Inspection needed even when buying new condo
Many people do not get inspections for new condos but since it is one of the most expensive things you can buy, it is worth it. Read below for more info.
Many buyers think it’s unnecessary to hire a building inspector before purchasing a new condo. Prospective owners often assume a condo building and their unit of interest is fine and everything is to code and working properly. While this is usually the case, purchasers still need to protect themselves against those rare occasions where a problem exists.
A friend of mine, for example, moved into a newly constructed condo where someone had inadvertently dropped a piece of plywood down the chimney flu, blocking it off. When the new owner lit the fireplace, smoke backed up through the unit.
Although the condo corporation took care of the fireplace, the owner was responsible for the smoke cleanup. A pre-purchase inspection would likely have avoided this problem as the offending piece of wood was within view of a casual look up the chimney.
I have sold many condos where buyers think they do not require an inspection, but every condo should be inspected by a certified building inspector.
Remember: It’s a good idea to put a building inspection clause into your offer. And it’s important to find a building inspector who is familiar with condo inspections. He or she will be cognizant of the types of problems to look for and of condominium building codes and regulations.
“What does an inspector check in a new condo? Isn’t this a waste of time and money?” I am asked this all the time.
An inspector will make sure your hood fan exhaust is properly connected. He will ensure that the electrical system is to code, in working order and adequate to meet any special electrical requirements you might have. Windows will be inspected to see they are installed properly and to regulation. A good inspector will also check the common elements to see if any owners who moved in before you have inflicted damage to the halls or elevators.
Is the garage constructed to code with adequate drainage to prevent flooding, winter road-salt spalling and excessive humidity build-up? An inspector will check the drainage in the garage and your parking spot. You want to make sure when you open your trunk to take out your groceries you are not always standing in a puddle of water.
The inspector will check the condo’s exterior envelope to see if it has adequate drainage and if it will deter ice buildup. Since the balcony is both the exterior element in which you will spend the most time and is also a source of liability (e.g.: ice buildup or water-damaged tiles blowing down onto the cars below), it will be examined carefully for potential problems.
Inspectors will check the roof and any air conditioning units located there, the security gate to the garage and many other things you would not think to consider.
The biggest factors are plumbing, electrical, heating and wiring. These must be to code, meet regulations and be suitable to accommodate any special requirements you, the buyer, might have. To further emphasize, a recent inspection revealed an ice buildup problem that, if not caught by the inspection, would have cost the buyer, along with the condo corporation, $20,000 to correct.
Definitely not a nice housewarming present.
Arkadi Abramovitch of Artech Home Inspections told me recently that technology has changed a lot in the past few years and this has helped to ensure buyers have a positive buying experience. Arkadi, along with many inspectors today, uses infrared equipment to check for moisture buildup in or behind the walls or ceilings, which would not normally be visible.
Inspectors check the exhaust systems for bathroom ventilation fans and kitchen hood fans that have sometimes been blocked inadvertently. A memorable condo inspection Arkadi had was when he found two Tim Hortons cups in a kitchen ventilation exhaust system.
It’s better to find out before closing on your unit than to try to fix the issue (and be reimbursed) later. Ask the inspector specifically for his or her impressions of the common areas as they may or may not do this if they aren’t asked specifically.
By now, I hope you are sold on the need for a building inspection for a new condo and it should be evident that this applies even more to a resale condo.
When first considering a resale condo, it’s a good idea to ask residents (if you know any) about previous problems with the building. When you request a building inspection, ask the inspector to address specifically these areas. (Of course, you are going to have both your lawyer and your insurance agent review the status certificate before signing off on the purchase.)
On the flip side, I encourage sellers to get a pre-inspection before their property is listed for sale.
Marilyn Wilson has been selling real estate for more than 23 years and owns Marilyn Wilson Dream Properties Inc.
Brokerage in Ottawa, an Exclusive Affiliate of Christie’s International Real Estate. She can be reached through dreamproperties.com or follow her on Twitter @marilyn_wilson.
the B20 !!
There will be lots more on THE B20 – as it is the #1 issue with getting real estate deals approved right now.
To start with, that the B20 is:
- Needs multiple financing condition extensions
- Pre-approvals collapse at the bank and with on-line or inexperienced brokers
- Seemingly strong purchasers outright and irreversibly declined
- Losing out in multiple-offer situations
- Approvals taking forever
SUMMARY
The reason you are having a tough time removing financing conditions (COF) for your deals is called “the B20” and the details are attached. Have a read to find out why. Better yet, feel comfortable suggesting your clients use 1 of Canada’s Top-10, full-time, professional, fully-independent, mortgage brokers with a Master’s Degree in Finance, who knows what these rules mean and how to get your deals done. On time.
OUR SYSTEM, proven during the ‘06 – ‘07 boom, gives you the winning edge in multiple offers most of the time. BEFORE clients go shopping we get all the docs in. They are then reviewed by our past-head-underwriter (with $18 Billion in residential mortgages written) who discusses directly with the bank underwriters. We know the deals will work BEFORE they write an offer. In multiple offers we review the file to shorten condition time and work with you to write the winning offer.
More Data – and on my blog @ http://blog.MarkHerman.ca/
New mortgage guidelines have been issued to ALL mortgage lenders by OSFI – the Office of the Superintendant of Financial Institutions – causing every lender to modify their policies which:
- Significantly restricts the LTV (Loan-to-value) and overall qualification of mortgage amounts.
- Demands significant additional scrutiny and verification of ALL client documentation – banks can no longer paper over problems like before; causing many more outright, irreversible declines.
- Causes many banks and non-professional mortgage agents to take way too long to present approvals or produce irreversible “declines” on mortgages that were not properly documented or packaged.
Using an experienced, full-time, professional, high-volume mortgage broker is the best way to ensure your deals are completed on time, the first time. Why risk an irreversible decline for your client by using any random broker?
10 Year Term – Best Ever!
10-year fixed, full-featured mortgage is @ 3.69! (Portable, Assumable, Standard 3 month payout fee) See my comments in the Calgary Sun – full article on home page of my website: http://markherman.ca
Alberta: 23,300 jobs were created, unemployment rate 2nd lowest in Canada
Canadians continue to move to Alberta for jobs and our hot economy. This is what caused the housing boom in 2007 and is expected to continue to support home prices here. With only 2000 listings for homes for sale prices are actually rising here – the opposite of Vancouver and Toronto.
CALGARY — Alberta’s unemployment rate remained unchanged in January at 4.5 per cent, second lowest in the country behind Saskatchewan’s 4.0 per cent, according to Statistics Canada.
The federal agency reported Friday that Alberta saw an employment gain of 9,700 positions from December, up 0.4 per cent. On a year-over-year basis, employment in the province has grown by 1.9 per cent or 41,100 positions.
In the Calgary census metropolitan area, the unemployment rate rose from 4.6 per cent in December to 4.9 per cent in January. There were 1,700 jobs created, up 0.2 per cent. Year-over-year, 23,300 jobs were created in the region for an increase in employment of 3.2 per cent.
“Alberta added jobs, but the unemployment rate held steady, as more people joined the labour force,” said Jacqueline Palladini, economist with the Conference Board of Canada.
Todd Hirsch, senior economist with ATB Financial, said 8,600 of the new jobs in Alberta were full-time positions.
Job gains in Alberta were concentrated in finance, insurance and real estate (6,800), business support services (5,500), and construction (4,800). Those gains were partially offset by losses in transportation and warehousing (11,800), and retail and wholesale trades (6,800), explained Hirsch.
“January’s jobs report continues to portray Alberta’s labour market as healthy and balanced,” he said. “New jobs are being created to accommodate interprovincial and international migrants, but not so many that wages or labour shortages are in danger of overheating. In the months ahead, it is certainly possible, even likely, that the pace of new job creation will slow, particularly given the challenges in the energy sector. That should not be the cause of too much alarm, however. With 4.5 per cent unemployment, the economy is more than capable of managing a more moderate job market.”
Nationally, following two months of gains, employment decreased slightly in January by 22,000. A decline in the number of people looking for work pushed the unemployment rate down 0.1 percentage points to 7.0 per cent.
Compared with 12 months earlier, employment increased by 1.6 per cent or 286,000, all in full-time work.
Douglas Porter, chief economist with BMO Capital Markets, said Canadian employment fell in January after a five-month stretch of surprisingly powerful gains.
“Combined with the steep drop in housing starts as well as the still-wide trade deficit, the jobs report rounds out a day of infamy for Canadian economic stats,” said Porter. “To some extent, the drop in jobs appears to be a payback for the surprising strength in the second half of last year, and would normally be little cause for concern. However, with housing softening notably, and consumers and governments not in much mood, or ability, to spend, the economy will need a major helping hand from a stronger U.S. performance in the year ahead to help generate renewed job gains.”
Sonya Gulati, senior economist with TD Economics, said the Canadian job market started 2013 on a sour note.
“The contraction seen this month is not the beginning of a new year – the recent pace of job creation was running too fast given economic growth,” she said.
“The Canadian job market fizzled to start the New Year. This should not have been a surprise to anyone. Labour market data in Canada are notoriously volatile and it is hard to infer trends even with a few months under your belt. If we use economic momentum and indicators as our gauge, job creation should come in around 10,000-20,000 in the next few months.”
mtoneguzzi@calgaryherald.com
Twitter: MTone123
Momentum continues in Calgary luxury home market
MLS sales in January just shy of all-time record for the month
CALGARY — Calgary’s housing market experienced a record year for luxury home sales in 2012 and the pace of transactions in January 2013 suggests the market is not slowing down.
According to the Calgary Real Estate Board, there were 34 MLS sales in Calgary of properties over $1 million in January — just shy of the January record of 36 luxury sales in 2007.
Calgary finished 2012 with an all-time record of 544 luxury home sales, eclipsing the previous mark of 458 in 2007.
The luxury home market in the city has rebounded following the recession dip of a couple of years ago.
Don Campbell, senior analyst and founding partner of the Real Estate Investment Network, said that during market corrections luxury homes are the first to drop off, after recreational properties, and the first to come back unlike recreational which is always last to recover.
“In Calgary, within the business world, confidence in business has come roaring back,” he said. “This has led those with capital and strong businesses to take the leap into the market.
“In a higher than average percentage, due to their more business orientation, those buying luxury homes have their finger on the pulse of economic direction and therefore with the resurgence of the Calgary economy over the last 14 months, they are identifying the fact that the luxury homes they want are not going to get any cheaper than they are now. They are seeing the underlying economic strength of the city and want to get into the market before it is reflected in the housing market. That is why you saw so much activity in 2012.”
Campbell said the large number of luxury home sales will push average sale prices up more than it is really being felt at the mid-market level.
“This will create un-supported expectations of mid-market sellers. Also, there are only so many luxury market homes in any given market and they are often the first to move,” said Campbell. “What we often see is a slowdown in these sales after 18 to 24 months and when this occurs it slows down the average sale price increase to lower than is being felt on the street.
“The other anomaly we are seeing in Calgary in the luxury market is the profile of the buyer. Compared to Toronto and Vancouver, whose luxury homebuyer demographic is made up of a large percentage of foreign/offshore buyers, Calgary’s luxury homebuyer profile is very local. People here in business have high paying jobs in Alberta. This is a much more stable cohort than the often fickle offshore buyer.”
Last year in January there were 16 luxury home sales in Calgary. After hitting a high in 2007, the market dipped to only six sales in January 2009.
“We have seen a 20 per cent increase in luxury sales in Calgary in 2012 over 2011 and are seeing tremendous momentum building already in 2013 this past month,” said Rachelle Starnes, realtor with Royal LePage Foothills in Calgary. “We have seen 10 sales over $1 million in Rocky View County in the past month, up 67 per cent over the same period last year. The Springbank area continues to be the busiest being one of the wealthiest areas in the country.
“Prices have dropped in the higher-end to reasonable levels, there is a dwindling supply and buyers have been out shopping the market for months. They have done their research and are ready to buy the minute the ‘perfect’ home hits the market. Calgary continues to be the ‘City of Choice’ for corporations moving West and the high salaries from the oil and gas market sectors allow for lots of ‘move-up’ buyers.”
The following are the annual sales in Calgary for homes priced at more than $1 million, according to the Calgary Real Estate Board:
2012 — 544
2011 — 446
2010 — 365
2009 — 337
2008 — 369
2007 — 458
2006 — 334
2005 — 138
2004 — 44
2003 — 36
2002 — 21
2001 — 14
2000 — 14
Twitter: MTone123
© Copyright (c) The Calgary Herald
Alberta homes lead Canada for 2013
Alberta resale housing market tops Canada in annual sales growth
Forecast to lead the country again in 2013
CALGARY — Alberta will lead the country this year and in 2013 in the pace of growth in the resale housing market, according to a new forecast by the Canadian Real Estate Association.
The national association of realtors said Monday that Alberta MLS sales this year will finish up 13.1 per cent from last year to 60,800 transactions and sales will lead the country next year as well with 1.3 per cent growth to 61,600.
Nationally, sales are forecast to decline by 0.5 per cent this year to 456,300 and fall by another 2.0 per cent in 2013 to 447,400 transactions.
The average sale price in Alberta is expected to rise by 2.7 per cent this year to $363,100 and by another 2.3 per cent in 2013 to $371,300.
Across Canada, the national average sale price is forecast to increase by 0.3 per cent this year and next year to $363,900 and $365,100, respectively.
In November, Calgary MLS sales of 1,831 were up 10.6 per cent compared with last year while on the national level sales dipped by 11.9 per cent to 30,573.
The average sale price in Calgary rose by 3.8 per cent to $413,921 but fell by 0.8 per cent across the country to $356,687.
In Alberta, sales increased by 3.2 per cent to 4,034 transactions and the average price was up 4.3 per cent to $365,999.
“National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among local housing markets,” said Wayne Moen, CREA’s president.
CREA on Monday also released its MLS Home Price Index of seven major Canadian markets. Regina’s annual price growth of 11.58 per cent led the nation followed by Calgary at 7.13 per cent.
The national aggregate price rose 3.5 per cent year-over-year, the seventh time in as many months that the year-over-year gain shrank and it marks the slowest rate of increase since May 2011.
Twitter:@MTone123
© Copyright (c) The Calgary Herald
Calgary – #1 for Real Estate Investment
Once again, Calgary has been ranked as the top real estate investment market in the country followed by Edmonton by the Real Estate Investment Network Ltd.
In its Top Alberta Investment Towns report, REIN said that Alberta’s economy has come out on top after a few years of economic turbulence.
The report identifies towns and regions poised to outperform other regions of the province over the next three to five years.
And none is better than Calgary.
“After a couple of roller-coaster years, Calgary is back on a roll. The return of jobs to the city, as well as greatly reduced office vacancy rates show us that the city’s short slump has come to an end,” said the report. “Recording a GDP growth of three per cent in 2011, and one of the lowest unemployment rates in the country, it’s no wonder Calgary is sitting as one of the top places in North America for property investors. When you combine the economic fundamentals, the population growth, and a burgeoning provincial economy, it is easy to see why so many businesses and people have come to call the city home.
“The market is hot. With the pressure on the resale housing market, there is similar pressure on the rental market. Inventory has dropped for rental accommodations while monthly rents have increased. Real estate investors and real estate agents are reporting that rental listings are being pounced on. Savvy investors purchasing units and advertising them for rent upon close are receiving calls from anxious tenants wanting to see the unit before the investor has possession and/or has done any improvements to the property. Rental sites are reporting difficulty in compiling statistics become some communities have nothing for rent.”
REIN said housing affordability will begin to be an issue in Calgary, with rents increasing and a high average sale price. But when you look at that price versus average income it shows that other cities in Canada have a much larger problem on their hands.
“Calgary has the long-term economics to support long-term market strength while other cities do not,” said REIN.
The Top Alberta Investment Towns ranked in order are: Calgary, Edmonton, Airdrie, Red Deer, St. Albert, Fort McMurray, Lethbridge, Grande Prairie, Okotoks, Leduc, Sylvan Lake and Lacombe.
The report said Airdrie has been one of the fastest growing communities in the province.
“Its proximity to the economic engine of Calgary and the growth of the surrounding economy will push the physical and economic growth limits of the city in the next decade,” said REIN.
“With increasingly easy access to many areas of Calgary via the ring road as well as the growth of job centres in and around the city, Airdrie property owners should continue to feel upward pressure on both rents as well as home prices. As affordable housing becomes a growing problem in Calgary, Airdrie will benefit from lower average house prices. As the office centre of the west, Calgary may offer employment opportunities that Airdrie does not, but much of the labour force will turn to Airdrie as a place to call home.”
REIN’s top Canadian investment cities ranked in order are: Calgary, Edmonton, Hamilton, Surrey, Maple Ridge and Pitt Meadows, Airdrie, Kitchener and Cambridge, Red Deer, St. Albert, Waterloo, Winnipeg, Saskatoon, and Halifax.
According to a research note by Scotia Economics, Alberta remains a key economic engine for Canada, with the highest provincial real GDP growth rate forecast for 2012 and 2013 at 3.4 per cent and 3.0 per cent respectively.
“The economy is growing strongly with contributions from consumer spending, business investment, particularly in the oilsands, and exports, which is encouraging given the strong Canadian dollar and soft global demand,” it said. “Provincial government spending also will continue to support growth, albeit at a slower pace than over the decade prior to the recession.”
In the second quarter of 2012, Alberta had a year-over-year population growth rate of 2.5 per cnet, the highest in the country.
“At this juncture, the federal government’s recent tightening of mortgage and home equity financing standards appears to have had a limited impact on Alberta’s housing market,” said Scotia Economics. “It continues to be supported by strong employment growth, significant wage gains and ongoing resource development.”
mtoneguzzi@calgaryherald.com
Residential Market Update – Mortgage Rates to stay low for a while.
A great summary of where we are today in relation to the economy and the housing market.
There have been a couple of highlights for the Canadian housing market in the past week:
- the U.S. Federal Reserve announcement that it is committed to low interest rates until 2015 and
- the latest global housing outlook that puts this country in better shape than most.
Anyone looking for a new mortgage or a mortgage renewal will likely be heartened by the American central bank’s interest rate pledge. The commitment to low rates makes it harder, but not impossible, for the Bank of Canada to move on its desire to increase rates.
However, that desire got a boost from Canada’s economic think-tank, the C.D. Howe Institute. It says the central bank needs to change the way it calculates inflation to take into account rising house prices. The institute says the current calculation keeps inflation lower than it really is and puts the Bank of Canada at risk of keeping rates too low for too long.
As for the global housing outlook, it shows Canadian prices continue to rise, albeit more slowly than a year ago. But around the world, countries showing price declines outnumbered gainers by more than two to one.
The iPhone’s sexy, but ‘iSave’ is far smarter
With all the hype on the new iPhone 5, this puts it a bit into perspective.
Interesting 3 minute read.
The Globe and Mail
Published Monday, Sep. 17 2012, 8:10 PM EDT
The new Apple iPhone 5 tells us a lot about why you can’t get your financial act together.
The iPhone is a brilliant device – a deluxe cellphone that has become a cultural icon. So important is the iPhone 5 that the announcement of its features and release date – it’s Sept. 21 – were treated globally as a major media event. Who doesn’t now know that the iPhone 5 is 18 per cent thinner and 20 per cent lighter than its predecessor?
A man talks on a mobile phone in front of an Apple logo outside an Apple store in downtown Shanghai in this September 3, 2012 file photo. Although Apple makes billions from new phones, a significant portion of its sales in recent years have come from dropping the price on older models once a new phone or tablet hits stores REUTERS
Apple could sell 33 million iPhone 5s globally this quarter, a tribute to the company’s gadget-building supremacy. But iPhones are also symbolic of a change in society’s attitude toward money. We now get our gratification through spending money rather than by saving it.
The savings rate in Canada has been falling for decades, more or less in line with the decline in interest rates. Today, savings accounts offer less than 1 per cent in many cases and barely 2 per cent at best. As a result, a lot of us have come to believe that saving is useless, even foolish. And so, we’ve moved on to spending.
The iPhone 5 will sell for a suggested retail price between $699 and $899 (depending on how much memory it offers), but in the past it has been possible to pay much less if you sign up for a multi-year wireless phone plan. If an iPhone sounds like an affordable luxury, ask yourself these questions:
However much the phone costs, have I contributed at least that much money, and preferably much more, to my retirement savings this year?
Have I contributed anything at all to my kids’ registered education savings plan?
Do I have any money saved that I can tap if the car’s “check engine” light comes on, if the basement floods, if the orthodontist says my kid really needs braces or if I lose my job?
If you’re covered on all of this, enjoy your new iPhone. Otherwise, you might want to reconsider that purchase because your spending and saving are out of balance.
The roughest rule of saving is that you should be putting away 10 per cent of your take-home pay for the future in a tax-free savings account or a registered retirement or education savings fund. If you’re getting a late start as a saver, your number is higher.
External factors like wage freezes and inflation can affect our ability to save, and today’s low interest rates offer no encouragement. But the biggest impediment is in our own heads. We see more value in spending than in saving.
In a way, spending by consumers is a good thing because it accounts for roughly two-thirds of our economy. But spending takes away from saving in today’s zero-sum economy, where wage growth isn’t strong enough to put us ahead of inflation. The only way to save more is to spend less.
The iPhone and similar devices make that a challenge because of the way they draw you into a web of higher spending. You could buy a cheap cellphone and your wireless phone company would probably give it to you for free if you signed up for a service plan. A basic cellphone would mean simple data needs, so you could probably get away with an inexpensive plan.
With an iPhone, you’ll pay extra to buy the phone and likely face higher monthly plan costs. And then there’s the temptation to upgrade. An iPhone 5 bought this fall could be superseded by something better within 12 months. By then, there will probably be a new iPad and, who knows, but maybe Research In Motion will have turned some heads with the new BlackBerry 10. Every new product is competition for money you could otherwise use to save or pay down debt.
You’re urged to buy things all the time via mass media, but there’s no lobby for saving. Apple had Steve Jobs on its side. Savers are stuck with Benjamin Franklin, who said that a penny saved is a penny earned.
How can we get people saving more, then? By making it automatic, not discretionary. Have money electronically diverted from your chequing account to your RRSP, TFSA, RESP or a savings account every time you get paid. Have some money left over after the bills are paid? Hello, iPhone.
————
How the savings rate has tracked in the past 50 years
(data taken from first quarter from each year)
| 1962 | 6.50% |
| 1972 | 9.80% |
| 1982 | 21.20% |
| 1992 | 12.40% |
| 2002 | 4.80% |
| 2012 | 2.90% |
Source: Statistics Canada
Possible Mortgage Rate Increase from these 112.7 year lows?
We are able to watch some indicators that drive mortgage interest rates. This is how we can guess what rates are going to do over a 10 day or so period.
Right now the spread on Canadian 5 year mortgage bond is 1.795%. This is WELL BELOW the comfort zone of 1.90% and 2.10%. Can we potentially see a rise in interest rates?
Hard to say as the spread has be bouncing all over the last few days, but it could trigger a small rise in rates if it does not bounce back soon.
What does this mean?
- If you are going to buy a home, or are planning on moving up or
- have a mortgage that is up for renewal in less than 120 days from now, or know someone who does, then
- CALL for a rate hold at today’s super low rates ASAP. We answer the phone from 9 am to 10 pm every way, holidays and weekends included.
Other Key Points about Mortgage Brokers:
- We have access to all the banks.
- The banks pay us for doing their work for them so there are no fees to clients for our services.
- The rates and terms & conditions are better than the Big 6 offer.
- We offer unbiased, expert advice; we only do mortgages and nothing else; and have been 1 of the top-10 brokers in Canada for the last 5 years.
Please feel free to call or reply with comments or questions.
These are exciting times,
Mark Herman, AMP, B. Comm., CAM, MBA-Finance
1 of the Top-10 brokers of 1,700 at Mortgage Alliance
Direct: 403-681-4376
Accredited Mortgage Professional | Mortgage Alliance – Mortgages are Marvelous
Toll Free Secure E-Fax: 1-866-823-1279
E-mail: mark.herman@shaw.ca | Web: http://markherman.ca/
A study conducted by Maritz Canada showed customers renewing or renegotiating with a mortgage broker’s help reported a rate decrease of 1.40%, compared to a decrease of 1.00% among all mortgage renewals.
Brokers are your best choice for seeking home financing advice and assistance.
NO Condo Bubble in Calgary nor Toronto!
These comments below are in addition to the report last week that said that because Toronto has:
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lots of in-migration,
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New to Canada migration and
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no other kinds of homes being built in the inner city
they do need all of these new condos and it is not a bubble. Interesting.
Economists to condo investors: Smile!
Written by Vernon Clement Jones
Condo investors in Toronto have every reason to be keep smiling, with two separate bank reports suggesting their assets are almost certain to retain their value at the same time their cash flow gets buoyed by rental demand.
“As CMHC… mentioned, capital return for investors who bought new condominiums and decided to rent them once the construction was complete, could earn superior returns than on other investment products,” reads Laurentian Banks’ July economic outlook. “Furthermore, condominiums rents are generally 40% more expensive than apartments of same dimensions in the Toronto CMA, the most important spread in the whole country.”
Smiling yet?
There’s more.
RBC is also weighing in on the future of Canada’s most controversial housing market, suggesting there’s no indication condos, despite what most see as a glut of inventory, are in a bubble.
Far from it.
“Based on market activity to date,” say economists for the heftiest of Canada’s big banks, “the total number of new housing units (condos) completed by builders has not exceeded the GTA’s demographic requirements and is unlikely to do so by any significant magnitude in the next few years.”
Phew!
That dual analysis effectively counters concerns that T.O.’s high-rise properties are primed to fall in value as renters find themselves spoiled for choice and investors are forced to slash prices. The naysayers are also worried that even new construction will be subjected to a major price correction and in the short-term, a phenomenon directly tied to mortgage rule changes making it harder to win financing.
That could, in fact, still happen, although not likely on the scale many analysts had predicted earlier this year, says Laurentian in its analysis.