Invest in the stock market, or in Toronto preconstruction condos?  That’s the question posed to me most often by first-time investors.  Perhaps this article from The Toronto Star will help guide you one way or the other.  It’s written by George Carras, the President of RealNet Canada.  In this article, George compares the performance of new home prices for highrise condominiums to the TSX from January 2004 to January 2011.

To sum up the major points of interest:

• During the financial crisis suffered in 2008, the TSX lost a staggering 45% of it’s value while the high rise index price remained constant at $430/sq ft.

• Looking at the last 5 years, the TSX is up approximately 5% (with considerable volatility) while during the same time, the high rise index price is up approximately 53%.

• During the most recent stock market fluctuations related to the threat of US default, the TSX has fallen 12% compared to a flat high rise index price of $528.

• “Going into the 2008 financial crisis, GTA new home inventories were 82 per cent higher than they are today. Active builder inventories are currently at record low levels. Total unsold new home inventories in the region are at 19,332 units (6,283 lowrise, 13,049 highrise). Ironically, low supply in the GTA housing market makes the market and the building industry more stable in the event of a major economic downturn and even less vulnerable to price drops due to potential oversupply.”

This should be comforting news for those looking for a less volatile financial shelter.  If you believe in learning from the past, then this bit of news should help guide your investment decisions through the next bit of financial instability.

Toronto preconstruction condos have been a very desirable investment path as many of my clients can attest to.  If you’re interested in learning more about investing in preconstruction condos, don’t hesitate to contact me.

Posted in Pre-construction Condos, Toronto Condos