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Interest rates have risen dramatically in Canada recently, putting pressure on Canadians who have (or are hoping to acquire) a mortgage, line of credit, or other loans with variable interest rates. Since March 2022, the Bank of Canada has raised interest rates six times, and rates have shot up from 0.25% to 3.75% (source). High interest rates mean that it now costs Canadians more to borrow money, and they’re leaving many people wondering if now is a good time to buy a pre-construction condo in Toronto and to enter the housing market.

While the higher mortgage costs are leaving many Canadians feeling anxious and frustrated, we believe that it is still a good time to buy a pre-construction condo in Toronto or the Greater Toronto Area (GTA). Here’s why:

The Increasing Value of Pre-Construction Condos

Buying pre-construction means that your new condo won’t be ready for approximately three to five years from the date of purchase. In most cases, the value of the condo increases from the time it’s finished without the owner having to do any work or upgrades. And given the rate at which Toronto condos appreciate, it’s a smart time to get into the market despite the higher interest rates.

The Lack of Housing Inventory

Toronto has a notoriously low amount of homes available for sale compared to the demand, which we can expect to continue to drive higher prices in the GTA. As such, it’s best to get into the Toronto real estate market as soon as you can reasonably afford it.

The Ever-Growing Demand for Housing 

On top of the current low inventory, the demand for housing in Toronto is expected to continue to increase. The latest data from Immigration, Refugees and Citizenship Canada (IRCC) reveals that Canada welcomed 274,980 new permanent residents in the first seven months of this year, which puts Canada on track to see immigration hit 471,394 new permanent residents in 2022, or 16.1% more than the record-breaking 406,025 new permanent residents to Canada last year. The country plans to welcome another 477,055 immigrants next year and 451,000 in 2024 (source). The vast majority of these immigrants come to Ontario, including 227,235 newcomers in 2022 (source). In 2021, over 9 in 10 recent immigrants lived in one of Canada’s 41 census metropolitan areas, which are large urban centres of over 100,000 residents. As was the trend over the past 50 years, Toronto (29.5%), Montréal (12.2%) and Vancouver (11.7%) continued to welcome the most recent immigrants in 2021 (source).

With all of this continued growth in Canada, Ontario, and the GTA, the demand for housing shows no signs of slowing down. Every new resident will need a place to live. This will continue to drive up real estate demand and prices. The sooner you can get into the market and secure your investment, the better.

More Bargaining Power for Buyers

The shifting market and turbulence may give new home and condo buyers more leeway to negotiate and more bargaining power, which are valuable things to have on your side when looking for a GTA house or condo to purchase. As the rising interest rates have caused demand for new homes to decrease, buyers who remain in the market will have a greater opportunity to take their time and to be smart and prudent when making important financial decisions. Whether it’s negotiating the price of a new home or condo, or adding conditions to their offer, buyers will have the upper hand in this market. They’re also less likely to have to enter a vicious bidding war.

It’s Important to Play the Long Game

Finally, with real estate, you have to play the long game. The dips and rises of the real estate market and varying interest rates are normal, and there will always be rebounds and corrections. Waiting for the “perfect” time to buy is nearly impossible, so it’s best to buy what you can afford, when you can afford it. Despite the fluctuating market, the long-term growth possibilities are strong. Real estate is a long-term investment strategy and we know from both recent and long-term trends that it always appreciates. In short, real estate is a good investment.

Questions? Comments? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!

BAZIS is a Toronto real estate development company specialized in new construction condos for sale and pre-construction condos in Downtown Toronto. We are committed to excellence in every facet of the commercial and residential real estate development process. Combining visionary architecture, design, marketing and construction with the epitome of corporate integrity and environmental responsibility, BAZIS has become a major force in articulating Toronto’s ever-evolving skyline.

Buying a pre-construction condo in downtown Toronto is a big decision and financial investment, and you should be informed and confident with the details of your potential new home. In order to get the best possible deal and also a safe investment from a reputable builder and developer, there are several questions you’ll want to consider along the way. The following questions are designed to help guide you through the process of buying a new condo in Toronto and avoid common mistakes that new buyers make.

1. Who is the builder/developer and what is their experience? Who is the contractor?
   Before purchasing a pre-construction condo, you will want to do some background research on who you’re purchasing from. Who are the condo developer and contractor? Do a quick Google search and see if you can find any potential red flags. If the developer and contractor sound good, check if they have experience building the type of condo and amenities that you’re looking for and that suit your lifestyle. Are they located in the city of your choice and do they have an extensive portfolio?
2. What can I afford?
   In order to determine what unit you can afford, visit the developer’s website or the sales centre of the pre-construction condo you’re interested in. Many developers have affordability calculators on their websites that can help you figure out your budget and down payment, and if not, a sales centre staff member should be able to help you determine which unit is within your budget and what you can afford. You should also be aware of all the costs that come along with a pre-construction condo, including occupancy fees and closing costs.
3. What is the deposit structure?
   Before investing in a pre-construction condo, make sure you know what the deposit structure is. A deposit structure is a payment schedule to pay off your down payment. Sometimes you can negotiate your deposit structure with the builder so that you can make your payments comfortably.
4. Will my deposit be protected?
   The deposit for pre-construction condos in Toronto is typically 20% of the purchase price, although this varies. Even though your deposit is fully protected by the Condominium Act, you should always ask the developer what other security measures they have in place to protect your deposit. When purchasing a pre-construction condo from a respectable builder, your purchase fees should include a Tarion Warranty Corporation enrollment fee that protects your deposit in the case that the project is not completed.
5. When can I take possession?
   Sometimes pre-construction condo projects can be delayed for months, and sometimes even years due to a variety of reasons. Most builders try to honour their commitments but sometimes things happen out of their control. First you will want to ensure that the builder has a good reputation for finishing projects on time, and second you will want to ask if they have a firm date of possession. Protect your investment by asking the condo developer what they will do if your possession date is delayed for any reason. You can also check the developer’s history in Tarion’s Builder Directory before committing to your purchase.
6. What is the outside date?
   An outside date is the date a developer will give you if your pre-construction condo is not completed on time. Consider it as an extension date. Make sure you’re comfortable with this date, and ask the developer if they don’t complete the project on time, what are your options for backing out of your contract.
7. How many units remain in the building?
   This number can tell you a few things – it can tell you how many people are interested in this building, and when construction will begin. If there are a high number of units remaining, it might be a while before the developer has enough capital to begin the construction phase. Then again, if you’re getting in early, you may be getting a better deal.

8. How will I know if my condo will meet my expectations?
   This again comes back to the reputation of the builder/developer. You need to do your due diligence and make sure the developer has experience and that they have a good track record of delivering on what they promise. Check out their previous condos and see if you like their style. If you purchase from a well-known builder, you shouldn’t have to worry that your condo will end up disappointing you. Another thing to consider is that you really need to know what you’re purchasing. Familiarize yourself with the project’s sales centre, ask questions, and study the floor plans and finishes, as well as the amenities spaces and renderings. Also, make sure that you’re happy with the neighbourhood in which the condo will be built.

8. What if I have questions or concerns?
   Purchasing a pre-construction condo can be overwhelming but is also very rewarding when you finally move into your unit. Ask the developer about their customer care, and what services they have in place to help you with any questions that may arise. Some developers have extensive customer care practices and will keep you updated on construction updates, occupancy dates and fees, etc.
9. Who will manage the building?
   The builder is responsible for developing the building, selling units and the construction phase of the building, but usually another company is hired to manage the building once construction is complete. Find out who will manage the building and check into their reputation.
10. What other developments are coming to the area?
    Ask the developer if they know of any other builders working in the area, and do a search online. Sometimes another condo development could end up blocking your view or the construction of another tower might make your investment less desirable. Find out what is happening in the neighbourhood.

Do you have any questions about how to avoid poor pre-construction investments? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!

BAZIS is a Toronto Real Estate Development Company  specialized in new construction condos for sale and pre-construction condos in Downtown Toronto. We are committed to excellence in every facet of the commercial and residential real estate development process. Combining visionary architecture, design, marketing and construction with the epitome of corporate integrity and environmental responsibility, BAZIS has become a major force in articulating Toronto’s ever-evolving skyline.

In November 2021, Toronto City Council adopted a new Inclusionary Zoning policy framework. The City of Toronto is the first city in Ontario to implement inclusionary zoning, which will ensure that more affordable housing is built across the city.

In the last five years, only 2% of housing that has been built or approved in Toronto has been affordable. The areas in Toronto with the largest amount of new housing are also experiencing substantial price escalation to the point where many Torontonians are struggling with housing affordability.

Inclusionary zoning is a tool to ensure that major Toronto neighbourhoods provide housing options that are suitable for a wide range of households and incomes. In the City’s policy, ownership prices will be centred on new income-based definitions of affordable housing, targeting households earning too much for social housing but not enough to afford market prices. These low- to moderate-income households fall in the 30-60 percentile of income distribution. This includes households earning $32,000-$92,000 per year, depending on household size.

Toronto City Council approved an Inclusionary Zoning Official Plan amendment, a Zoning Bylaw amendment and draft Implementation Guidelines, which will make it compulsory for some new developments around Protected Major Transit Stations Areas (PMTSAs) – for example, the TTC – to include affordable rental and ownership housing units beginning on September 18, 2022.

Inclusionary Zoning will secure 5-10% of certain condominium developments (the development must have at least 100 units, and have over 8,000 sq. ft. of residential gross floor area to qualify) as affordable housing, increasing gradually to 8-22% by 2030. The amount of affordable housing will vary depending on where the development is located in the city and whether the units are intended for ownership or rental. The highest requirements for affordable housing will be in the Downtown Toronto area, followed by Midtown and Scarborough Centre.

The City has established three Inclusionary Zoning Market Areas (as pictured below). These areas have the highest amount of new housing supply with significant price escalation where the City has determined that its inclusionary zoning requirements should not affect overall development viability. The three areas are subject to different inclusionary zoning requirements based on their individual market conditions.

Image: City of Toronto By-Law 940-2021

The requirement for future condominium developments is broken down as follows:

Image: Aird Berlis

Toronto’s Inclusionary Zoning framework ensures affordability is maintained for 99 years, and that the by-law requirements be incorporated on a steady basis. The policy will be closely examined and reviewed after one year to allow for any changes that may be required to ensure market stability and the continued production of affordable housing units.

The resulting Inclusionary Zoning framework will help the City of Toronto reach the HousingTO Action Plan target of approving 4,000 new affordable ownership homes and 40,000 affordable rental homes by the year 2030.

Do you have any questions about inclusionary zoning in the City of Toronto? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!

BAZIS is a Toronto real estate development company specialized in new construction condos for sale and pre-construction condos in Downtown Toronto. We are committed to excellence in every facet of the commercial and residential real estate development process. Combining visionary architecture, design, marketing and construction with the epitome of corporate integrity and environmental responsibility, BAZIS has become a major force in articulating Toronto’s ever-evolving skyline.

Buying a pre-construction condo is incredibly exciting. It gives buyers the chance to live in a brand new home that has never been lived in before, so it’s completely fresh and clean. Pre-construction condos can be customized to suit homeowners’ personal style, from the floor plan and layout to the flooring and cabinetry. Plus, it’s thrilling to watch your new home come to life before your eyes.

However, it’s easy to get caught off guard with the financing of a pre-construction home. To make the process a little bit easier, we’re breaking down the financial process and explaining what you need to know about deposit structure, the cooling-off period, occupancy fees, and closing costs. Costs vary depending on the value of the home, municipality, and the builder, so read on to learn more.

Deposit Structure

The down payment for resale condos can be as little as 5%, however pre-construction condos typically require 20%. The good news is that it gets paid in installments, giving the buyer more time to save up. A typical deposit structure is $5,000 with the offer, and then 5% increments at 30 days, 90 days, 180 days, and at final occupancy. The exact timing depends on the builder, and some developers even offer pre-launch deposit structures that are even more manageable, for example, your deposit may be split over 365 days instead of 180. Deposits often tend to be higher at the beginning of a project as banks and lenders require this, however deposit structures may become more flexible closer to completion, where a builder may be willing to negotiate your fee structure.

Cooling-Off Period

After putting down a deposit on a pre-construction condo, buyers are given a “cooling-off period.” During this time the buyer has some time to re-evaluate their purchase decision. Typically, the cooling-off period is 10 days in Ontario, so this would apply for all Toronto condos. At this time, the buyer should organize their finances and ensure they’re ready to move forward with the purchase. They should also take advantage of this time to review their Agreement of Purchase and Sale with a real estate lawyer to make sure they fully understand the builder clauses. If a buyer changes their mind during the 10-day cooling-off period, they are able to back out of the contract and have the deposit returned without deduction.

Occupancy Fees

After the condo is built and the buyer’s unit becomes available to move into, there is a period called interim occupancy. During this period, which can last a few weeks to several months, the buyer can take possession of their unit without actually owning it. This is because titles can’t be transferred until the whole building is complete. During this time, rather than paying their mortgage, the buyer will pay occupancy fees. The occupancy fee is made up of three parts: interest (usually 1%) on the unpaid balance of the purchase price of the condo, an estimate on the municipal taxes for the unit, and a projected common expense contribution to keep the building running. The fee is usually charged monthly. Many buyers will elect to take advantage of the interim occupancy period, as the payment may be less than their rent, and to take advantage of moving into their unit. A downside is that the building’s amenities may not yet be available to use, however the buyer can begin leasing out their space if they choose to do so.

Closing Costs

Closing costs are additional costs that the buyer will need to pay between the time they make their offer and the day they close. These costs include home inspection fees, legal fees, land transfer taxes, etc. Buyers should try to put aside an additional 1.5% to 4% of the purchase price of their homes, in order to cover these closing costs. Additional closing costs include: development and educational levies, a New Home Warranty Plan enrolment fee, utility hook-up fees, assignment fees (if you sell before final closing) and occupancy fees. These additional costs are builder- and project-specific, and some may even be included in the sale price of the unit.

It’s also important to keep in mind that when buying a pre-construction condo, buyers will need to contribute at least two months of condo fees to the condo’s reserve fund. Pre-construction condos are also subject to HST, which builders often factor into the purchase price of the unit and pay on behalf of the buyer. If a buyer is planning to live in the unit, they may qualify for an HST rebate.

Timing

When it comes to pre-construction condos, delays happen – and it’s not uncommon. Builders are permitted two extensions that last up to 120 days each. After that period, the developer must set a new date, and buyers are eligible for delayed closing compensation. If another year passes, the buyer can cancel their agreement.

With so many fees and closing costs, it’s no surprise that many pre-construction condo buyers feel overwhelmed at closing time. However, with due diligence and sound legal advice, buyers can confidently navigate the challenge of home financing and attain the home of their dreams.

Do you have any questions about purchasing a pre-construction condo? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!

In this week’s blog post, we’re delving into the details of pre-construction condos – especially condos built in downtown Toronto – and answering all of your questions about them. If you’ve been wondering if a pre-construction condo is a good idea for you, how to decide on pre-construction versus resale, or the investment benefits of choosing a pre-construction condo, read on!

What is a pre-construction condo?

A pre-construction condo is just that – a condo that has not been constructed yet.

What are the benefits of investing in a pre-construction condo?

-Investing in Toronto pre-construction condos is a fantastic investment. It’s a great way to get into the Toronto real estate market and build equity.

-You get the thrill of personalizing your home to your unique style, while having a brand new home that no one has lived in before.

-You can choose your unit on a first-come-first-served basis. You get to select the view, floor plan, and layout that suit your lifestyle.

-Unlike a resale condo, you don’t have to pay your down payment all at once. When investing in Toronto pre-construction condos, you pay off your down payment in stages over the first year. This gives you more time, flexibility, and control over your finances.

Why are pre-construction condos in Toronto a good investment?

-With rising home prices and shortages in the Greater Toronto Area, you can grow your money quickly if you invest in a pre-construction condo in Toronto. The value of a pre-construction condo increases the moment you take ownership (and even before then), and it generally continues to increase until you decide to sell. This is even truer if you invest in an up-and-coming neighbourhood.

-You get the lowest price possible. Builders and developers are looking to sell units to fund construction, so you get amazing value, and you can also avoid the stress of costly bidding wars.

-Pre-construction condos allow you to break into the real estate market at a slower pace, demand less money upfront, and give you the best appreciation value.

-Pre-construction condos offer better rental and resale value, because people would rather live in a new build rather than invest in properties that need maintenance or extensive renovations, or that have outdated features and finishes.

-The Toronto real estate market is hot right now and you can’t beat the location. Living in downtown Toronto gives you the advantage of being in close proximity to the best jobs, top universities, and all the entertainment options you can dream of. If you decide to sell your condo later on, you’ll have no difficulty finding someone who wants to live in downtown Toronto.

Who should consider investing in a pre-construction condo?

-Anyone and everyone! Pre-construction condos in Toronto are a great investment for young professionals, downsizers, and even families. Many condominiums offer 2-3+ bedrooms, and incredible amenities to suit all lifestyles.

Our upcoming Queen Church condo with Tridel, for example, is located in the heart of downtown Toronto. It’s perfectly situated nearby the Financial District, the University Health Network, the top universities and colleges in the city, and the best in entertainment. Queen Church also offers luxurious amenities that make life simpler and more enjoyable, including a state-of-the-art fitness centre, a pet run, BBQ and fireplace lounge, and much, much more.

Are you considering investing in a pre-construction condo? Are you interested in learning more about Queen Church? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!