The Toronto property market has yet to show any signs of cooling down, as demand for condos and other real estate has escalated over the last few years. From small family homes to large and mid-sized condos, there’s a growing need for property in the Greater Toronto Area.
There are a few elements that have been driving up prices for real estate, and for starters, demand has kept increasing year-over-year. From local migrations to new immigration laws, immigration is expected to bring more people looking to move into busier metropolitan areas for various reasons.
Additionally, low-interest rates and excess savings from the extended lockdown periods over the height of the pandemic have also seen prices increase rapidly. Home prices remained a key selling point when compared to the historical average of property values and the number of real estate investors.
Whether you’re a first-time property buyer or perhaps a small-time investor looking to grow your financial wealth and investment portfolio, the Toronto property market is set to undergo another prosperous year.
So even if you’ve been considering the last few months to jump into the property market, either to purchase an investment opportunity or perhaps a principal home for yourself, here’s a look at buying a condo in Toronto for investment.
Why Are Toronto Condominium Investments a Good Idea?
Despite the fact that Toronto is a bustling city, with a growing population, ample job opportunities, and a hotspot when it comes to culture, arts, food, and entertainment, the city has a long list of attractions and amenities that are worth moving for.
More so, condominium property prices have steadily increased over the years, which truly shows how high the demand for affordable housing is in the Greater Toronto Area.
Equity Gains
Buying any type of property, depending on the demand and the local thereof, can generate equity gains over time. When looking to purchase a condo in Toronto, you may expect to grow the value of the property and the equity thereof if you put more money into it.
Raising the equity gains means you do renovations or modifications every few years, conduct maintenance and upkeep, and save rental income can help build more equity to purchase a second or even third rental property.
Equity does take some time to accumulate, and generally speaking, you can build equity of your rental income to cover the mortgage (if you have taken one out), property taxes, maintenance, and HOA fees and still have excess to save up.
The Toronto condo market and Toronto real estate market have left a good deal of investors from all around the country, and the world flocks en masse to a world-class city that boasts major developments, high-profile tech companies, and a great investment opportunity in various sectors and industries.
Stable Rental Demand
Although the current rental demand for condos has significantly decreased since 2020, current figures indicate that rental demand in the fourth quarter of 2021 shows roughly 10,820 transactions being processed, down 13.9%.
Even with the slight downturn, there’s still a significant increase in general queries for new condo market rentals. This comes as most offices have reopened, with some places opting to allow their employees to return either partially or full-time back to the office.
Another contributing factor is that those people who have moved out of the city for various reasons during the early stages of the pandemic might be looking to return, or younger renters are opting to move into the city.
There’s also a need for aspiring property developers and investors, and with Toronto poised to be one of the most popular and sought-after cities in North America, investors may experience a steady influx of new migrations within the next few months.
There’s also a steady resale condo market, and Toronto real estate is pretty short-squeezed at the moment. And while the average condo price is outpacing the rest of the real estate market, having a condo investment strategy will offer long-term equity gains for buyers and investors.
Stringent Lending Practises
Perhaps it’s possible to point to the stringent lending practices of private and public financial institutions in Canada that have led to the rapid increase in new condo rentals in recent months.
In Canada, banks have remained the most influential player when it comes to residential and commercial lending. Because of this, banks have the upper hand in lending to those sectors and individuals with stronger credit, which can lower the lend-to-value rate overall.
What this means in the long run, for those who have struggled to either accumulate a healthy credit score or perhaps have one at all, due to extended lockdowns and business-related restrictions, it’ll be harder for them to be approved for a property loan.
Perhaps while the interest rate is low, and banks have been more generous in giving out medium-sized loans to individuals and businesses, it remains heavily difficult for most individuals to secure property loans that can help cover the initial cost of purchasing a new home.
Are Pre-Construction Condos a Good Investment?
Purchasing a pre-construction condo is a long-term investment, and most first-time buyers might not see it as it is. A lot of property experts and management groups have concluded that when you purchase a pre-construction condo, the value thereof is set to increase right from the very start.
The reason for this is that as demand steadily increases or decreases, newer condos and real estate have a higher value as they are located in modern areas, closer to growing communities and job opportunities.
There are other benefits to buying a pre-construction condo; these include property appreciation, principal pay-down, passive income, some tax benefits, and in some cases, you can control the layout and design of the condo – which puts you in control.
Is It Worth Buying a Condo in Toronto 2024?
High interprovincial migration and international immigration will see the Toronto property market steadily grow over the coming months of 2022. Most real estate purchases, including detached and semi-detached houses, apartments, and another commercial real estate, are set to grow this year.
When it comes to condominiums, the general outlook is relatively positive, with most market experts seeing an influx of new residents moving into the Greater Toronto Area by the coming summer months. The downtown Toronto condo market in regards to pre-construction condos has been a key driving force behind the real estate market and rental inventory.
Ongoing demand and short supply have left the market in a short squeeze, but that has created an opportunity for investors to purchase available real estate or condos as an investment for a passive income stream.
Currently, around 49% of Canadians feel that property and another real estate will remain one of their most important investment purchases in 2022, with roughly 49% feeling relatively positive about the coming year in terms of the property market.
How to Invest in Toronto Condominium Market
If you’re a first-time buyer or first-time investor, for that matter, there are a few places you can go and people you can talk to before making any type of purchase. It’s highly advised to first consult with an expert or property professional before you jump into the real estate market.
Talk to Agent Who’s also an Investor
It’s not surprising that some realtors or property agents are also investors, as they have the best scope on the current trends in the market. If you’re able to talk to an agent who’s also an investor, be sure to have a planned list of questions and queries ready.
If you’re looking to invest in the condo market, you should do your research on areas that you prefer and the surrounding neighbourhoods.
Ask questions regarding the potential growth and development of the neighbourhood, the current tenants, job opportunities, public transportation, and what the appreciation of other properties in the area might have been in the last couple of years.
Agents already have an insider view of what the market looks like and what the current demand may be, so being able to talk to one or two of them will make everything seem a lot more clear than it currently is.
Find the Best Condo Prices in Toronto
There are thousands of condos available on the Toronto condo market, and depending on what your budget may be, you will need to take some time to find one that falls right into your budget.
For starters, you can make a list of 5 to 10 potential places and conduct market research on the area or neighbourhood. See what the area has to offer, what there is to do, and what the general asking price per month is for a condo.
Then look at what your potential rental income may be and how that will cover the mortgage, rates, and fees.
If you already have enough saved up to purchase a condo without having to take out a mortgage, buying a more affordable condo may be the better option.
Best Condos in Toronto to Buy
There is a long list of popular condo developments currently available in Toronto, while others in the Greater Toronto Area are more favoured by younger renters.
Here are some of the best condos currently available to buy in Toronto:
- E-Condos
- Toy Factory Lofts
- The Berczy
- Theater Park
- The Milan
- Shangri-La
These are only a few of the available options but have been ranked as some of the best condos to buy. These condos all offer modern living quarters, easy access to the city or other public transportation systems, and a well-ranked neighbourhood of public amenities.
FAQs
How Much Do Condos Appreciate per Year?
Looking at historical figures and with the current rate of demand, condos generally appreciate between 5% and 6% each year in Toronto.
Are 1 Bedroom Condos a Good Investment?
Depending on its location and what there is to offer, including public attractions or in-building amenities, a one-bedroom condo can be a generous purchase as it can be a lot cheaper, and you may have a long-term renter if it’s located well within the city.
But do also consider other options that are available on the Toronto condo market and real estate listings.
How to Invest in A Condo?
First, you need to research the condo market and what is currently available. Then you can speak to a property investor or real estate agent who will be able to guide you through the process of buying and renting a condo.
You will also need to talk to a property lawyer about all the legal aspects of investing and renting a condo. From there, if it’s possible, you can then acquire the help of a property manager to deal with the general upkeep, maintenance, and screening of tenants.
Is Buying a Condo a Good Investment?
Yes, buying a Toronto condo as an investment property, especially in a city like Toronto, is a good investment opportunity, as the value of condos has been seen to appreciate well above 5% and 6% per year.
How Long Does It Take for Condo to Appreciate?
Any type of property investment will take a good amount of time before it starts to appreciate. In Toronto, it’s been calculated that, on average, it can take three to five years before a condo starts to appreciate. But with the current demand, it may be sooner, as property prices have been climbing in recent months and are predicted to increase by 10% in 2022.
Final Thoughts
Depending on your financial situation, purchasing a condo is considered a well-thought investment that can help bolster your financial growth and investment property portfolio.
Additionally, buying a condo in the current real estate climate also shows a sense of resilience, with several contributing factors that can impact the buyer market. These, among others, include stringent lending practices and the rise in condo prices – if you have the opportunity to purchase a condo, then now would be a great time to do so.
Finally, it’s not without any risk, and any first-time buyer and investor should first consider all their risks and rewards before diving into the property market. Conducting market research and seeing if you’re in a financial position to take on a mortgage and any additional costs will help clarify whether you’re fit for such a well-worth endeavour.
