Pricing Starting to Favour Pre-Construction
Once upon a time in Toronto real estate, there was a rule that investors followed religiously – you only buy a pre-construction condo if the price is lower than that of a comparable existing resale condo. If the price wasn’t lower than existing resale condos of similar quality in the immediate area, then it just didn’t make sense to buy. After all, why take on the risk of buying ‘from plans’ when you don’t know how long it will actually take to be delivered, what the final build quality will be like, and what additional surprise costs you may incur along the way.
When market really started to get hot sometime in mid-2007, and pre-construction condos became the thing everyone and their mom were investing in, this long-held rule was abandoned. Prices of pre-construction started to reach heights never seen in the resale market. $600 Per Square Foot was suddenly a normal rate for pre-builds, whereas resale prices were still hovering around $425 PSF.
Over the last six months, there has been a seismic shift in the resale market. Prices have escalated at about 2% per month since June 1 2009. If you bought a condo this year anywhere downtown, it likely has appreciated about 12% in value. Congrats.
Prices have gone up so much and so quickly in the resale market that the value is now, incredibly, starting to once again favour pre-construction. Resale prices in several of the ‘prime’ downtown buildings are now routinely hitting the $550-$575 PSF range. One upper floor 1+den with parking unit recently sold for $660 PSF! With several pre-construction projects across the downtown still selling between $500-$550 PSF, it doesn’t take a genius to figure out where the best value for your investment dollar is and where it will be in the months ahead.
If you are interested in taking advantage of some hidden gems in the pre-construction market downtown, let’s talk.