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Checking Toronto real estate properties

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Several reports have predicted that Canada’s economy will be better off compared to the economy of other Group of Seven countries, which includes superpowers such as America, United Kingdom, and Japan. Such forecasts were proven last year. America’s economic crunch is well-documented by the media, with the country’s real sector as one of its biggest hits. Because of the crunch, there is not enough demand to fully support America’s real estate sector. American investors are currently looking for business outside their country due to the already saturated market. Even foreign investors have departed from their usual business locations and have expanded in countries in Asia and South America, in countries where investors, years ago, would never have thought a market for real estate could exist. And this situation is not solely exclusive to America. But what makes toronto different?

For years, economists in Canada have predicted the decline in real estates in the country. However, while the country did experience some drop in sales in the sector, it was not as sharp as the drop in countries such as America or Japan. For example, in the toronto real estate News, it was reported that Toronto will not experience a crash in condominium unit sales. In the same report, it was cited that a record number of condo units will be constructed in 2008. By 2009, economists estimated the second-highest record for condo unit construction. While the sales of existing homes will not experience an increase within the next two year, sales will remain moderately higher than previous years. Considering the status of the worldwide economy and the country’s previous record in housing sales, this is relatively high. In 2007, home resale in the greater toronto area experienced a 10 percent increase from 2006 sales. While sales in 2008 were predicted to decline, it will only be slightly lower than the sales in 2006 (2008’s predicted 84,000 against 2006’s 84,842). The predicted sales for 2008 and 2009 are also still within the range of the sales in the last eight years.

Also, Canada Mortgage and Housing Corporation (CMHC) and the Scotiabank have released their forecasts for the Toronto’s real estate sector. According to their research, there will be a soft landing for real estate in Toronto. According to the CMHC report, there are a very low number of unoccupied condominium units in Toronto, ranging from 1,000 to 2,000 units only. Price growth, while not as high as in 2007, will remain moderate. Price growth for 2008 was predicted to be five percent, while price growth in 2009 was predicted to be three percent. Considering the status of real estate around the world, these are very good numbers. This means there is still an existing demand for property in Toronto despite the worldwide economic crisis.

Of course, this is not to say Canada is impervious to any negative effects of an economic crunch. However, as foreign investors say about Toronto’s real estate status, it is currently undervalued. However, with the situation now, these foreign investors may be correct in saying that it will only increase in value.

The foreign appeal of Toronto’s real estate

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Unknown to many, a considerable number of foreign investors and buyers now see toronto as the new alternative to New York and London when it comes to buying property. Years ago, these investors and buyers won’t even consider Toronto. Although toronto is at par with such cities, its real estate is considered to be undervalued. However, Toronto is now one of the prime considerations when buying real estate. Multi-national developers are now investing on Toronto’s real estate, and the results are positive. Because of this, Toronto is now considered to be the condominium capital mantle in North America.

What has caused this shift?

While there are no formal research or study on the actual number of foreign buyers of properties—specifically condominiums—in Toronto, the number is significant, considering the global real estate situation. Many attribute this to the real estate market in other countries. In prime locations in America or Asia, real estate is not what it used to be. Condominium units in New York, London, and Tokyo, to name a few, remain unoccupied for several months. This shift, economists say, is the reason why Canada has so far managed to survive the real estate crunch countries like America is experiencing. The reason why Canada has survived the economic crisis is not solely because of the country’s population, which isn’t enough to support the real estate supply in the country. Among the foreigners who have bought properties in Toronto are Russians, South Koreans, and the British. Citizens from Japan, China, Greece, Ireland, Trinidad and Tobago, Venezuela, and even the U.S. buy properties in Toronto. However, the Iranians comprise the bulk of these foreign buyers. According to high-end developers and agents, Iranians are biggest client group for real estate sales. The foreign market is hardly saturated; firms and agents are struggling just to keep up with the demand. Foreigners usually buy property so they will have a place for vacations or so they could rent it out. Subsequently, because of Toronto’s good real estate records despite the economic crunch, more foreigners are enticed to buy property in Toronto. Other than Toronto being one of the most visited cities in the world, its price growth, while not as high as 2007, is stable; more stable, in fact, compared to other pricier locations in America.

However, that is not the only reason why foreigners are interested with Toronto’s real estate. For years, Canada is known for being home to several nationalities. Unlike countries such as America or Australia, there are hardly any cases or reports of racial discrimination in Canada. This is among the reasons why Iranians are flocking to Canada. In recent years, Americans have been less welcoming to Muslims. Canada, however, is seen by foreign as more tolerant to different nationalities. There are no exact figures on record on how many foreign buyers of real estate there are in Toronto. Depending on the record one checks, it could range from 20 to 50 percent. What is proven, however, is that Toronto truly is a prime location for real estate investment.

Toronto: Haven for the rich and famous

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More than a decade ago, people see Canada as North America’s backwater. America is seen as the superpower. Japan, while inconspicuous, is already making its mark as one of the world’s future countries to be reckoned with. China, on the other hand, is called a sleeping giant, and, just recently, is seen as one of the biggest forces as a real estate and international workforce supplier.

However, this is no longer the case now, especially in its real estate sector. While America’s real estate is not as good as in the previous years, Toronto’s real estate experienced a surprising increase in 2007. What’s more surprising is the relatively low decline in some sectors of Toronto’s real estate. The positive price growth in Toronto’s properties is also a considerably good mark proving Toronto’s real estate stability.

Because of this, the world’s richest and most powerful are heading to toronto to buy real estate property. In 2007 alone, the price of condominium units has reached the $700 per square foot mark. In previous years, a high-end unit would cost $500 per square foot. Now, it can cost up to $1500. This is because investors see the real estate sector of the United States as unstable due to last year’s crisis. China, while booming, is still risky and will continue to be risky for the next couple of years. Toronto, therefore, is one of the most stable locations in the country.

Agents and firms have mentioned that famous and rich people who would normally go to countries like America take their business to Toronto. Despite the price difference, toronto is no longer seen as America’s backwater; it is now on the real estate spotlight. real estate mogul Donald Trump expressed surprise that a $5,000 per square for unit in New York would sell for only $1,500 per square foot in Toronto. He said It was “a little bit wild” that in a great city like Toronto has lower priced real estate properties.

Among Toronto’s real estate market are the citizens who benefited from the country’s good economic standing. However, among those who are primary buyers of Toronto properties are rich foreigners, who could purchase expensive condo units. Foreigners are among those purchase units which cost $1 million to $10 million.

Investors have also set their sites on Toronto. A Ritz-Carlton hotel, a famous luxury hotel, is set to be finished by 2009. As early as 2007, it has already attracted interest from Ireland, Singapore, London, and Australia. The units in the much-publicized Trump Tower condominiums, to be completed by 2010, are almost sold out.

This foreign interest can only be good to Toronto’s real estate sector. The number of foreign buyers and investors could help Canada soften a predicted economic decline. Economists suggest the surprising number of foreign parties in the country may have softened the blow in previous years, and not just in the real estate sector. As long as Toronto remains stable, people will continue to put their money on the city, since it is strength and stability that people follow.

Factors in Toronto’s real estate market

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Toronto’s real estate market does not exist in a bubble. Outside forces affect the real estate market. Economists and real estate observers and experts use these factors to determine the current status of Toronto’s real estate market and to predict real estate trends. Organizations such as the Canada Mortgage and Housing Corporation (CMHC) come up with reports annually to estimate the increase and the decline of various parts of the sector, like price growth and unit sales. These reports help investors and casual buyers determine the value of their property in the coming years. So far, real estate markets in Toronto—and Canada in general—are considered as a pillar of strength these past ten years. So how do organizations like the CMHC determine the value of real estate in toronto for the coming years? They use key market factors such as mortgage rates, income and employment, net migration, and demographics.

Mortgage rates affect Toronto’s real estate because higher rates could ease the demand for housing. Mortgage, for those unfamiliar with real estate, is a transfer of interest in properties, from the property owner to the mortgage lender. The higher the mortgage rates, the higher the price of a property is. Higher mortgage rates could be too much for first-time property buyers in Toronto. These past few years, mortgage rates have been moving slightly higher in Toronto, so a rise in the cost of real estate properties is to be expected.

Employment and the income of the country’s population are also direct factors in real estate. Citizens of Toronto—and Canadians in general—are employed, with employment rates close to full-employment. Also, the rise of income for workers will continue due to the country’s demand for workers. High employment rate and high income stimulate a demand for property, because citizens have money to spend. However, while the numbers are still encouraging, it would not be as much compared to past years. Subsequently, net migration also affects Toronto’s real estate market due to the same reason: the purchasing power of the population. Visitors could mean potential investors and buyers, which could negate the impact of the high mortgage rates. According to estimates, migration will remain strong. And although the exact numbers are unknown, foreigners—mostly Iranians and Koreans, among others—have already bought a bulk of luxury properties in Toronto. In fact, foreigners are one of the main clientele of luxury real estate projects by the Ritz-Carlton and The trump organization in Toronto. The demographics of the Canada is also considered as a factor. The population of Canada is already aging, which means the birth rate is decreasing. With the decline in the natural population of Canada, the demand for real estate property will also go down with it. However, the influx of foreigners can slow the effects of the aging population. Anyone interested in owning a real estate property in toronto can research about these factors. There is no need to read the elaborate reports by CMHC (which are not readily available to the public). One can simply go online to read related news about these factors. Anyone can find out why Toronto is considered as one of the most competitive locations in real estate today.

How to buy a Condo in Toronto

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Like with any purchase, there are things one should know when buying a condominium unit in Toronto. An intelligent buyer, regardless of the purchase, will never enter a transaction blindly. The same should apply when one buys a condominium unit in Toronto. True, toronto is a great location for a real estate investment such as a condo. However, the location is no longer the issue; although toronto is now known for supplying Canadians and immigrants top real estate properties, doubtful agents and firms and risky business still abound. Buying a condominium unit in Toronto, like any other business in any other location, is full of risks. Buyers should practice extreme caution.

One of the things a condominium buyer should consider is the model suite. When one buys a unit in a yet-to-be finished complex, there is a risk of not getting the room you paid for. The completed units may look drastically different from the model units. The floor plans could be smaller that what the buyer saw in the model suites, the material used in the actual unit could be different from the ones used in the model suites. When these things happen, the buyer buys a completely different unit from the one he or she had already envisioned.

A solution for this is to buy from an already constructed condominium building. To cut on costs, since new units are expensive, one can buy pre-owned or renovated units which are cheaper and good to go. Since it is already constructed, the buyer can already see the finished product. The buyer can also check if the building and its facilities are working properly if it is already constructed.

However, this is not to say an interested buyer should avoid new condos. One can still opt for new condominiums. However, the buyer should thoroughly check the track record of the condo’s developer to make sure the unit will be at par to standards. The interested buyer should look other buildings built by the developer of the unit he is interested in and ask the tenants if they are happy with their units and if they encountered problems in their residency. If the buyer can afford it, he or she should get an agent. The real estate agent can ask the developer questions regarding the unit that the buyer may not be aware of. The agent can also warn the buyer about issues and risks concerning the purchase of a condominium unit. Also, it is advisable if the buyer gets his own real estate lawyer. The lawyer should be a real estate lawyer in Toronto. The buyer should then show the contract for the condo unit purchase. The real estate lawyer can suggest improvements to the contract, if any, or note potential risks stated in the contract.

The best advice, however, is for the buyer not to believe anything he sees and not believe half of what he hears. Model units and the developer’s testimonials are not meant to paint an accurate picture of the property; they are meant to entice buyers. In the end, buyers must do their homework when buying a condo unit to fully enjoy the benefits of having a real estate property in Toronto.

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    Check list: what to look for when buying real estate in Toronto

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    Living in toronto has advantages. Being the 14th most visited city by tourists in the world, toronto not only has the basic amenities for Canadians; it also has the attractions and luxury that was previously only available in cities like New York, London, or Japan. Toronto, being Canada’s economic capital, is among the world’s top financial cities, with a population of 2.5 million. In 2007, a bulk of condo units and home were purchased by foreigners, most of which were Iranians and people from other Asian countries. According to reports, they chose Toronto because of its reputation from being tolerant to other nationalities, and because of its stable economic standing and real estate price growth rate.

    However, choosing to reside in Toronto is only half the problem. Toronto is a huge city with a diverse population. While being in Toronto itself is a good choice, choosing where to live in Toronto requires serious consideration of various factors. One of the main considerations is the property’s distance to importance institutions and establishments, such as schools, shopping and entertainment districts, health facilities, among others. A house or a condominium unit’s distance to these establishments should be considered according to the buyer’s lifestyle and needs.

    For one, an individual interested in buying a house or a condominium unit in Toronto with children or dependents and relatives who need to go to school must choose a location near schools and universities. For starters, Toronto is home to three major universities: University of Toronto, York University, and Ryerson University. Because Toronto is home to immigrants from different countries, it also has a number of English as a Second Language schools. Considering this is important primarily because of the distance, especially for dependents who are not staying in dormitories. Living too far from the educational institutions could be an inconvenience in the long run for commuters. In line with this, a buyer should also consider the distance of the real estate property he plans to buy from the location of his job. This is a major factor in deciding what property to buy since one has to take to account his budget for transportation—may it be through private or public vehicles.

    The hospitals, too, should be taken in to account. The location of one’s residence should a few minutes away from a health facility. If this is not possible, then one take note of Toronto’s health infrastructures for emergency purposes. Among the public hospitals in Toronto are Mount Sinai Hospital, North York General Hospital, Princess Margaret Hospital, Toronto General Hospital, among others.

    The actual status of the real estate is not the only important thing when looking for a property in Toronto. Toronto’s real estate sector is doing very well at the moment, and is expected to do well for the next two years. Buying a real estate property in Toronto is indeed a wise decision. Buyers of real estate properties in Toronto should think about the location of their purchase to fully maximize the benefits the city has to offer.

    Toronto’s real estate sector still standing strong

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    Recent reports have cited that the United States should start recovering from the current economic crisis since its impact has been less than what was expected. However, this is not to say the international community is already out of the woods, so to speak. While the duration of the slowdown was not as long as expected, what the economic crisis has done to what was once seen as an infallible country is, according to economists, deeper than expected. Various countries with sectors dependent on the United States are still cautious as the damage done by the slowdown can still be felt. Countries like China and India are some of the countries that were deeply affected by the slowdown.

    However, according to the Bank of Canada, Toronto—and, in general, Canada—is holding up to the effects of the slowdown. This is especially true in its real estate sector. Real estate experts attribute this to what they say could holdovers from what was previously United States’ market. Because of the unstable real estate of America, Asians and Europeans—and even the Americans themselves—choose toronto for the location of their investments and their properties. Toronto’s real estate is currently home to various international investments in condominiums, housing projects, and luxury hotel. While 2007 was seen as a better year for real estate, the sales from the first few months of 2008 were better than expected. The housing sector of America has clearly cast its shadow over Toronto. For example, existing home sales was down 11 percent. Relatively speaking, however, this is a good start, as other prime locations around the world suffered much bigger decline from 20 to 40 percent. This is proof that while toronto has long been seen as North America’s backwater in terms of real estate, it is holding up against the odds.

    Still, although Toronto’s real estate status is better than America and other developed countries, real estate firms and agents are preparing for the effects of the U.S. economic slowdown. An expected decline in real estate sales has been continuously reported for years, but the predicted magnitude of the decline is yet to happen. There is still interest in Toronto’s real estate properties, for sure, but real estate now has to intensify their marketing strategies in other to translate the interest into a sale. Agents also say that there are smart enough parties to see the trend and believe that the turn will definitely turn. The opportunity is there, say real estate agents. In fact, active listings this year were eight percent higher than last year. And while condominium prices were up this year compared to last year’s prices, prices in June 2008 are lower compared to prices in January 2008. This means a real property, as long as it is priced right, will sell, while an ill-priced property would not.

    The real estate sector of Toronto is expected to get more stable as the U.S. economy stabilizes next year. This could only mean Toronto’s real estate status will and could only get better.

    Tips for first-time buyers of Toronto real estate properties

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    Although the prices of houses are higher than last year, this does not mean that the house-buying activity in toronto was deeply challenged. Other factors, such as alternative housing and longer amortization periods, have offset the effects of higher prices in Toronto. In fact, according to a report by RE/MAX, toronto real estate is still benefiting from buyer’s interest as they are still eager to purchase property in Toronto. Although it is harder to get loans or borrow money from banks due to the worldwide economic crunch, the steadfast buyers are using every possible resource to be able to buy real estate property in Toronto. First-time buyers, some of them immigrants from Asia and Europe, are even willing to sacrifice financial freedom for a long period just to be able to buy property in Toronto. They are also taking advantage of innovative financing and the longer amortization periods, as well as no or low down payment packages.

    According to the report, the first-times buyers, despite the higher prices, are determined to achieve home ownership in Toronto to take advantage of its stable economy. Surprisingly, what hinders first-time buyers in Toronto are not the prices but the inventory levels. Inventory levels in 208 tighter than last year’s, an indication of an existing market for Toronto’s real estate. The effects of the slowdown in the United States’ economy have not yet fully reached Toronto.

    So what should first-time buyers of Toronto’s real estate consider when buying property? First and foremost, a buyer must educate himself with the mortgage process in Toronto. This is especially necessary for immigrants, although locals who are unfamiliar with Toronto’s real estate should also familiarize themselves with the process. When a buyer knows the mortgage process, he can make more informed decisions regarding the real estate purchase. Also, it is important to know the different kind of mortgages. Other related factors, like credit interest rate and budget, should also be considered beforehand.

    With knowledge about the mortgage process, a buyer can now look for mortgage lenders. A first-time buyer may instantly obtain a mortgage from the lender he meets. However, it is advisable to look for other lenders. A first-time buyer should take his time and ask for references from friends and family. A mortgage lender can also help the buyer review his financial status and help him acquire pre-approved credit. A buyer should always ask questions. If there are terms and clauses the buyer cannot understand in the loan documents, he should ask the lender or get an attorney. While the lender can help the buyer with his finances, it is important for the buyer to check his credit capabilities beforehand. He should check his credit history and get a credit report if necessary. This is important because any inaccuracies in the credit history may hinder one’s capabilities to buy property in Toronto. Lastly, to be on the safe side, the buyer should save more money than necessary for unexpected expenses. A buyer should not only just save for down payment and other preliminary costs; he should also save up for other costs. Additional savings from up to six months is already a safe estimate for additional expenses.