Driving along the Gardiner Expressway through the heart of downtown Toronto, it seems like there are nearly as many cranes as high rises dotting the skyline. With tens of thousands of new condo units coming onto the market each year, and reported concerns of oversaturation, it probably shouldn’t come as a surprise that developers are offering incentives to lure buyers in. Here are a few of the goodies on hand for prospective buyers.
In July, The Minto Group announced that it would guarantee two years’ worth of rental income for units in its Westside development at Front and Bathurst streets in downtown Toronto.
As a way to entice investment buyers, the deal provides up to 6% of the purchase price of a unit for the first 24 months of ownership. So on a $400,000 unit, buyers are guaranteed at least $2,000 a month in income, even if they can’t find tenants.
Earlier this year, the WestStone Group offered buyers for its Evolve development in the Vancouver suburb of Surrey and enticing incentive: mortgage rates starting at $1 per day. Granted, it’s only for the first year – and some of the studio units are as small as 316 square feet – but with prices starting as low as $93,900, it has to be one of the deals of the century for Vancouver real estate.
A couple of years ago, Kylemore Communities offered a unique incentive for buyers of their project, The 6th, in Markham, Ont.: A BMW. Well, not the whole car, but $35,000 towards a lease on one. Company president Patrick O’Hanlon was unabashed in gloating about the reasons behind the promotion, saying: “Guess what, a BMW isn’t cheap. And why? Because they’re giving you the best. The 6th is not the cheapest condominium, so if you want the cheapest, there’s the door, you’re in the wrong place. We are giving you the best of everything.” Including a parking lot where all your neighbours have fancy cars!
Around the same time, a realtor trying to drum up business was offering buyers and sellers bonuses ranging from a $3,000 gift card at the Apple store (for sales ranging from $300,000 to $599,000) to a free Honda civic for any deals exceeding $2 million. (Of course, if you’re buying a $2-million home you probably aren’t driving around in a Civic…)
In its latest Housing Price Analysis, the Canada Mortgage and Housing Corporation warned that Toronto (along with Winnipeg and Regina) is a “high” risk of a housing correction. Condos, in particular, were singled out, “In Toronto, Ottawa and Montréal, we are monitoring the risk of overbuilding. Condominium units under construction are near historical peaks. Inventory management is, therefore, necessary to make sure that these condominium units under construction do not remain unsold upon completion.”
If the situation doesn’t change, we may start to see a lot more promotions like these as developers try to sell off any surplus stock ahead of a price drop.