Condo Market Showing Signs of Slowing?
There are starting to be signs that the condo market might be slowing down. I am seeing and hearing accounts of several newly released condo projects not getting near the sales numbers they were anticipating. But how can this be the case when just last month we saw near-record breaking sales happening at MEGA projects like INDX Condos and Massey Tower? Hundreds of units were sold in both projects within days. Now we are seeing top-tier developers launching high profile projects downtown and for some, sales are
I have 3 current theories as to why the pre-construction market might be slowing down right now:
1) There is Too Much Product on the Market.Â There is no question that several developers are rushing projects to market that they normally would not. Projects are going to market without residential zoning approvals in place, let alone approved planning applications to build hundreds of condo units. They are trying to take advantage of a hot market, but in doing so, they are shooting themselves in the foot because they are causing an over supply of product.
2) The Weather Sucks.Â It’s almost May and I’m still wearing my wool coat and the seat heater is in the ‘on’ position. It seems simplistic but I can tell you from years of experience ‘on the ground’ in real estate, the weather DOES make a noticeable difference in people’s buying behaviours. When the weather is good, the sun is out and the winter coats are left in the closet, people feel better and they suddenly want to buy! When the weather is cold and wet and damp (like it has been for the past couple weeks) people feel worse and they are not in the ‘buying mood’.
3) The Market Has Peaked. Â The red-hot market of 2011 may have had some carry over into 2012, but now we are coming back down to earth as it were. This is certainly a possibility. Time will tell if this is just a blip or if we are in fact entering a different market atmosphere.
A perfect litmus test has just arrived that will give us a very good indication of the market and that is 88 Scott. The project is launching now to Platinum brokers. It bears many similarities with INDX and Massey Tower. All three are 50+ storey MEGA towers within spitting distance of Yonge street and the financial district and all are averaging around $700 per square foot. This tower should be a smashing success and should be 60%+ sold out within a few weeks. If 88 Scott does not sell well I believe that will be the indicator that the market has shifted.
Questions or comments? Contact me or leave your thoughts/opinions below.