If real estate is the investment everyone thinks it is, then now’s a good time to look at buying a condo.
Not because condos are killing it right now, because they’re not. A recent CIBC Economics described condos as a buyer’s market and said weakness will continue into 2025. A Greater Toronto Area snapshot: Overall home prices were up 1 per cent year over year in October, but condo prices fell 2 per cent.
You’ve heard about buying low in the stock market, right? The same applies to other assets, including real estate. Buying at depressed prices helps position you well for an upturn, but you have to be OK with near-term price declines.
Condo prices certainly have some potential downside ahead. “The high-rise segment has been in recessionary territory for the past few quarters and is likely to remain under water for most of 2025, as record-high completions will continue to chase reduced investors’ appetite,” the CIBC report says.
A condo rebound would be driven by lower mortgage rates and pent-up demand from both investors and people who want to both own and occupy their units. CIBC sees potential for “significant upward pressure on condo prices” as rising demand meets inadequate supply of new condo units.
There were signs in October that the broad housing market is starting to heat up again. CIBC sees lower mortgage rates combining with inventories at historically low levels to produce higher prices in 2025. Surprisingly, population growth will be a factor as well. The federal government has cut immigration targets, but CIBC still sees population growth of about 1 per cent next year.
Rising prices would get people excited again about house prices, which have come down from the peak in early 2022. But houses aren’t in, as CIBC puts it, recessionary territory. Stories of bidding wars on good properties continue to circulate in the Toronto housing market.
For now, condos are the better buy-low opportunity and they’re a lot cheaper for first-time buyers. The average condo price in the Greater Toronto Area in October was $694,038, while the average detached house price was $1.5-million.
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Rob’s personal finance reading list
Divided about dividend investing
A nicely balanced analysis of the benefits and disadvantages of focusing your investing on dividend stocks. For me, the discussion over dividends has to start with an investor’s priority. Is it growth, or income? Dividend stocks can deliver both, but some investors end up sacrificing growth to maximize income. My sense is that they’re OK with this.
Trump tariff talk, American-style
You’ve no doubt read a lot about the potential effects on Canada if U.S. president-elect Donald Trump goes ahead with his threat to introduce a 25-per-cent tariff on products from Canada and Mexico. Now for the American view – what products might people want to buy now, before consumer prices are inflated by tariffs?
How scary are stocks right now?
Helpful thinking on the potential long-term gains in stocks compared with the risk of losing money. Over the long term, stocks are worth it. Stop worrying about the moment.
Close to half of Canadians are in the process of planning or executing home reno, or they’ve recently done so. For those looking at how best to spend their kitchen reno money, a list of top design trends of the moment.
Podcast fans
Subscribe to Stress Test on Apple podcasts or Spotify.
Ask Rob
Q: I’m planning for retirement as a single person. What are some key strategies? I do not have a pension, am considering taking Canada Pension Plan at 62 or 63 and have a registered retirement savings plan, but am not sure it’s sufficient. How do I determine realistically what I will need, and how to plan for this in the near future?
A: There are two paths here, one for do-it-yourselfers willing to use online tools to map out their retirement and the other for people who want the help of financial planners. You can work with a planner by paying directly for planning, or through fees that include management of your investments. To organize your thinking about retirement, figure out your cost of living in retirement and then estimate how much income you can expect from CPP, Old Age Security and the investments in your RRSP and elsewhere. You can find out about your CPP entitlement using the Service Canada website. Here’s some info on how much OAS pays.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A comparison of what a hospital stay costs in Canada and in countries around the world.
In the social sphere
Social Media: The CPP death benefit and a couple of other examples of how key numbers in personal finance have not kept up with inflation.
Watch: The most popular toys for Christmas 2024.
Money-Free Zone: For boomers and other lovers of classic rock: The Rock History account on X, with links to a lot of vintage concert footage you’ve never seen. And now for some video of the Beatles performing Let It Be. Never gets old.
More PF from The Globe
– The Globe and Mail’s 2024 Robo-Adviser Guide
– How snowbirds are adapting to increasing costs
– Retirement? There’s utopia and then there’s my reality
– How this former commercial banker overcame ‘a bad case of retirement shock and depression’
