Where Will Prices Go In the Second Half of 2012?

ASHBURN, VA

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ANDREW LAFLEUR

Buzzer

Where Will Prices Go In the Second Half of 2012?

Where do you think condo prices will go over the second half of 2012?

The condo market has clearly changed, both on the pre-con side and on the resale side in the last 90 days compared to the heights of 2011.

For the Pre-Construction market, I believe prices will hold steady as developers have recognized the market has changed and many are holding off launching new projects, thereby reducing the supply significantly from what it was supposed to be by this point in 2012. Large developers especially can afford to wait out a market like this and sit on properties in their pipeline for quite some time. I wrote some thoughts on this here: http://www.truecondos.com/why-new-condo-prices-will-not-fall/

The resale market I believe is different because you are dealing with thousands of individual sellers instead of the highly concentrated new-condo market where there are only a handful of sellers. Some sellers may hold off until conditions improve, but for the most part, if you have to move, you have to sell. For this reason I believe that resale prices will either be flat or be slightly down in the second half of 2012 (single digit % decreases). For the resale market, I've posted some of my thoughts here:
http://www.truecondos.com/9-things-to-know-about-the-downtown-condo-market/

What does everyone else think?

Canada / General Chit-Chat

RIZ

Buzzer

1 BEST REPLY

I know we are holding off a large project and determining what is happening with demand. Andrew is right. Developers will just hold off launches and prices will stabalize. Then, prices will start to increase and so will demand once supply starts to dwindle. Plus, a number of developers are holding off on land purchases which will further reduce supply in the future.

MARCO DIFOTI

BabbleBee

476

Toronto still seems pretty cheap to me, both on resale and new-construction.
As Andrew said, without a doubt builders are starting to hold back launches, which is shrinking the supply. On the resale side, there is still pretty strong demand, with little supply in many neighbourhoods. I think we are going to see a bit of a softening over the summer, then a strong fall.

NICHOLAS GAVEY

Buzzer

Hopefully this all translates into better buildings and suite layouts.

AAREAS INTERACTIVE INC

Buzzer

I would assume both sides to be flat possible slow growth but for all intensive purposes flat.
This city is still growing at a tremendous rate, the economy is in good shape, and there is not really a reason for a dip other then the media trying to make it happen.
It is also possible that the spring market of 2013 will be absolutely insane.

BRENNAN VALENZUELA

Buzzer

Ben Rabidoux had some interesting notes on the effect of supply and demand in Toronto:
I'll re-iterate them here:
"The idea that Toronto needs 40,000 new residences annually to satisfy population growth is ridiculous. For starters, TO pop growth is 90K annually, virtually all of which is immigrants who have on average 3.5 ppl per household. Do the math. Even dividing population growth of 90K by TOs current ppl/houshold (2.68) gives much less than 40K. And even assuming we actually needed 40K new dwellings, the 12 month total housing starts is 43,500 in the CMA."
I'm curious, how many projects realistically can and/or will go on hold in the latter half of 2012?

BRENNAN VALENZUELA

Buzzer

As a whole, I think condo prices in Toronto will stay flat or even regress a little bit, but certain neighbourhoods/buildings will be hit extremely hard by over-saturation and monotone-ness (ex. Park Place by Concord).

GORD SMART

BuzzStaff

171

Anyone out there have any thoughts on the Vancouver market?

LEAH BACH

NewBee

Gord said:
Anyone out there have any thoughts on the Vancouver market?

Hi Gord (et al)...

First, let me say, I am a resale agent. But I'd be interested to see where the sales are for new product as well. From a #YVR perspective I have noticed that there seems to be a huge incentivization (?) that wasn't here a few years ago. Splits are more generous as are gifts and other 'bonuses'.... to attract agents with buyers to look at new product. I have to assume sales are flattening. When I need to make a sale, I increase the buyer's agents commissions as well.