{"id":946,"date":"2022-07-18T02:21:12","date_gmt":"2022-07-18T02:21:12","guid":{"rendered":"https:\/\/www.realestateleads.ca\/blog\/?p=946"},"modified":"2023-09-25T22:08:48","modified_gmt":"2023-09-25T22:08:48","slug":"interest-rate-hike-prominently-factoring-into-greater-toronto-area-condo-market","status":"publish","type":"post","link":"https:\/\/www.realestateleads.ca\/blog\/interest-rate-hike-prominently-factoring-into-greater-toronto-area-condo-market\/","title":{"rendered":"Interest Rate Hike Prominently Factoring into Greater Toronto Area Condo Market"},"content":{"rendered":"
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Though some may be skeptical, there is absolute economic soundness to the argument that interest rate hikes are necessary to put the brakes on inflation. It\u2019s not the first time this has happened in Canada, although it is the first time it\u2019s occurred in the wake of a Federal Government being loose and carefree with money in a way never seen before in this country. That part of it is what it is though, and it should be noted that Canada joins nearly ever First-World country in struggling with inflation at this time. So while there is little to like about rate hikes in the here and now, the fact is they are necessary.<\/p>\r\n\r\n\r\n\r\n

Part of the \u2018little to like\u2019 will obviously relate to certain aspects of the housing market in Canada, and it appears that is now especially true for the condo market in the GTA. Is that because many condos are owned by investors who paid too much for them? Yes, there\u2019s some of that in it but it is more complicated than that. Keep in mind that condos have long been the standard for people buying a first home for themselves, and the natural process is for that rung on the ladder to be vacated some years later and the situation repeats itself as a new generation of 1st-time homebuyers buy an affordable first home for themselves too.<\/p>\r\n\r\n\r\n\r\n

What we have now is a scenario where rather than condos going onto the market \u2013 owned by investors or not \u2013 they are being retained (and perhaps even being rented for less) rather than being sold at a price where they wouldn\u2019t have been worth the value the mortgage was negotiated for. The same can be said for other types of homes, but those other types of homes haven\u2019t been filling a very specific part of what has been the organic process in this all for a long time. Here at Real Estate Leads our online real estate lead generation system is ideal for realtors who need an advantage during a time when fewer homes are going onto the market.<\/p>\r\n\r\n\r\n\r\n

Swinging back on topic, what is to be made of how the BoC\u2019s recent hike is continuing to have major ramifications for the Greater Toronto Area condo market.<\/p>\r\n\r\n\r\n\r\n

Pushing Down Prices<\/strong><\/h3>\r\n\r\n\r\n\r\n

The rise from the BoC this week was 2.25%, and the rise is reverberating across the region\u2019s housing sector, with the most notable effect being condo prices dropping significantly. The issue with this of course is the fact the condo prices were the ones to rise most dramatically over the last years after those for single-family detached homes. But the difference is A) there are many more condos on the market at all times, and B) these are the homes that the majority of 1st-time homebuyers would have seen as affordable, all things considered.<\/p>\r\n\r\n\r\n\r\n

That may still be the case, but a rate rise of this size and promised ones in the future are really putting a damper on the market, as fewer would-be buyers qualify for a mortgage and the owners of condos increasingly decide now is not the time to sell. It goes without saying that inventory is absolutely key to regulating prices organically for all types of homes, but it is an especially sensitive issue with condos and even more of a focus in desirable locations like Toronto and Vancouver.<\/p>\r\n\r\n\r\n\r\n

12% Decline Since March<\/strong><\/h3>\r\n\r\n\r\n\r\n

The current median per-sq ft price for condos is $832, and that works out to a 12% drop since March of this year. The estimation is now that individuals buying condos here are paying an average of 1% below asking, and as we all know paying below asking for any type of property has been simply unheard of for a very long time now. Look no further than just a handful of months back in Feb 2022 when homebuyers were paying on average 15% above the listed price for condos in the GTA. <\/p>\r\n\r\n\r\n\r\n

Now we have inventory plateauing there too, and of course what that works out to is a buyer\u2019s market. Some will welcome the opposite end of the spectrum there based on the fact it\u2019s been the opposite for so long, but balance is always best and a healthy housing market is never one that leans too far towards being a buyer\u2019s market. That\u2019s the basic economics of it, and that takes into consideration the additional value that everyone has in their homes, including those who haven\u2019t bought theirs yet.<\/p>\r\n\r\n\r\n\r\n

Supply Down in City\u2019s Core<\/strong><\/h3>\r\n\r\n\r\n\r\n

The trend of people returning to the city core as back-to-work trends continue means that supply is down in the city\u2019s core, and that means that the average price per square foot has increased every so slightly as people come back to downtown Toronto. The average price of a condo in downtown Toronto is now $1,102 per square foot\u2014a $3 increase so far in July\u2014or roughly $882,680.<\/p>\r\n\r\n\r\n\r\n

But with rents skyrocketing and not coming down in step with price values going lower, we have a situation where would-be sellers who don\u2019t like what they see are relisting their condos on the rental market instead. A recent spike in terminated listings may be explained by this. The average lease price for a condo is currently $2,700 per month, and that\u2019s up 15% from last year.<\/p>\r\n\r\n\r\n\r\n

Fierceness in the rental market, and the reason it doesn\u2019t move with home value decreases, comes back to supply and demand exclusively. With that in mind, realtors can advise clients that despite the downturn if a property is well maintained, well located, and priced competitively it will still sell and likely relatively quickly in places like Toronto and Vancouver. The same cannot necessarily be said for other types of homes, but condos are unique in what they offer at or around a certain price point.<\/p>\r\n\r\n\r\n\r\n

__<\/p>\r\n\r\n\r\n\r\n

Sign up for Real Estate Leads here<\/a> and receive a monthly quota of qualified, online-generated buyer and \/ or seller leads<\/a> that are delivered to you exclusively as the only realtor registered to receive them. It\u2019s a proven-effective way to get more out of your client prospecting efforts, and a look at our testimonials<\/a> page is enough to make clear how many realtors like you are very happy they\u2019ve made that decision to sign up with us.<\/p>\r\n","protected":false},"excerpt":{"rendered":"

Though some may be skeptical, there is absolute economic soundness to the argument that interest rate hikes are necessary to put the brakes on inflation. It\u2019s not the first time this has happened in Canada, although it is the first time it\u2019s occurred in the wake of a Federal Government being loose and carefree with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-946","post","type-post","status-publish","format-standard","hentry","category-general-topics"],"yoast_head":"\nInterest Rate Hike Prominently Factoring into Greater Toronto Area Condo Market - Real Estate Leads Blog<\/title>\n<meta name=\"description\" content=\"Interest Rate Hike Prominently Factoring into Greater Toronto Area Condo Market - Real Estate Leads Blog\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.realestateleads.ca\/blog\/interest-rate-hike-prominently-factoring-into-greater-toronto-area-condo-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Interest Rate Hike Prominently Factoring into Greater Toronto Area Condo Market - 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