaning to the poorest people and subsequently seizing their property when they could not pay there mortgage. I'm not sure how the banking/lending system works here in canada.

Canadian banks also seize properties when people could not pay their mortgage.

 

[simonvee]

Yes but will the banks grant loans to people who cannot afford to pay them back. That's what happened in the states.