Is the Condo Party Over For Toronto ??
Well, today was the first day of the bad news for the Toronto Condo Market. Sales down 70% year over year as reported by BILD. That's a lot, but also remember that August isn't usually the best month for condo sales. For confirmation we'll have to wait and see what the numbers are like in September before we jump to any conclusions. Still this is sobering news nonetheless for developers, who have still been launching new projects at a rapid rate even though the market cooling has been a forgone conclusion for a while now.
Big projects launching at the downslope of the condo boom are numerous and include projects like the Holt Renfrew Tower, Menkes Harbourplaza Residences, 10 York by Tridel, and of course now the Projectcore development headed by David Mirvish, and Frank Gehry.
One almost has to wish that some of these projects were launched at the beginning of the cycle. Seems like the developers saved the best for last, but that the last might be too late. Still there are many great projects which have come through pre sales fine, so we have guaranteed condo construction for the next 2 years. And even if we extrapolate this past months figures for the full year, Toronto is still looking at over 10,000 condo unit sales per year. Enough to do 6 or 7 David Mirvish-Frank Gehry projects.
So let's not get alarmist , let's see what happens over the next two months before we sound the alarm. And let's not forget this correction is artificial and imposed on Toronto by the federal government in its hopes to slow the Toronto condo market, and create an unsteady employment situation for the 200,000 people employed in the construction industry in Toronto.
Getting a Mortgage and Mortgage Insurance through National Bank Insurance for financing a loan to purchase at FIVE Condos is actually a relatively easy process, and new rules from the federal government has required that company include new regulations, which have made the home loan and mortgage process a bit more difficult. Those changes at National Bank Insurance include shortening the amortization period for which the loan can be held by the consumer, and the degree to which the property is financed by the mortgage. They have also increased deposit requirements to lift the loan insurance amount. Mortgage insurance from National Bank Insurance is actually one of the major financing costs on home loans.
Investment Trusts have no taken to looking to purchase rental properties and acquiring mortgages through financing auctions by the banks looking to shore up their balances sheets in light of stricter government regulation. These regulations have actually made holding residential mortgages by the large financial institutions harder to hold. Currently investors are looking to increase their position in rental properties in Toronto, at the same time the federal government in co-operation with the financial institutions are making getting and qualifying for loans and mortgages more difficult
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