Comparing 2012 to 2011
Over the past two weeks I have been contacted at least six times by clients asking me about the condition and stability of the Mississauga condo real estate market. Keeping that in mind, and given the time of the year, I felt it would be appropriate to give my readers another focused market watch update. Although the official sales data from TREB will not be out until mid to late January, I can already use the tools at my disposal, and come up with some real estate sales data for the past year. I decided to conduct three case studies of historical sales data of downtown Mississauga condos by comparing 2011’s sales figures to 2012’s sales figures.
1st Case Study – 2 bedrooms SOLD
Criteria: newer (0-5 years), 2 bedroom condos sold in the Square One area (City Center) between Jan 1st to Dec 15th of 2011 and Jan 1st to Dec 15th of 2012.
Units Sold: 203
Average Listing price: $338,027
Average Selling Price: $329,877
Average days on market: 33
Units Sold: 207 (up by 2%)
Average Listing price: $348,882 (up by 3%)
Average Selling Price: $339,945 (up by 3%)
Average days on market: 36 (down by 9%)
2rd Case Study – 1 + dens SOLD
Criteria: newer (0-5 years), 1+den condos sold in the Square One area (City Center) between Jan 1st to Dec 15th of 2011 and Jan 1st to Dec 15th of 2012.
Units Sold: 171
Average Listing price: $268,428
Average Selling Price: $262,065
Average days on market: 27
Units Sold: 105 (down by 63%)
Average Listing price: $280,524 (up by 4.5%)
Average Selling Price: $273,664 (up by 4%)
Average days on market: 30 (down by 11%)
3rd case Study – 1 + dens LEASED
Criteria: newer (0-5 years), 1+den condos leased in the Square One area (City Center) between Jan 1st to Dec 15th of 2011 and Jan 1st to Dec 15th of 2012.
Units Leased: 206
Average Listing price: $1,430
Average Leased Price: $1,413
Average days on market: 22
Units Leased: 147 (down by 40%)
Average Listing price: $1,506 (up by 5%)
Average Leased Price: $1,488 (up by 5%)
Average days on market: 20 (up by 10%)
Analysis Of This Data
There is no question that the real estate market in Mississauga has definitely slowed down a bit. There are less available listings, less properties being sold and the properties that are selling are taking a longer time to sell. However, prices for both condos for sale and condos for lease are still going up on average between 3-5% per year. What does this mean if you are a buyer, seller or tenant?
Buyers: You are in a good position to buy. Multiple offers are less common now, as they were at the beginning of 2012. Take your time and shop around.
Sellers:You will have to be more patient as properties are taking a longer time to sell. This should not be a discouragement as prices are still going up. It’s imperative that you price your property to sell, instead of being known as the “overpriced property on the market”.
Renters: I bet you are getting sick of the rising renting costs. Stop making your landlord rich, and go ahead and buy your own condo. This can be done with as little as 5% down!
Predictions for 2013
After taking many, many, many variables into my own equation, I came up with this prediction for the Mississauga Condo real estate market for 2013.
Mortgage rates = will be unchanged (or maybe 0.25% up)
Available properties for sale = will be less than 2012 – 10-15% drop
Purchase Prices = will be up conservatively by 1-3%
Rent Prices = will be up conservatively by 1-3%
Strongest Demand = 2 bedroom/2bathrooms newer condos and secondary parking spots
What do you think? Agree? Disagree? Let me know what you think!
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Sunday, December 30th, 2012 and is filed
As we are well into the 3rd quarter of 2012, I felt it would be appropriate to give our readers a real estate market update for Mississauga. There is a lot of “buzz” over the internet and different media outlets portraying various real estate predictions, overwhelming the average consumer. This makes it difficult to choose a side, as everyone seems to have a different opinion on this topic.
In this blog post, I will share my interpretation of the latest Market Watch for July 2012 and what implications it may have for Mississauga condos.
GTA As A Whole – Despite what media outlets say, real estate prices in the GTA (Greater Toronto Area) were actually up by 4% from July 2011. The average price is now at $476,947. The number of real estate transactions has declined by 1.5%, while the average property took 26 days to sell (the same amount of time as last year). I would argue that the 4% incline in prices is still a solid indicator that we are in a healthy real estate market.
Number Of Square One Condo Sales – The number of transactions in the 905 area code (which includes Mississauga) has actually dropped by 2% compared to (the same time) last year. This number is no surprise to me, as I indicated in the beginning of this year, that we are in a seller’s market. Well priced condos around Square One are known to sell under a week. However, as we are now past the traditional “peak real estate season” of the year, I do see this trend shifting and being more balanced out and even possibly favoring buyers.
Average Selling Price Of A Square One Condo – The average selling price of a condo in the 905 area code was up by 1% in July 2012 from July 2011. This modest incline was lower than some of the previous years on record, where we have seen 4-7% price jumps. However, the Mississauga condo market continues to outperform Toronto’s condo market, which experienced a 1% decline in prices during the same time. I do see Square One condos appreciating 1-3% per year as we approach 2013.
Conclusion – No one can predict for certain what is going to happen, but based on these statistics it appears to me that we are in healthy shape. Prices are modestly going up (almost in line with inflation which is rated between 2-3%) and now the market appears to be balanced between buyers and sellers.
As a Realtor who is passionate about condos, (I follow 25+ national and international condo blogs) let me reassure you that the market conditions are very sour in most places outside of the GTA. Condo prices in some cities in the US have dropped by 40% since the 2008 recession. We here in Canada, and more specifically Mississauga, are fortunate enough to have tight lending policies and a strong economy which prevents a US style real estate market crash.
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Thursday, August 16th, 2012 and is filed
It seems like the discussion over rising interest rates and tightening lending practices is once again in the spotlight of the media. This time, the government has decided to keep interest rates the same but instead they changed the maximum amortization period for a mortgage with less than 20% down payment . The amortization period, often referred to as the “payback period” has been reduced from 30 years to 25. This change was brought in by effort to combat high consumer debt. The philosophy behind this change is that by reducing the maximum allowed pay back time, the home owner will be required to pay higher monthly payments and in turn build equity in their homes faster. Under the previous 30 year maximum amortization period, monthly mortgage payments were more spread out, thus the borrower ended up paying less principle off each month, and eventually paid a greater sum of money by the time the term was over. According to CBC news this change in minimal amortization periods may result in a home owner paying around $170 per month extra. The new changes will take effect on July 9th 2012.
How does this affect the Mississauga condo real estate market?
- Condo owners will see their properties become paid off faster.
- More people will look into buying condos in Mississauga since affording a house in Mississauga is going to be even more expensive.
- Rental demand might go up since less people will become qualified to buy a home.
- The change does not affect you, if you are putting 20% or more down as a down payment.
- Some first-time home buyers will need to hold off with buying and instead continue to save for a greater down payment in order to offset higher monthly mortgage payments.
- Investors with less than 20% down, might have more trouble finding a positive cash flow property, as monthly payments are now greater.
What I noticed is that there are very mixed views about these new mortgage rule changes. What do you think about the new mortgage rules affecting the Canadian real estate? We want to hear your opinion.
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Friday, June 22nd, 2012 and is filed
With new condo sale records broken once again this year, Mississauga is once again in the spotlight of many who seek a good return on their real estate investment. According to a report by the Toronto Real Estate Board, Mississauga condos experienced a healthy 7.21% price increase from February 2011 to February 2012.
This is more than double of the 3.31% price increase found in Toronto, between February 2011 and February 2012. Not surprisingly, condos in the Mississauga area are considered more affordable with the average price at $241,900 as compared to Toronto; where prices on average hovered around the $320,000 mark.
In this blog post I hope to share some of my personal client experiences, and how investors; both local and distant are choosing Mississauga condos as their number one real estate investments in 2012.
I will start off with the local people who invest in Mississauga. By local I mean anyone from the GTA (Toronto, North York, Oakville, Hamilton and of course those already living in Mississauga). Most of these clients witnessed the start of the Mississauga condo boom which commenced roughly in 2004. They have seen one condo building being constructed after another, and over a period of less than 8 years the Mississauga skyline has evolved beyond their recognition. After hearing countless stories of friends and family, who bought property and seen it rise in price over a short period of time, it only made sense for many of the local investors to get involved. This could explain the sharp increase of 7.21% over a short time period of one year. In addition, they recognize Mississauga as a young city with plenty of real estate investment opportunities and room to grow.
Most of my local investing clients are word of mouth referrals. Once they contact me, I met with them in person, go over their specific needs and begin working on their file. Some of them are only interested in pre-construction condos and others prefer to go with resale condos. The majority of these clients are familiar with such aspects as local property taxes, condo maintenance fees and mortgage conditions. Interesting enough, Toronto downtown condos almost always get brought up during my face to face meetings with local investors and more often than not, my clients share similar views as myself, regarding investing in Toronto condos.
Once we decide on which condo would make the most sense from an investment perspective, I provide my local clients with the number breakdown of how much return on investment they should expect to make. From there we together make a decision which condo property would be the best investment for their needs.
My clients who are overseas investors (From Dubai, India and different parts of the Middle East and Europe), have very similar stories on why they have decided to invest in Mississauga condos. Most of them, never heard of Mississauga prior to being interested in investing in real estate. However, they did hear of the ever so popular Toronto condo market and how many profited huge amounts of money in a very short period of time. Upon further investigation into the Toronto condo market, the overseas investors soon realize that these condos are by no means cheap. The second dilemma that they are faced with is the size of the condos that are in question. Toronto condos are known to be very compact and sometimes referred to as “shoe box” size. Both the price and the size of the Toronto condos, gets many of the overseas investors worried and thus they begin to seek alternative options. They soon discover the city of Mississauga, which is less than 20 Km away and offers one of the most prosperous condo markets in the country. After doing some basic research about Mississauga, they find that the city is clean, debt-free and still in the process of growing. This could also be a factor of why the 7.21% healthy increase has occurred in Mississauga as compared to Toronto. Seeing as how, foreign investors see it better fit to invest in Mississauga condos than Toronto condos.
Right now, I would say that half of my international investors are referrals and the other half found me over the internet. Given the vast distances between us, some of my international clients who purchased pre-construction condos through me, I have never met in person, but stayed in tight contact with them over the phone and via e-mail.
What does the condo real estate market look like for Mississauga in 2012? My predictions lead me to believe that we will continue to see the same 3-7% rise in condo prices that we have seen in the past decade. Both local and international investors see Mississauga as a great opportunity to capitalize. Any active real estate agent in Mississauga will agree that it is difficult to find good condo properties, that are reasonably priced and that do not sell within 10 days.
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Tuesday, March 27th, 2012 and is filed
It’s all over the news! As we say goodbye to 2011 and enter a new year, we once again hear the debates about the Canadian real estate market. The news are speculating that 2012, with too many building constructions going on within the GTA and putting the buyer in the driver seat, the market will go soft; stating that there are too many condos and not enough people buying (CTV news- CEOs sound alarm over Toronto, Vancouver condo markets ). Other sources such as CMHC, predict stable market conditions with the national average of a house hovering around the $368,900 benchmark.
Despite all this, as I stated in my previous article, there is no shortage of buyers for Square One condos. Properties are disappearing fast from the market and are being sold to distant buyers. Just last week alone, two of my buyers where both in a multiple offer situation and both were forced to pay over the asking price for the unit they wanted. I discussed this phenomenon with my colleagues and they shared similar encounters. Seeing multiple offers in the first 2 months of the year is uncommon, as it’s generally seen as the slow real estate season.
Mississauga’s condo market is still a baby compared to other places like Toronto and Vancouver. Over the next 15 years there will be over 20 new condominiums constructed. The question that is often raised is whether or not there will be an oversupply of condos in the market which can in turn perpetuate a real estate crash.
Is this a real estate bubble waiting to burst or a great investment opportunity?
My prediction, and of course this is only my personal opinion, leads me to believe that there will be no real estate crash in Mississauga anytime soon. My reasoning is based on the following key points.
1. Interest Rates are Low – For the past few years interest rates have been at historical lows. Many condo owners took advantage of this by selecting extremely low variable interest rates. Also, a few weeks back BMO and a few other banks introduced an all time low 5 year fixed rate at 2.99%. By no means am I a mortgage broker or interest rate expert, but for me this signifies that interest rates will probably continue to stay low for the next little while. Having low interest rates, means the cost of borrowing is cheap; hence people can afford to buy real estate.
2. Tight Lending Practices – Unlike our US counterpart, the Canadian banking system is a lot more strict and conservative. In order to qualify for a mortgage, a person has to prove his income in various ways by providing T4′s and bank statements.
3. Most Eeal Estate Predictions are US Based – Most speculations of any type of real estate crash are US based. As stated above, Canada has much tighter lending practices in place, which would prevent a real estate collapse like the one that occurred in 2008 in the United States.
4. Rent in Mississauga is Not Cheap – Rent prices for a newer one bedroom condo in downtown Mississauga starts at about $1,300 per month. The demand for vacant condo units is high and anything that is rented slightly below market value disappears off the market the same day!
5. Real Estate is Local – Just because Vancouver condo prices might dip does that automatically mean the Mississauga real estate market will follow? Of course not. Mississauga has been seen as one of the fastest growing cities in Canada over the past few years; providing a lot of jobs, a stable economy and steady growth.
6. People Love this City! There are more people who move to Mississauga than move out of Mississauga. People from different parts of Ontario (and other parts of the world) are amazed with the well planned out infrastructure and architectural design of Mississauga. I am having prospected clients from distant places contact me with inquires into purchasing a condo unit for investment purposes.
This is not to say a real estate crash is completely out of the question. As other real estate professionals, such as Andrew La Fleur pointed out; the only way a possible Mississauga real estate crash might occur is if we see:
1. Rapid rise in interest rates – Interest rates would have to almost double in 1-2 years.
2. A major economic catastrophe – An example on a global scale would be the US going into a very deep depression
In conclusion, indicators suggest that the chances of a Mississauga real estate market crash happening anytime soon are rather slim. Low interest rates, tight lending practices and other key factors all contribute to a steady 4-7% per annum real estate growth as seen in the last decade.
Questions or comments? Please contact me.
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Tuesday, February 14th, 2012 and is filed
BMO, announced yesterday they will be dropping their five-year fixed mortgage rate to 2.99 per cent. This is the lowest rate ever offered by a chartered bank in Canada. Other banks are expected to follow.
Economists speculate that the reason being this sudden interest rate drop is due to international investments into Canadian bonds.
This, of course, is great news for those looking into buying a condo in Mississauga. Perhaps we might even have an early jump-start to the real estate market for 2012.
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Monday, January 16th, 2012 and is filed
For those who have been following interest rates for the past few months, it comes as no surprise that the Bank of Canada announced that there will be no changes to its overnight rate.
Despite the fact that Canada’s economy is performing better than most analysts expected, there are still worries about the instabilities in Europe, the weak U.S. economy and decelerated growth in China. The Canadian economy is expanding at a rate of 3.5 per cent on an annual basis.
What does all this mean for Mississauga condo buyers and sellers?
Buyers: It is a great time to take advantage of the low interest rates and lock into a 5 year fixed rate.
Sellers: For those looking to sell, consider the fact that it is easier to find qualified buyers while interest rates are still low.
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Tuesday, December 6th, 2011 and is filed
Statistic Canada released information today, stating that home prices in Toronto gained 0.3 per cent from August to September.
Re/Max conducted their own study and found some interesting results. The Re/Max study was based on 16 major house markets (including GTA, Vancouver and Calgary) across the country. Between the years of 2000 to 2010 the value of Canadian homes has doubled. Back in 2000, the average home was worth $163,951 and 10 years later the nation’s average of studied homes was worth $339,030. The study also showed that condos have become more and more popular as freeholds become less affordable
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Tuesday, November 15th, 2011 and is filed