Toronto condos are tantamount to a phenomenon that’s rife with twists and turns and immense speculation for end users and investors alike. Yes, the story of condos in Toronto and how they’re enveloping not just the City of Toronto but also several parts of the Greater Toronto Area (GTA) is nothing short of a bestseller! You see, condominiums are part and parcel of the incredible growth that Toronto’s real estate and construction industry has witnessed over the last few years. Toronto has become a major economic and technology hub with several global MNCs expanding here and multiple start-ups being birthed.
As a result, skilled professionals are coming to the city in search of requisite employment, not just from other cities and towns in Canada but also from other countries. This has naturally contributed towards increased demand for residential housing, courtesy the growth in population, economic growth, higher employment levels and so on. Condos are red hot prospects in Toronto; their prices have been soaring even faster than the Peregrine Falcon (fastest bird in the world) as some say. This has given rise to unaffordability concerns.
Latest Toronto condo market trends
Going by the latest trends in the condo market in Toronto, there are several key aspects which can be unearthed:
- According to TREB (Toronto Real Estate Board) figures, condominium benchmark pricing touched record highs in February 2019.
- Sales figures dropped correspondingly as well while inventory levels climbed to new highs for February 2019 as well.
- There are a lesser number of buyers for condos in the city at the moment although they’re not unwilling to spend more for quality properties.
- Apartment prices went up to a whopping $516,500 for February 2019, indicating growth of 7.92% as compared to the same period last year.
- The benchmark prices for condos in the City of Toronto stood at $549,000 for this month, representing growth in prices of 8.7% (year on year).
- Prices shot up by 1.89% on a monthly basis (month on month) for February 2019 which was the highest increase witnessed since February last year.
- Overall growth throughout the TREB region came down to 7.92% although this was the lowest such figure ever since June last year.
- 7% is the annual growth rate for the City of Toronto which is the lowest witnessed since the month of July in 2016.
- Median sales prices touched $495,450 in February 2019 for TREB which is higher by 6.54% on a year on year basis.
- Median sales prices for the City of Toronto stood at $540,000 in February 2019 which represents growth of 6.93% on a year on year basis.
- Close to 50% of condominiums in Toronto were sold at 5% lower prices than usual condominiums as per reports.
- Average selling prices for condos touched $562,161 in February 2019, indicating an increase of 6.1% (year on year). The average for the City of Toronto touched $612,488 which indicates growth of 7.4% (year on year).
- 1,536 units were reported by TREB in sales figures for February this year, indicating de-growth of 5.7% on a year on year basis. The City of Toronto accounted for 1,064 units in sales which is lower by 6.7% from the same period in 2018. This has been the slowest sales tally observed for the condo segment in the city since the year 2014.
Inventory levels and other trends
New listings for condominiums have reportedly come down in the Greater Toronto Area (GTA) although they have gone up in the City of Toronto. 2,453 new listings were confirmed in February 2019 which indicates a decline of 1.32% (year on year). The City of Toronto contributed 1,691 units in these listings which is representative of year on year growth of 0.23%. Total monthly inventory naturally increased on account of a higher number of listings in comparison to sales figures.
TREB has stated that 2,821 active listings were noted for February 2019 which is 4.58% higher as compared to the same period last year. The resale inventory for condominiums in Toronto is already at the highest possible level witnessed in a span of three years. Sales transactions have come down marginally in Toronto due to the high prices and inventory levels have also been rising steadily as a result. In fact, sky-high pricing is also leading to lower transactions for pre-sale projects in the condominium category. This is leading to several project cancellations which continue to be a source of worry for market watchers.
Experts feel that after enjoying a bull run for close to three years, the condo segment in Toronto will be moderating and settling down more in 2019. This could actually be better for homebuyers if price increases taper down and interest is revived again along with sales volumes. There remains scope for growth in prices as per industry experts although the rate of growth will be moderate. The last three years have witnessed condo prices going up by 50% to touch a record high of $570,764 in September last year. The gains in pricing are still high as compared to detached homes which have been more impacted by the stringent mortgage regulations in Toronto and the rise in overall rates of interest. Having touched peak levels, the condo market will remain at flatter levels over a period of 2-3 years. This means buyers will be able to pick up condos at stable prices.
What will keep drawing investors to the segment is the potential for long-term growth on account of lower supply levels in Toronto as compared to population growth and economic progress backed demand. The GDP (gross domestic product) in Toronto has been approximately 3.4% over a 3 year period which is higher than 1.6% of population growth as per reports. Prices may also go down a little in case a wave of new supply hits the condo market over the next couple of years. Investing in a Toronto condo? This will continue to be a good value proposition in terms of long-term price growth, no matter how the market pans out in the short to medium term.