Month: January 2021

A penthouse condominium suite in Montreal’s Ritz-Carlton that sold for $11 million set a record on the province’s Multiple Listings Service.

“I had it listed for fewer than 90 days,” said Liza Kaufman, founding partner of Sotheby’s International Realty Québec, and the broker of record at Kaufman Group. “I’d say it’s excellent for a property that expensive, considering it’s the highest priced sale ever for a condominium listed on the MLS in Quebec.”

The buyer is an American who, because of the COVID-19 pandemic, was unable to physically visit the two-storey, 6,979 sq ft suite that had initially been listed for $12.9 million.

“Because of COVID, they weren’t in Montreal; they were on an island in the Caribbean and I was in Miami, and we concluded the deal via FaceTime viewing,” said Kaufman. “This isn’t the first deal like this I’ve concluded recently; the second-highest priced condo sold in Quebec last year was to my client in Aspen while I was still in Montreal. I showed them the condo via FaceTime as well.”

The unit, which the developer dubbed the “Rockstar,” has 5,301 sq ft of interior living space and panoptic views of Montreal’s Golden Square Mile, the Museum of Fine Arts, and Mount Royal. It also has 25-ft ceilings, its own private elevator, 24-hour security, a catering entrance and nook in the kitchen, and all three bedrooms are en-suite.

“It also has 200 sq ft of outdoor space, which would enable the new owner to host a party for about 100 people outside, even though they’re in the middle of the Golden Square Mile,” said Kaufman.

As it turns out, Kaufman is no stranger to breaking records. In August, she set the record for the most expensive house ever sold in Quebec at $20 million. That six-bedroom house, which was built in 1924, was nearly 30,000 sq ft and had a 14-car garage.

“Breaking records is something we absolutely enjoy doing,” she said. “I have developed my international network through Sotheby’s network and that’s why we can break records repeatedly. The high-net-worth client base we deal with has multiple homes, and having that kind of global reach, especially because of our web presence, allows us to conclude these sales on a repeat basis.”

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Condominium rents in the GTA plunged by 14.1% year-over-year last quarter, with an especially pronounced decline in downtown Toronto where they fell by 17.2%, according to an Urbanation report.

GTA condo rents still averaged $2,076 in Q4-2020—the lowest since the second quarter of 2017—and the rent price per square decreased by 13% to $2.95, the first time they have been below $3 since Q1-2018. In the City of Toronto, condo rents declined to $2,104, while the outer 416 regions of North York, Etobicoke, and Scarborough saw 12.7% drops to $2,036. The 905 region had condo rents of $2,050.

However, the GTA’s condo rental market saw lease transactions surge by 25% last year to a record high of 38,366, according to Urbanation, but rents declined because a deluge of units also entered the market—the number of rental units jumped 46% in 2020—which caused active listings to surge by 162% to 8,066 units. Consequently, rental inventory climbed to two months from 1.4 at the end of 2019—but it’s also down from 3.3 months at the end of Q2-2020. Moreover, impelled by lower rents, two-thirds of leasing activity in the GTA last year occurred during H2.

The City of Toronto’s vacancy rate for purpose-built rentals upsurged to 5.7% during the fourth quarter of 2020—a 1.1% year-over-year increase, and a 50-year high—according to the report.

“The GTA rental market faced its toughest challenges to date in 2020 due to COVID-19,” Shaun Hildebrand, president of Urbanation, said in the company’s latest research report. “While rents have a long way to go before returning to their peak and supply will continue to be a headwind in the near-term, some improvement can be expected in 2021 as vaccinations eventually lead to higher immigration and at least a partial return to the office for downtown workers and in-class learning for post-secondary students.”

The survey, which only surveyed apartment buildings completed in the last 15 years, determined that vacancy rates are lower in Toronto’s suburbs than in the city proper, rising by 0.8% to 2% last quarter. However, the report also noted that the 905 region had less purpose-built rental inventory and that it benefited from an exodus of Toronto residents. Region-wide, the vacancy rate increased to 4.6% in the fourth quarter of last year from 3.6% in Q4-2019.

“Actual rents landlords can get from new tenants is falling, so there’s clearly more supply than demand,” Phil Soper, president and CEO of Royal LePage, CREW. “One of the mistakes people make is assuming everybody is abandoning the cities. In fact, a major contributor, perhaps the major contributor, is missing demand altogether. It’s missing demand that comes from foreign students, domestic students and new Canadians.”

Additionally, Soper says COVID-19-induced unemployment hit renters the hardest, but he added that the desire to live in downtown cores like Toronto’s hasn’t dissipated.

“There’s a bump in unemployment in the country, which disproportionately skews to renters, and you get another group of people not able to rent. Does that mean people are abandoning cities for the country? No. It means a material portion of rental demand is temporarily unable to rent, but all of it is coming back.”

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About a decade and a half ago, a single condominium project near King and Portland Sts. catalyzed a building boom that would transform Toronto’s west end into a trendy hotspot replete with tens of thousands new condo units.

And now Queen St. E. is poised for that same transformative residential boom. Before developers could even think about entering a neighbourhood, crucial fundamentals that drive demand must first be present, and Queen East has them in spades.

East Harbour, a 60-acre modern melange of office and retail sites that will create over 70,000 jobs, public space and more amenities than one can count, will be the lynchpin of the new east end. In fact, what East harbour will have that the west end doesn’t is a multi-modal transit hub slated to become the region’s busiest after Union Station. Running through East Harbour will be the long-awaited downtown relief line, dubbed the Ontario Line, the Queen’s Quay LRT, Regional Express Rail, SmartTrack, and the Broadview LRT.

The Places to Grow Act has, for 15 years, mandated that kind of intensification for Ontario, however, it scarcely occurred to such an extent in the GTA. Now that it’s in the works, Torontonians, from young professionals to young families and empty nesters, will flock to the area once the imminent condo boom begins producing completions.

The Queen East condo boom is also being catalyzed by development of the GM Mobility Campus—the seven-acre site will be home to 2,000 new jobs comprised of research, development, and automotive sales. The area, which will brim with yet more green space, has received a $100,000 contribution towards the Bruce Public School yard, doubtless boosting surrounding values in the process, while General Motors itself will inject nearly $1 million into the local arts community—everyone from design, digital, and screen firms to fashion incubators and musicians—which it will host on the site’s commodious northwestern quadrant.

The Port Lands is also getting a makeover: a nine-acre redevelopment zone will see Cinespace Film Studios expand by 165,000 sq ft, thereby cementing the Port Lands as the epicentre of Hollywood North, while the Basin Media Hub will allocate 500,000 sq ft for creative spaces, half of which will become a Netflix production hub.

Among the Queen East condo boom’s first developments is Queen & Ashbridge Condos, a 17-storey, 360-unit project by Context Development and RioCan Living located smack in the middle of Leslieville and the Beaches. The end user-driven project has already attracted much attention from savvy investors who know they won’t have much competition to contend with when they cash out their equity. In the interim, there will be no shortage of renters wanting to live in the building to be closer to work.

Queen East is overwhelmingly composed of detached houses, which average $1.5 million in Toronto while the mean price of a condo is around $630,000, says Ryan Coyle, real estate broker and co-founder of Connect.ca Realty. He added that Q&A is an affordable opportunity to move into the area for people who have previously been priced out of the area.

“People who want to move into desirable neighbourhoods like Leslieville and the Beaches now have a really good option to move into the area and have a beautiful condo with incredible amenities and parks,” he said. “You’re going to have a lot of people—young families and young professionals—moving into the area because they can now. It’s a desirable neighbourhood and it’s becoming more affordable.”

Coyle noted all the jobs coming into the area as a demand driver for new home construction.

“The jobs will be on Queen. St. E. along the DVP to Woodbine, and you’re going to have a lot of young professionals and young families who are going to want to live close to where they work, close to the waterfront, parks, restaurants, and this is the perfect option. You’re going to have a mix of people.”

Q&A Condos is also offering 6% annualized interest on deposits, however, the annual appreciation of units in the building is already being augmented by the astronomical detached housing prices in the Beaches. It certainly doesn’t hurt that the Q&A’s frontage has a streetcar stop.

In addition to the east end’s propitious economic horizon, the nearby downtown core added 100,000 jobs between 2014 and 2020, and it’s expected to add more in the coming years with 8.7 million sq ft of office space under construction, and 27.5 million more in the development pipeline. It isn’t surprising, then, to learn that 37% of jobs in Toronto are located in the city’s downtown. And in a congested city like Toronto, it isn’t difficult to understand why people prefer living close to work. The Queen East condo boom will invariably facilitate that.

To learn more about the Queen East condo boom, click here.

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The popularity of Toronto’s small condominium units dipped last year because of the COVID-19 pandemic and short-term rental regulations, but as the city’s red-hot freehold market remains financially prohibitive, larger units have emerged as a reliable option.

“Condos are still considered an affordable entry point for first-time buyers, so it’s not like demand just disappeared. Condos help people get into the housing market,” said Dalia Barsoum, president and principal broker of Streetwise Mortgages. “You’ll see most of the demand in the bigger units as opposed to the smaller ones, especially since the prices of those larger units have come down. It becomes an attractive alternative to a detached house.”

Condominium sales have started rising again, and very quickly, perhaps because detached housing has become even more cost prohibitive while condo prices have concurrently softened. In the City of Toronto, condo sales surged by 75.9% year-over-year in December and the average price declined by 4.7%, according to the Toronto Regional Real Estate Board (TRREB). Moreover, GTA condo sales in the first two weeks of January shot up 90% year-over-year on the MLS.

“During the last couple of months, I’ve seen more interest on the buy side from folks looking to get pre-approved and start shopping,” said Daniel Johanis, principal broker of Pekoe Mortgages. “People aren’t exactly expecting a downturn in the market, and when they look for affordability they have to look outside of their areas and consider moving elsewhere.”

Except not everybody can afford detached homes, even in suburban areas. According to the TRREB data, the average sale price of a detached GTA home was $1,240,632 last month. Furthermore, not everybody is willing to relocate to the exurbs in pursuit of spacious homes—especially not when the mean price of a City of Toronto condominium in December declined by 4.7% year-on-year to $625,828. The result is that two- and three-bedroom condo units have become very affordable options.

Asked about surging condo sales during the first two weeks of the year, Frances Hinojosa, mortgage broker and managing partner of Tribe Financial, says opportunistic buyers, impelled by low interest rates and moderating prices, are purchasing multi-bedroom units.

“What worked for people before COVID isn’t working now,” she said. “Some people are okay with the downtown lifestyle, but they’re upgrading where they’re living because they need more space for the family and for that home office.”

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The GTA’s condominium market is heating up again, with sales surging 90% year-over-year on the MLS through the first two weeks of January.

“We’re seeing a huge rebound in interest and demand. Condo listings are up 66% over last year, but it’s interesting to see such strong demand for condos downtown,” said John Pasalis, president of Realosophy Realty. “For the second half of 2020, the condo market was pretty sluggish and prices in the downtown core dipped about 10%, but a lot of investors saw that as a good opportunity to jump into the market and potentially get some value by taking advantage of a surge in listings.

“[Investors are] optimistic and believe prices will go higher in the near term, and this is largely what’s driving investor behaviour.”

The optimism began manifesting late last year with condo sales in December increasing by 75.9% year-over-year in the City of Toronto, according to the Toronto Regional Real Estate Board’s latest data. The impetus for renewed confidence in the condo market was likely news that COVID-19 vaccines are available for distribution.

“I do think the vaccine was a big issue and perhaps led a lot of investors to jump back in during Q4,” said Pasalis. “A combination of softening prices, the vaccine and recovery caused optimism to kick in and I think that helped swing the market a fair bit, for sure. A bit of optimism led people to jump into the market. We heard news about the vaccine and that a good number of Canadians would be vaccinated by September, and that led investor sentiment.”

Although it doesn’t look like inoculation targets will be realized by the end of Q3, prolonged distribution delays aren’t expected.

Frances Hinojosa, mortgage broker and managing partner at Tribe Financial, confirmed that the downtown Toronto condo submarket in January has picked up from where December left off, with young professionals taking advantage of low interest rates and soft condo prices to become homeowners. Hinojosa also says another cohort of buyers with an eye to the future are active as well.

“Investors understand we’re going to come out of this, and back in October the government announced it’s going to substantially increase the number of newcomers to Canada to 1.2 million in the next three years, and 60% of them will be economic class,” she said. “It might not seem like there are investment opportunities right now, but Toronto’s downtown core has retained the companies that need those workers. They will be renters, so immigration will fill that gap.”

Although consumer confidence has resuscitated the city’s condo market, Pasalis warns that it could be tenuous and that Q1-2021 may determine what happens for the rest of the year.

“Q1 will tell us a lot. If rents start falling even more, then it will basically discourage investors from jumping in,” he said, but noted that the market will remain buoyant “if news continues being positive about vaccines and people are optimistic about immigration picking up.”

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