What Happened The Last Time
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You know the resale condo market is slowing down when the mainstream media starts writing articles telling us that it is. By the time the MSM gets on the train, it has already left the station and is well on its way to its destination. Reader of this blog and clients of mine have already known that the market has peaked and has been slowing for quite some time already.
On the pre-construction side however, it’s a different story. Buyers and agents are still lining up for the latest and greatest pre-construction launches all over downtown (seems to be one just about every week). Demand is still far outstripping supply with projects like FIVE condos supposedly receiving several hundred worksheets in the first few hours post-launch, and other projects like The Berczy and King Edward Hotel practically selling out overnight.
This is all eerily similar to the pattern we saw the last time the market slowed down. The resale market started to show signs of cracking around June/July 2008, but the pre-construction market kept humming along until the fall of ’08 when it too was affected. But prices if you recall, did not come down in pre-construction until around the spring of ’09 when everyone was ‘relaunching’ their projects with reduced pricing and finally the momentum came back.
The resale market is much more sensitive to changes in the overall housing market than the pre-construction side. Individual sellers are much more inclined to reduce prices compared to slow moving developers who don’t do anything without talking about it for at least a month or two. The pre-construction market will slow this year, but developers will probably not notice it until the Fall.
Does this mean it is a bad time to buy pre-construction? Not necessarily. I believe there are good opportunities to buy in any market, you just have to know how to evaluate the opportunities and make smart buying decisions. One project that is a still a great buy for me remains DNA3. Questions or comments? Contact me.