GTA Real Estate Market outlook with Preconstruction projects compared
The real estate market is currently thriving in the GTA and the surrounding area.
A lot of people have questions about the GTA market. Why is there a sudden increase in listing prices? Why are there more offers for resale homes than usual? How has the resale home market become a sellerís market? We will attempt to answer these questions within this article by analyzing TRREB, Remax, and CREA data and showcasing why the preconstruction market is the way to go with the current market and fluctuations.
2020 has been a tumultuous year with the Covid-19 pandemic and as that has put the world at a stand-still, the real estate market did just the opposite. After a drop in March at the very beginning of the pandemic, the stats for freehold homes in April and May started to bounce back and have only been going uphill since then. Listing prices and ultimately the sold prices have ended up being astronomically higher than what market value was back in October/November, 2019. With freehold homes receiving multiple offers and short median days on the market, it is extremely important to understand the logical reasons behind these increases.
Looking at the GTA market from the December rental statistics, as per CREA (Canadian Real Estate Association) the price of rent is expected to drop approximately $100 per month from Novemberís average by mid-2021. By late 2021 rental prices will slowly pick up before growing 13 or 14 percent in 2022, which is still 2019ís highest average of $2,454 per month. Novemberís average rent in Toronto was down 3.1 percent monthly and 16.4 percent, year-over-year. Average rental prices for one and two-bedroom properties are down approximately 15 percent from last year. With the preconstruction condo market set to grow in 2021 and current rental prices being low, many investors are looking at preconstructions condos as a valuable and profitable investment for the future. With the pandemic and the current uncertain market, many investors are foreseeing the future growth of GTAís condo market and investing in the preconstruction market. It is also currently a good time to invest into the preconstruction market as new condo development prices are set to increase in the next few years due to increases in construction costs.
When it comes to freehold detached, semi-detached, and town homes the outlook for buyers looking into the 2021 market is startlingly to continue as a sellerís market. Looking at the picture above, it can be seen that estimated average residential sale prices in 2021 will be up 6%. The 2020 market has already seen an increase of 12% even during a pandemic. Many people are concerned about the uncertainty of the real estate market. Multiple/unconditional offers, bidding wars, and a shortage of inventory has become the new norm. †Due to these factors, the preconstruction market is more attractive to potential buyers. Buyers are getting a brand new home which will usually be completed within two years along with Tarion warranty. The ability to add specific and additional features to the home before it is constructed adds value which cannot be done with resale homes. Providing the time to get funds in order and ease into the transition of occupancy/closing is something the resale market does not widely provide. Whether it be an investment or principal home, we see that preconstruction projects are the way to go in 2021.
As seen through the www.preconstruction.info site, there are plenty of new development projects within the GTA. When it comes to the current condo market in downtown Toronto between available units and renters there is an imbalance. Therefore as an investor in order to purchase a resale condo as an investment and to rent out that unit one would not get the most value. When it comes to freehold homes, we see that some properties have upwards of fifty offers. Hence at this time the preconstruction market for condos are a better value. With an expected influx of immigration and international students, condo markets will surely have a demand in the future. Therefore it is more profitable to buy a preconstruction condo now, as you will be buying as a future investment. One can also avoid the current hassles which come along with purchasing a resale freehold homes. We believe that 2021 is the year for preconstruction projects.