3 COVID-19 Condo Misconceptions Buyers Should Ignore
Okay home buyers gather round. We’ve all had a good scare thanks to what most people are calling the dumpster fire of the century – a.k.a. 2020. But with the vaccine on the horizon, and everyone banding together to help keep numbers to a minimum, it’s important to focus on the positives and try to make the most of a bad situation. So for all those who had the idea that condo ownership is off the table, here’s why we say 2021 could be the year to buy a condo in the heart of downtown TO. We’re calling out the top three COVID-19 condo misconceptions you need to ignore!
1. Living in Condos is Too Dangerous!
Our retort: No it’s not.
Here’s why: From the moment the pandemic lead to lockdowns around the world, a whole new set of rules came into play. As people adapted to the new normal, those living in close quarters like apartments and condo complexes soon learned that if they followed the rules, they could and would stay healthy. Property management companies also play a key role in the adaptations made. They were governed by strict protocols that introduced stringent rules that included increased frequency to clean commonly touched surfaces, such as, you got it, elevator buttons. But is also included less noticeable precautions like increasing circulation of outdoor air either through the outdoor air ratio of the HVAC system or just opening windows wherever possible. So if you can:
- Wear a mask
- Wash your hands
- Stay 2 meters apart from your neighbours
You can be just as safe in a condo, as you can anywhere else.
2. Condos in Toronto are Too Expensive!
Our retort: Not anymore!
Here’s why: Look, no doubt the cost of an idyllic downtown condo was probably out of reach for many hoping to purchase a home in TO. While they were more affordable compared to houses, they still were rising at an alarming rate as 2019 wound down. But here’s the thing. While COVID didn’t seem to make a dent in Toronto’s housing market, it did affect condo prices for several reasons:
- Short-term rentals: First, there was the effect on investors owning short-term rentals. Travel bans and bans on short-term rentals during lockdowns put some unexpected financial pressures on owners of these so called “ghost hotels”. Suddenly the bane of affordable housing had some reckoning with the money gods. It seems the gains made at what some feel was at the expense of Torontonians seeking affordable housing were going to be lost thanks to COVID. As a result, these condo investors either chose to sell, or switch to a long-term rental model.
- Working from home: Next, as it became clear the work from home trend was here to stay, condo dwellers realized they could swap their vertical living for open green space. They could finally have their own little plot of private property in the form of a suburban lawn and backyard. What once seemed way too far out was no longer a concern since they no longer had to worry about the day to day drudgery of a dreaded commute. That meant all bets were off and many headed to the greener pastures of not just suburban life, but out and out pastoral life in cottage country. This put even more condos on the market.
- Fear of COVID-19: Another group of condo dwellers looked around at the people waiting for the elevators and decided this life is not for me. They too headed for less crowded areas where they could soothe their inner hypochondriacs and live in a single family dwelling instead. The result, even more condos on the market.
- Too much inventory: The last and final nail in the coffin for the condo market is the old supply and demand rule. With all these groups feeling the need to sell, the market was saturated, with not enough buyers to scoop up the units for sale. This turned the market very effectively into a buyers’ market forcing prices down.
So the bottom line right now, and it might not last too far past the first quarter of 2021, is that condo sales dropped by 8.5% when the rest of the real estate market bounced back. Condo prices followed suit, with the average dropping 2.4% year over year. So now is actually a good time to buy while prices are at a more affordable level.
3. Condos Aren’t A Good Investment For Landlords Anymore
Our retort: Only if you’re a landlord right now!
Current landlords certainly are feeling the pinch. As more short-term rentals shifted to long-term units, rental availability increased a staggering 131.6%. In response, average rents dropped 16.5% year over year. Now while this all sounds bad, if you look at how much you have as a down payment, how much your mortgage payments are, and how much you can charge for rent, you might find it is a good time to invest in a condo. Some facts to consider:
- The rent for a one-bedroom condo is now $1,845, so if this is equal to or more than your mortgage payments you could consider this as a potential investment.
- Rents last year were $2,209, meaning once the market starts to rebound, you might be able to raise the rent by a couple of hundred a month once your first tenant leaves.
- There’s currently major growth in new listings for condos by 91.9% and a 158.7% increase in active listings so you’re going to have some decent negotiating room in this buyers’ market.
Just keep in mind, there’s also more competition for tenants, and a vacancy tax looming that could make having an empty unit a little riskier.
Look, the truth of the matter is we’ve all been a little spooked by this whole pandemic thing. However, we also have to pull up our socks and remember life goes on. If part of your life’s plan was to own condo in Toronto, well there’s never been a better time to make that dream come true.
If you’d like to learn more about the killer condos on the market right now, give us a call at 416-291-7372 or head to our contact page!