The Condo Sector Is Becoming The Leading Market For New Home Buyers


The Condo Sector Is Becoming The Leading Market For New Home Buyers

Photo Source: Victor Garcia

Toronto’s condominium sector is becoming the leading market for new home buyers, and as a result is forcing prices to jump to 25 per cent to $758,370.

According to a recent report by the Building Industry and Land Development Association (BILD), the reason for the increase in prices within the condo sector is due to high demand from new home buyers looking for more affordable housing options that are also family-sized.  The average unit size for condos increased from 814 square feet last year, to 892 square feet, while the average price per square foot increased from $743 to $850 year-over-year – both being contributive factors for higher demand in this sector.

When comparing condos and single-detached homes, prices for the latter are not looking as appealing as the first, as prices and transactions for condos have been since May 2017. David Wilkes, BILD President and CEO, addressed the decrease in prices for new single-family type homes saying “it is doubtful prices will continue to moderate, considering embedded government fees, taxes and charges, and high land costs due to regulatory constraints.”

Photo Source: Yeshi Kangrang

According to the release, condo apartments accounted for 2,003 of the total 2,345 new home sales in May, one per cent below the ten-year average for condo sales. While they accounted for a large sum, they were still down 47 per cent from May of last year (which saw a record high of 3,766 condos sold). However, according to Patricia Arsenault, Executive VP of Altus Group, May has been the strongest month since November 2017. “May new condominium apartment sales were very encouraging. Not only was it the strongest month since last November, but the sales of 2,003 units are impressive in historical terms: there have only been five other years where May new condominium apartment sales topped this year’s performance.”

Inventory levels for condos for the month of May were also down to 9,345 units, as only five projects representing 710 units opened last month. However, while inventory may be low, supply is slowly starting to rise. Federal housing agency, Canada Mortgage and Housing Corporation (CMHC), stated in a recent report that there is a total of 7,691 units are being built across the Greater Toronto Area (GTA) since the first quarter – the most in construction in over 25 years. Housing starts could even hit record levels within three years, which will certainly help tackle the supply/demand imbalance this city is currently facing. Conversely, due to rising construction costs and development charges, long approval processes, and lack of available land, developers are still taking new development projects on with a grain of salt.

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