Economic and Condo Update 2010

I attended the Economic and Condo Market Update yesterday sponsored by Genworth Financial (thanks to Jessica Magno for the invitation). In his address, a speaker from the Conference Board of Canada showed that our economy seems to be on the mend. While it is of little consolation to those who are losing their jobs, he pointed out that we experienced eight years of employment growth from 2000- 2008, far greater than the jobs lost in the last year.

An interesting point he made is that it is unlikely that the US will very soon start to address the huge deficit that they are building up, which is actually a good thing for us in Canada. Once they start to address it, there will be a tightening spending by Americans, our biggest export customers. He said that the introduction of the HST in July 2010 will add .7% to the inflation rate, with the overall rate expected to be 2.7% He did not foresee an increase in mortgage rates beyond 1-2%, which he felt would not have a significant effect on the real estate market. I took my son Michael, who recently graduated from Trent with a Bachelor in Business Administration and is looking for a job in finance, with me. It was interesting to see how the younger generation views these things.

One of the other speakers was from Urbanation (www.urbanation.ca) who spoke about the Toronto condo market. He felt that the biggest issue with the coming HST is its impact on condo maintenance fees, which he expects will rise by about 6%. He said that when fees rise to over $600/mo., it has a negative effect on condo sales. Overall he was very positive about the condo market in Toronto, reporting that the unsold inventory is down significantly. He noted that a number of successful projects had revised their suite mix, going to smaller less expensive units.

He noted that there has been a difference in price per square foot between new and re-sale has declined. He also identified the condo areas that have experienced the most price appreciation since 2007:

Downtown core: up 16%

North York City Centre: up 12%

City Place: up 10%

Downtown West: up 9%

Downtown East: up 8%

Harbourfront: up 8%.