Toronto has always been a place for the rich to enjoy their prey, buying up luxury condos that even a king would envy. But in the last two quarters of last year, the luxury villas market has been leveled. The number of new condominiums sold in the last quarter was 18% lower than in the previous year. In fact, even the number of villas built was significantly lower (at least 1,000 less) than last year. But what feeds this loss of growth and what does this mean for the real estate market as a whole?
While the decline in the Toronto condominium market was high, the number of condominiums reached a high level of 35,000. Resale of luxury villas created a serious situation for both condo builders and the city of Toronto. It is possible that the growing number of condo vacancies will encourage current condominium owners to sell their property, thus flooding the market with even more unwanted luxury homes.
Banks also fall into the mix. Obviously, banks are the only financiers of any real estate market, and, unfortunately, between them and the developers of condominiums at present, the volume of investments is about 3 billion dollars. This is a serious investment problem. If banks are nervous about the luxury market right now, their credit line will drop significantly. Factors on the world stage also do not help the market. Over the past few years, the United States and Europe have experienced severe economic instability, and global banks have taken note of this and are preparing for other markets. Canada is not a recession either. During 2011-2012, there was a housing bubble in the country, which he would not soon forget, and the banks, of course, did not forget either.
Of course, not all of this is bad news. Experts are not in a hurry with the pilots of the end of the world. Investors and banks remind us that a luxury condominium is just one real estate sector in Toronto and should be considered separately. According to Sotheby & # 39; s International, condos listed and sold for more than $ 1 million, saw an increase of 4% in the first six months of 2013. This shows that a possible rise in the market could be in Toronto. In fact, despite the fact that investors are flooding the market, this shows that the potential for selling luxury real estate is still positive. But investors are usually shy, and if the market does not make a sharp rise, everything can soon become very attractive for the city.
