Toronto’s housing market is heading into a recovery with sales surging month-over-month and year-over-year. But after a year of record lows for new condo sales in the city, will the condo market fare the same? Top developer Brad Lamb, president of Brad J. Lamb Realty, gives us the scoop on when to buy and what’s on the horizon for new builds.

The housing market finally started heating up last month. What about condos?

It has been a mild recovery. Right now, I would say there’s an excessive supply and lack of real demand. Because interest rates have now more or less plateaued, I think most people feel that we’re closer to the end of this than the beginning. Every month where interest rates stay where they are, it’s a positive month for people’s feelings of stability. 

Once the rates start to fall, you’re going to see a surge in real estate interest. People have been sitting on the fence because they’re either afraid or they can’t afford to, so there’s about 125,000 excess buyers. They’re looking for a sign that the pricing is the best it’s going to be, and from here on out, it’s going to get worse. When people realize that, you’ll see a large rush of people in the market. 

The new condo market in particular has suffered. What will change in the year ahead?

If you buy a new condominium today, you won’t get the keys for five years because the building is sold before all the design work and financing is approved and the permitting is obtained. What you saw being built up until about November of last year were buildings that sold early 2022 and earlier. There have really been no sales of consequence from March 2022 until now. So you’re going to start to see — and we’re already seeing it — less starts, less buildings breaking ground. Then you’re going to see no buildings breaking ground. It’ll literally be zero around summer or fall, and that’s going to last about a year and a half to two years. 

What does that mean for construction?

It’s actually catastrophic because what’s going to happen is this fall. Construction companies are going to get very desperate and start cutting prices. But there will be no one wanting to build, so they’ll cut the prices even more. And once they’ve cut their prices to break even, they’ll have to start laying off people, and the industry is going to shrink. The industry is going to rebound this year in sales, so this year will be maybe 18,000 sales, versus 13,000. And then in 2025, maybe 30,000 to 32,000 sales, an overcompensation. 

In 2027 and 2028, we’re going to want to build all these new buildings. But the construction industry will have shrunk, so construction prices will escalate dramatically. So all of this, this gerrymandering with interest rates, it’s ultimately going to cause substantially higher pricing in the marketplace.

If someone wants to get ahead of rate cuts and buy a condo, where are the best pockets of value?

It’s universally good in the city. If you want to buy in a building, in the Entertainment District, they’re about 10 or 15 per cent below what they were two years ago. There are reductions in pricing everywhere, and it doesn’t really matter where you look. It’s not just condos — if you’re looking to buy a house or an investment property, across the board in every city in Ontario, there are bargains to be had. The problem is that interest rates are higher, so the cost of owning through borrowing money is higher than the savings you achieve with lower prices. 

Speaking of investment — do concerns over tenants ever stop potential investors from entering the condo market?

Everyone is going to have some vacancy and some bad tenancy over an arc of a lifetime of real estate. But if you’re buying quality, new real estate that doesn’t require updates or renovations, you’ll get the best quality tenants. We’ve placed probably 1,000 tenants into condominiums in our office, and it’s always the same — it’s not a tenant market, it’s a landlord market. We recently placed a tenant who had to make 15 offers to get a property. If you don’t have a high credit score, a strong job at a known entity, if you aren’t an ideal tenant, you’re going to have to pay more. Landlords are able to pick away to find the best tenants.