The Greater Toronto Area (GTA) has been witnessing sizable demand for condominiums in recent times. This is majorly because the real estate market in Canada, particularly in Toronto and other parts of the GTA (Greater Toronto Area) has rebounded positively over the last few years or so. As a result, homebuyers are now spanning up properties and this includes a sizable number of fence sitters who were previously waiting to absorb the impact of regulations like the mortgage stress test and the rise in interest rates.
However, the market has now been shrugging off the slump with sustained economic progress and job growth in the GTA (Greater Toronto Area) along with population growth and the influx of more companies and professionals alike into the region. Sales figures witnessed handsome growth in August as well, indicating positive tidings for the sector going forward.
Condo prices keep increasing due to steady demand
As per latest reports, median prices for every sq. ft. in case of condos in the GTA increased by a whopping 9.1% to touch $743. There is sustained demand for condos in the GTA, particularly from people belonging to the baby boomers generation. These are people who are downsizing and opting for condos and hence this rise in demand and subsequently prices.
Single-family homes are also not drawing millennial homebuyers in droves since there is an affordability issue due to sky-high prices in spite of the fact that mortgage rates have actually come down to a 2-year low currently. As a result, both baby boomers and millennial buyers are now locked in a race for similar kinds of condominiums across the GTA. As a result, with affordability spurring demand in this segment, prices continue rising and how!
Key market trends worth noting
According to several studies and reports, construction of condos in the GTA touched the all-time high peak in the first quarter of this year. 3,073 new units for condominiums were also sold successfully in the first quarter in the GTA. Millennials are currently grappling with the stress test and new regulations for mortgages and hence continue preferring condos on affordability grounds. Demand has not been hampered in this category in spite of these regulations.
Experts believe that more people are steadily adjusting to the new mortgage rules and this has taken a year and a half or so to be absorbed. There are many people who have also saved money for making down payments so they are still buying homes. Some are borrowing money from family and friends for the down payment. Several millennials are now opting for condos which are smaller since they cannot afford single-family homes. The reducing size of condo units in Toronto is another factor behind higher demand.
Median condo sizes came down to 647 sq. ft. between 2016-17 which is lower by 5% as compared to the median size between 2011-2015. This means that condo units are smaller by a whopping 39.53% as compared to units built in the year 1990 when space was costlier. The median size has even come down to 769 sq. ft. in Vancouver between 2016-17. The tiny or micro home trend may well spill over into the condo market as anticipated by experts although the price per sq. ft. will keep rising due to the rise in demand. The average price for every square foot will increase with the decrease in condo sizes.
Condominiums in the Greater Toronto Area (GTA) continue to do excellently in terms of price and sales growth in spite of several market hurdles including the Foreign Buyer’s Tax and mortgage stress test. However, on the other end of the spectrum, prices of condo units actually came down by 8.3% in Vancouver to touch a more reasonable $764 per sq. ft. as per reports. This was the highest such reduction witnessed in a major Canadian housing market.