Why invest in condos?
Smart People Will Invest, Smarter People Will Invest Now
This is definitely the number one question we get asked here at GTA-Homes, and it’s usually followed by:
- What’s the condo market like right now?
- What does the future hold for condo developments in the GTA?
- What are the risks and returns?
The greatest thing about making investments in real estate is that there are so many different options. But what is the right choice for you? Is buying a condo a good investment? Generally, a real estate investment is considered good when the value of the property is worth more than the purchase price. That’s the simplest way to think about good investments but what are the factors involved in determining the value?
If you've found yourself asking these same questions, then you’ve come to the right spot! We’ll do our best to answer these important questions here, but you may find that it’s best to talk with one of us in person or over the phone. There are many different variables when deciding whether to invest in a condo, so don’t be shy. We’re always happy to chat.
Why You Should Invest In A Pre-Construction Condo
So first… why invest at all?
The first question you may ask is, “why invest my money at all?” You work hard for your money, and the last thing you want to do is not make it grow, not make it work harder for you or to lose it all in bad investments.
Why invest? Well, let’s start by saying that in order for your money to grow, you have to make it work harder for you. Most people get up every morning and go to work to make money. Investors often do the same thing, but they have an advantage: their hard-earned money is accumulating value over time as a result of their investments.
In short, investing is how you can make your money work for you. There are many choices when it comes to investing. You can invest in stocks, bonds, mutual funds, businesses, companies or real estate, and each comes with its own strengths and weaknesses, as well as their own risks and rewards.
Of these options, real estate is special because it has the benefit of being a tangible asset that you can see, touch, hold and control, meaning real estate is cyclical, it will go up and down but you decide when to sell it and a smart investor will sell when the time is right and profitable.
It is also traditionally regarded as one of the safest investments because it is stable and intended for the long term.
The truth is, your money will never grow if you keep it under your mattress. Even if you leave your money in a bank at a low rate like today’s GIC’s, you’ll only see a 1% growth, and it will be years before you see a meaningful return.
Investing is the clearest path towards building wealth, and with real estate being the soundest type of investment there is, the choice should be simple! Real estate investment can be your vehicle toward building the life you’ve always wanted.
Okay, we’ve established that investing in real estate is the way to go, but that leads us to the next question: why condos? In short, they’re the housing of the future, which has been guaranteed by legislation passed by the Government of Ontario.
Why It Is the Right Time to Invest in Condos
The simple answer is that condos are the future of housing for the GTA. The recent Ontario Places To Grow Act and The Growth Plan has changed our lifestyle drastically. The government’s plan to accommodate growth strategically and protect the environment means that large swaths of greenbelt throughout the province are prohibited from being developed. Instead, smaller areas closer to urban centres are available to developers, and these centres are encouraged to grow up, instead of sprawling outwards. This means more high-rises and urban communities where you can live, work and play all within walking distance.
Condominiums are going to be the most popular type of housing for GTA residents. While we’re building the same amount of homes we were building 20 years ago, the style of those homes has changed drastically. Instead of building 80% low-rise homes and 20% condominiums, we’re building about 30% low-rise homes and 70% condominiums.
This shift from low- density to high-density housing will encourage a more sustainable approach to urban development. The Growth Plan laid out a series of policies to manage the anticipated population and employment growth throughout the GTA and beyond, dictating density and intensification towards designated areas known as “Urban Growth Centres.
While the intention is to protect our environment, it also means that urban centres will need to intensify and begin building upward. This means more high-rises, and more importantly, more condos.
Designated Areas - 25 Urban Growth Centers
Intensification is planned for 25 communities in the GTA. These "25 urban growth centres" offer more options for living, working, learning and playing in areas that are expected to grow significantly in population.
Intensification in these Designated Areas
That population growth is a big factor here, as we need to house this growing population. Last year we received over 120,000 newcomers in the GTA. Today the GTA has a population of 6.4 million and the government estimates we will need between 42,500 to 52,000 new homes a year to keep up with that growth. It's not secret that growing urban centres result in a demand for new housing.
Affordability - Price
Condos Are More Affordable. Why else are people flocking to the condo market? Affordability. Single-family detached homes have been listed for record-high prices and will likely continue to rise. Not only are condominiums more attainable, but they present a much more affordable option.
5 Things to consider when investing in your new condo
1. Location. Real estate first and foremost is about location. So you might want to ask yourself when looking for a pre-construction condo, what is the neighbourhood like? Is this area somewhere you can see yourself living? How close is the condo project to transit, schools, parks, grocery stores and other amenities nearby to service everyone's lifestyle?
2. Population. What is the current population in this area? What are the demographics and household income in this area? And, is there any growth? Are people coming in to live in this area?
3. Employment. Tenants are increasingly being drawn to homes where they can get to work by either walking or taking public transit. Is your new condo close to employment centers or job opportunities?
4. Development Growth. What does the future hold for the neighbourhood? Will there be more housing opportunities? What about commercial developments or transit growth? This is especially important to consider for pre-construction.
5. ROI’s. This stands for Return On Investment. It’s always important to consider if you’re going to make any returns. Look around the surrounding neighbourhood for rental prices. Is this a good place to have an income property? Real estate first and foremost is about location. So you might want to ask yourself when looking for a pre-construction condo, what is the neighbourhood like? Is this area somewhere you can see yourself living? How close is the condo project to transit, schools, parks, grocery stores and other amenities nearby to service everyone's lifestyle?
Condominiums Are Flexible for All Stages of Life
It’s also important to note that younger generations are clamouring to live in cities. Gone are the days of white picket fences and long commutes on the highway. People are increasingly looking for urban homes where they can live, work, and play. Condo developments and master-planned communities are the preferred living destination for the majority of millennials who want to have everything at their doorstep.
Buyers want a home that will suit their needs throughout various stages of life and condominiums are extremely flexible that way. These communities let people live, learn, work, shop, dine and play in the same area, and it’s a lifestyle that people are embracing fully.Whether your goals involve sending your kids to university, retiring in cottage country, or saving money to travel the world, investing can be a way to reach those goals.
As Franklin D. Roosevelt said, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid in full and managed with reasonable care, it is about the safest investment in the world.”
These are just the first steps on your journey to be a new homeowner and condo investor. There’s plenty of more information in our Real Estate Guide, and we encourage you to check it out. If you’ve got any questions that you want answered by one of our pros, make sure you give us a call. We love what we do, and we love talking about it!