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Canadian Property Investment Dilemma: Condo or House? (Part 2)


In the last article, we listed a series of key differences between investing in Condo and House, but savvy investors will be happier to see numbers that actually speak for themselves. As an investor who wants to maximise his or her investment returns, which one is more promising for most areas of Condo and House so far this year?
TD Bank, one of Canada's largest banks, pointed out in March this year that most regional real estate is clearly divided into two housing types, Condo and Single Family Home, and that the overall market situation is firmly controlled by these two housing types.
TD Bank economists Derek Burleton and Diana Petramala cite the hot push and obsession with housing in most areas as blurring some of the larger differences that should exist, such as 905 versus 416, detached homes versus condos, new homes versus old ones.

Single-family homes
If the Toronto real estate market has been red-hot in recent times, we can say without a doubt that the fire that has lit the market must be Single-family homes.
The market for single-family homes is super "hot."
In January alone, Single-family home prices in most areas have gone up 12%. This earnings growth is much higher than other types of housing, but if you follow the housing market regularly, sales is found to be well below historical normal levels from.
TD Bank points out that in most regions, 43,000 Detached homes were sold in 2013, with only 9,900 new homes built, compared to 22,000 new homes built in 2002. With such a comparison, we can intuitively see that prices have increased to a great extent because of the shortage of supply. "Scarcity" has become a major issue in the housing market.
In downtown Toronto in particular, it's hard to find new detached homes under construction these days, with three new condos under construction for every detached home under construction, which is a huge difference, and there's a reason people are driving up the price of detached homes.

Despite the limited number of new single-family homes being built, new home sales have increased by 70%, and I'm sure the astute reader will have discovered the mystery of this - the Condo market pull is the main driver of new home sales.
In addition, the number of condominiums under construction has been shrinking, with the average market price for new condos generally in the $545,000 range, compared to $347,000 for old condos, as published by TD Bank, and the average unit size for new condos has shrunk to 798 feet in January compared to the 2005 average of 925 feet.
With 70,000 new units expected to enter the market this year and next (twice the historical average), the bank believes that the status quo will not change in the short term and that these data gaps that exist today will not narrow significantly.

Valuation agency says Canadian home prices are 21% overvalued
In 2000, only 28 per cent of Condos were built in high-rise buildings; today, this percentage has risen to 60 per cent. These eventually led to an overabundance of new condos making the condo resale market highly competitive and prices increasingly depressing.

Rental market
TD Bank has also issued some warnings to investors keen on the rental market. Recent estimates show that 26% of Toronto condominiums are not owner-occupied, but are rented out, with the average monthly rent remaining at $1,700.
If home prices fall, investors face more resale risk.
The current good situation of all types of housing makes the GTA housing market is full of mystery, all types of housing market according to the direction of development and the constant each other.
In the current 905 regions, low-rise buildings such as Single-detached and low-rise apartments are expected to be more promising than high-rise buildings, and of course, investors will have to make discretionary choices based on location and community.


This article is contributed by Juwai Columnist, Jackie Jiang

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