A-level investments in a buyer’s market

A few weeks back my column focused on this buyer’s market we find ourselves in, and the opportunities it may present, as well as the pitfalls to avoid. I’d like to expand on our current marketplace with respect to an ever popular practice — condominium investments.

When I use the phrase buyer’s market I do so to imply that the current market is a positive one for buyers. This is different than a market so deteriorated that buyers are doomed no matter how low they buy, at least in the short run. It is my humble opinion that our market, while in a state of correction and uncertainty, presents opportunities for those buyers in a position to take advantage of them.

One reason for this is the fact that Toronto’s real estate market had not peaked prior to the stock market crashes. When compared to like markets across North America such as New York, Los Angeles, Chicago, Boston, Vancouver, Edmonton and Calgary, Toronto’s real estate prices remained relatively affordable. To put it into perspective, a downtown Vancouver condo valued at $450,000 would have been worth closer to $300,000 in Toronto. Assume that same condo today, in Toronto, sells for around $280,000. If someone had offered to reduce the price of home you’re buying by $20,000 because they liked the cut of your jib, a few months ago, hysteria would have gripped our city.

The point is that once the market begins to climb out of the basement and soar once more, and history tells us it’s only a matter of time, Toronto’s real estate has a lot further to go before it hits the proverbial ceiling, than other similar markets. In other words, while prices in say Vancouver and Calgary were arguably significantly inflated, Toronto was only beginning to spread her wings.

When you understand these important facets of the market’s reality it becomes increasingly evident why real estate investment should be an even hotter commodity now, than before this market settled in. Condos with significant upside are available today for bargain prices. Those same level-A condos that were attracting multiple-offer bids and achieving prices $20,000 or more than market value, today would sell for, at best, market value. That swing of $20,000 means a more attractive investment, for the buyer.

Looking at new condos for a moment, similar trends can be seen. For example, many of Tridel’s Hullmark Centre’s units are of a high-priced calibre, one client of mine purchased a unit on the 2nd highest non-penthouse level (46th floor) for around the $315,000 mark. I earmarked such units as the level-A investments in the building, or the best of the best — the cream of the crop. An investment like this is the only investments really worth making, if you plan on making one, because only the smartest money ends up there.

For more information on these A-level investments feel free to contact me at amitp@rogers.com, any time.

– Amit is a Realtor/Developer with Re/Max. amitp@rogers.com