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Brokers wait for piece of condo action (Toronto Star)
Tempers flared yesterday as some waited 24 hours for the chance to buy into a hot housing development

July 27, 2007
Thulasi Srikanthan
and Tony Wong
business Reporters

About 150 real estate agents and brokers camped out, some for more than 24 hours, for the chance to buy units at a much-hyped waterfront condo in a waiting game some called "survival of the fittest."

Tempers were volatile and personalities clashed as some agents tried to scare off others to get a piece of the west-end Beyond the Sea condominium project.

"It's a battle," said Sofia Hassan, a sales representative for Royal LePage who said her brother was almost chased out when he seat-sat for her. Agents were looking to make quick commissions on the condo units, arguing buyers could hope for healthy gains in the value of the properties in coming years.

The camp-out, an increasingly common sight at some well marketed condo projects, is a sign that Toronto's real estate market is not slowing down even as the housing recession deepens in the U.S. Analysts yesterday predicted an economic slump for the rest of the year and stock markets suffered another nasty pullback.

At the Beyond The Sea project, many spent the night asleep on lawn chairs, cellphones by their sides, or subsisting on diets of coffee, doughnuts and pizza.

The development, near Lake Shore Blvd. W. and Parklawn Rd., is set to open in 2010 and has been heavily advertised. Prices for the phase two project range from $169,900 to around $1 million.

"We are going to take home $20,000 for 24 hours," said Hassan, referring to commissions. She started camping out at 9:30 Wednesday morning for yesterday's opening.

"Rapidly declining affordability in the housing market – due to both price increases and rising interest rates – has pushed more buyers into the condo market," said Douglas Porter, an economist with BMO Capital Markets. "And while Toronto's economy is only so-so, persistently strong population growth is also providing underlying support."

While overall home building activity has been softening in Toronto since the peak in 2003, Porter noted condominium construction is still holding up well.

According to the latest figures from Urbanation, a quarterly that tracks the high-rise market in the GTA, the first quarter of 2007 saw condo resales hit a record at 3,100, the highest ever for that quarter.

Some 3,400 new apartments sold in the first quarter, making it the third highest number on record.

"The market is still buoyant on the high rise side, and it has been amazingly resilient," said economist Peter Norman, vice-president of housing analysts Clayton Research Associates Inc.

Jane Renwick, executive vice-president of Urbanation, said once second quarter sales are added in, condo sales in the Toronto census area are on track to beat the first six months of last year.

One reason for what's being seen as a much stronger second quarter is that only eight projects were released in the first quarter, compared to 35 in the second, said Renwick.

"There was some pent up demand which was met in the second quarter by some really high quality projects," said Renwick.

Still, despite strong condo sales, some analysts have been warning that over the past year or so the market has seen an influx of investors – buyers who either plan to flip units immediately for possible gain, or rent them out. Estimates of investor activity range from 25 per cent to 40 per cent at some buildings. One big risk is that a downturn in the market can cause investors to panic and start dumping their units, causing a price drop.

"Investors are out in force, sowing their own future disappointment" said Toronto analyst Will Dunning in a recent report.

In the meantime, lineups like those seen yesterday have not been unusual in the hot condo market.

Agents lined up for up to three days in June to purchase a unit at Concord Park Place in the Leslie St. and Sheppard Ave. area, says Dennis Au-Yeung, CFO for Concord Pacific Group Inc., one of Canada's largest high-rise builders.

"It was our first project outside downtown, so there was a lot of demand,"said Au-Yeung. "The market in Toronto has been strong."

That's something Michael Yang, a sales rep with AimHome, has seen first hand. Yang, who received the elusive first ticket yesterday after waiting 28 hours, once was involved in a 48-hour condo camp-out.

"There is a lot of demand, especially for nice ones," he said.

The lineup allowed agents to do their work while they waited and even catch up on reading.

Remax sales rep Jason Hughes got a chance to finish the final book in the Harry Potter series during his 25-hour wait.

Hughes said demand for condos has been helped along by the increasing congestion downtown.

"The roads are getting worse, and people are getting tired of the commute," he said.

While affordable projects are usually the beneficiaries of lineups not seen since the '80s, even high-end properties have seen the phenomenon.

When the ultra-luxury Ritz Carlton Toronto property went on sale two years ago, several agents slept in the sales centre to be first in line for the suites.

Though an overnight camp-out is not the norm at condo sites, it is common for developers to hand out a number to those in line so they can come back at another time, said Renwick.

"That's usually quite common and it helps with the traffic flow so the staff don't become deluged."