Condo investors eye Montreal condos over Toronto
The per square foot price of Toronto area condos rose in the second quarter of this year as investor inquiries migrated to Montreal developments, according to a report from BuzzBuzzHome.
The online real estate hub says investor inquiries for Ontario developments declined 72 per cent between the first and second quarter. In the same period, information requests from investors interested in Montreal properties increased 91 per cent.
Greg White, vice-president of data for BuzzBuzzHome, said his company doesn't have precise information on how many of those inquiries are from outside Canada.
The company, which tracks new home construction, attributes the shift in investor interest to Ontario's Fair Housing Plan, announced April 20. Aimed at cooling the province's hot housing markets, it includes a 15 per cent foreign buyers tax and expanded rent controls.
About a third of Toronto's rental stock is in condos.
"Whether this is a short-lived reaction to perceived policy effects or a long-lasting shift remains to be seen," says the report.
In most parts of Montreal, the median per square foot price for condos increased about 5 per cent.
In Toronto, the price per square foot rose in the second quarter in every part of the Toronto region except Durham, which remained steady at about $400 per sq. ft.
That part of the region still has limited condo development, but that is changing, said White.
"There are some projects that are happening in Durham, that may change the urban style along the lines of what you're seeing in York Region or Mississauga," he said.
Because it reports on inquiries, BuzzBuzzHome gets a sense of buyer profiles before sales actually take place, said White.
It saw a slight increase in the number of downsizers interested in Toronto area condos in the second quarter. That suggests some strength in the mid-market range of the category as those buyers are looking for something above the entry-level and below the higher end offerings.
White speculated that empty nesters don't want to spend all their home equity on a condo.
"Downsizers need to cash out and get a little bit more liquid because they've got their retired lives to pay for. They need to transition some of that equity to annuity types of investments," he said.
Condo inventory was down 52 per cent in the second quarter in the Toronto region. More lower-priced units were sold in the first quarter, which has raised the median price per square foot of available condos, said White. Prices for high-end condos have not moved downwards, he added.
Although it accounted for fewer than 2,000 units, Halton Region saw the sharpest price rise in the area — from about $500 per sq. ft. at the start of April to about $700 per sq. ft. by the end of June.
In Toronto, which dominates the regional condo market, there were about 90,000 units available in the second quarter, when prices rose from about $625 per sq. ft. to about $750.
The new home market in Calgary hasn't recovered from the oil price decline in 2014, in the same way as the re-sale market has, said BuzzBuzzHome.
"Multi-family inventory in the pipeline increased 2.6 per cent quarter-over-quarter, suggesting possible oversupply problems," said the company's New Home Market Update for that city.
Condo inventories were down quarter over quarter in Vancouver but inquiries increased in the second quarter mostly from investors, move-up buyers and downsizers, said BuzzBuzzHome.
That could signal a healthy economy but it also creates challenges for younger, less affluent buyers, said the real estate hub.
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