Toronto Condo Market Report – Update and Forecast

Toronto Condo Market Report – Update and Forecast

Toronto Condo Market

The latest report on Toronto condo market shows prices rising and supply receding. Similar to the Toronto housing market, condo buyers and investment condo purchasers are frustrated with the conditions.

Whether resale or new construction the 2020 season will see sharp inclines in prices. Sure the media has been predicting a US and Canada recession, however economists aren’t taking that too seriously.

The Toronto Real Estate Board reported the sale of 6,407 condominium apartments via the MLS in Q3 2019, That is up 11.1% from Q3 of 2018.



Sales of new condominium apartments via the MLS® dropped by 1% vs Q3 2018. Only 9,538 listings were added in 2019 compared to 9,636 listings added in the 2018 period.

Toronto Condo Prices 2019 – Chart Courtesy of Trebhome

TREB says “average price of a condo apartment is above inflation and supply is down.” TREB suggests that first time buyers are finding they can afford a condo.

The average price of Toronto condos grew 5.8% or $32,000 YoY. That is from $552,766 in Q3 2018 to $584,564 in Q3 2019. 70% of condo transactions were in the City of Toronto, yet they dropped slightly by 5.6%, leading to an average price of $628,074.

That’s resulted in astonishing condo price increases in Ajax, Oshawa, Halton Hills and Mississauga. Mississauga condo prices have risen 81% in the last 3 years.

Toronto Condo Sales 2019 – Chart Courtesy of Trebhome




Q2 Toronto Condo Report

In the previous Q2 2019 report from TREB, the average price of a condominium apartment increased by 5.1% from $561,343 in Q2 2018 to $589,887 in Q2 2019.  Q3’s increase in price and sales is up markedly.

7,038 condominium apartments were sold via TREB’s MLS® System in the Q2 of 2019. Q3’s sales were 600 less.

Condo price by Bedrooms. Screen capture courtesy of TREB

Condominium Rents


TREB reports a positive outlook on condo rental prices and availability as rental listings increased with only a 4.2% increase in price. Condo availability rose 17.3% to a total of 10,800 condo rentals reporting to TREB which is only a small part of the condo and apartment rental market in Toronto.

However, the vacancy rate in Toronto continues at .7% which is very tight.

TREB says the average Q2 2019 1-bedroom condo apartment rent price in the GTA was $2,262 in Q3 2019 – up 4.5 per cent compared to Q3 2018. Over the last 12 months, the average two-bedroom condominium apartment rent increased by 4.2% to $2,941.

Although rental supply is increasing on the MLS, we know the number of units won’t rise forever. What is obvious is that fewer buyers can afford to buy, so renting is the only option.  Further complicating the issues, is more renters are seeking rentals far outside the GTA where available.

With the increasing competition, credit rating standards are being pushed hard by Realtors and rental owners.

Urbanation Condo Report

Screen capture courtesy of Urbanation

Urbanation which covers condos built since 2005, says the availability rate (includes both vacant units and occupied units where the tenant has given notice to vacate), fell from 2.3% to .8%. This does not include buildings released in the last 12 months.

Urbanation says rents grew 7.7% in Q1 (through the MLS) and 4.5% YoY which was lower than 1st quarter 2018.  No slow down here. Monthly condominium rents for units leased during the first quarter averaged $2515 which is $151 higher than Q2’s $2,376 across the GTA.

They report that the 3,157 purpose-built rental units that completed this year was the highest level of new rentals released in 25 years.  All the condos completed this year added to the good growth in supply. Purpose, built to rent units declined by 47% from last year to only 52,839 units. As of now, 11,413 units are under construction, mostly in the City of Toronto.

“The latest data suggests affordability constraints are impacting market growth for rentals, with renters seeking to save on costs by forming more multi-tenant households and substituting to smaller units and less expensive areas of the GTA” – Shaun Hildebrand, President of Urbanation.




Toronto Condo Developers Optimistic

Buyers in Toronto have turned to the condo market as an alternative resource to the Toronto single detached home market which is priced much too high. Most residential purchases in the Toronto GTA area are condos.

And the spirit of condo developers doesn’t seem to have been dampened.  This could be that Toronto’s economy has held up okay, and a rising population is desperate for accommodations.   Developers submitted applications for 42,841 purpose-built rental apartments in the 1st quarter, which is 20% higher than the total proposed inventory of 35,834 units as of Q1-2018.  And it’s almost 50% higher than the 28,841 units proposed in Q1-2017.

Proposed doesn’t mean they’re feasible or will be allowed by the governments.

The demand for condos comes from Millennial tech talent wanting to work close to the downtown core. Take a look at the condo prices throughout the GTA region below.

Rents grew only .7% in Toronto, but higher at 1% in Peel region and 1.1% in Durham region.

 





The huge Toronto condo market is woefully inadequate to fulfill buyer demand. The fact is Toronto is growing and the more affordable condos will be in continuous demand. It’s all about mortgages and price.  Although the city of Toronto just announced they will build 10,000 rental units, that will take some time.

As recommended by TREB, the mortgage stress test rules should be abandoned by the government. Yet Canadian debt is a big worry in some cities.

Canadian consumers are on the edge and cannot survive a recession.  Which is why many hang on the news about trade with the US and China. It’s a terrible situation the Canadian government has pushed Canadians into.

Constrained supply is causing residents endless misery. With prices so high, no purchases can occur and therefore no economic boost occurs from housing construction and sales.




Toronto Condo Sold to Listing Price

TREB District Sales Average Price New Listings
Sold to Listing Price %
Toronto West 322 $523,883 503 100
Toronto W01 31 $613,759 36 103
Toronto W02 23 $638,914 33 100
Toronto W03 6 $563,500 8 99
Toronto W04 33 $437,111 47 99
Toronto W05 26 $396,164 39 99
Toronto W06 68 $612,949 147 100
Toronto W07 3 $1,054,333 4 103
Toronto W08 89 $520,046 118 100
Toronto W09 16 $395,188 27 98
Toronto W10 27 $362,904 44 97
Toronto Central 828 $673,220 1416 100
Toronto C01 322 $701,758 571 100
Toronto C02 28 $1,126,554 63 98
Toronto C03 10 $811,850 26 102
Toronto C04 20 $719,566 17 103
Toronto C06 9 $457,667 16 98
Toronto C07 48 $601,179 84 99
Toronto C08 152 $671,033 222 101
Toronto C09 4 $916,250 12 102
Toronto C10 33 $673,852 65 101
Toronto C11 14 $454,599 26 97
Toronto C12 7 $1,095,286 14 97
Toronto C13 31 $563,775 43 101
Toronto C14 76 $561,613 141 100
Toronto C15 74 $561,613 116 98
Toronto East 199 $445,417 302 100
Toronto E01 16 $724,681 20 106
Toronto E02 8 $617,694 15 105
Toronto E03 14 $377,271 21 99
Toronto E04 24 $425,349 32 100
Toronto E05 29 $435,759 42 98
Toronto E06 7 $601,786 8 98
Toronto E07 36 $408,397 454 99
Toronto E08 12 $358,208 19 99
Toronto E09 28 $427,739 61 98
Toronto E10 6 $346,500 8 99
Toronto E11 19 $346,500 22 99

Current Toronto Condo Prices (TREB MLS statistics)


This condo price chart below (data courtesy of TREB) reveals the jumps in condo prices since 2017 in Oakville, Peel, Brampton, Mississauga and Halton Hills. Mississauga’s growth in prices are shocking.

TREB District Toronto Condo Prices 3rd Quarter 2019 Toronto Condo Prices 2nd Q 2019 Toronto Condo Prices 3rd Quarter 2018 Toronto Condo Prices March 2018 Toronto Condo Prices Sept 2017 Price Change over Last 2 Years
City of Toronto $628,074 $639,316 $598,660 $651,100 $554,069 13.4%
Toronto West $546,655 $554,263 $491,489 $494,400 $450,485 21.3%
Toronto Central $699,362 $707,774 $677,956 $656,000 $615,654 13.6%
Toronto East $459,159 $470,678 $432,160 $411,000 $395,859 16.0%
Halton Region $500,941 $500,874 $510,946 $465,300 $519,348 -3.5%
Burlington $461,820 $464,359 $437,624 $520,300 $514,755 -10.3%
Halton Hills $470,940 $500,874 $442,300 $486,300 $294,500 59.9%
Milton $473,523 $459,950 $447,988 $432,000 $418,219 13.2%
Oakville $556,036 $467,889 $617,608 $442,100 $606,131 -8.3%
Peel Region $469,406 $461,771 $424,860 $423,600 $385,588 21.7%
Brampton $409,186 $401,189 $372,575 $360,000 $336,091 21.7%
Mississauga $482,083 $474,457 $449,369 $435,000 $393,441 22.5%
York Region $530,577 $526,715 $498,198 $507,000 $481,138 10.3%
Aurora $513,083 $482,090 $430,107 $477,000 $562,500 -8.8%
Markham $549,646 $533,790 $497,763 $509,000 $486,369 13.0%
Newmarket $459,150 $533,790 $428,630 $536,000 $444,250 3.4%
Richmond Hill $492,970 $482,843 $428,630 $475,400 $446,505 10.4%
Vaughan $553,572 $576,902 $545,887 $531,000 $513,618 7.8%
Durham Region $380,256 $576,902 $383,872 $407,800 $365,297 4.1%
Ajax $410,350 $576,902 $363,089 $396,000 $397,125 3.3%
Oshawa $261,280 $360,379 $260,400 $358,000 $226,347 15.4%
Pickering $261,280 $447,510 $260,400 $501,000 $384,300 -32.0%
Whitby $451,547 $466,299 $442,169 $410,000 $395,633 14.1%




 

 

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New Condo Construction in Toronto

The new mortgage rules now enforced means many buyers will only qualify for a much lower mortgage. Still buyers are eager to purchase as seen in the new construction condo sector. It will be some time before new construction can save the day.




You likely have your own opinions about government meddling in the markets, however such interference can be a housing crash factor in itself.

Should you invest in a new or resale Toronto condominium? Given the election uncertainty, and rising unemployment rates, you should be certain.  The negativity in the Canadian economy is a key reason the Feds have pushed the stress test red tape so strongly. They don’t believe things are going to go well.

Millennials Are Driving The Toronto Condo Market

They’ll need more creative mortgage financing and improved condo searches to find condominium they can afford in Toronto.  To save they might have to search further to Brampton or Ajax. Although the mortgage changes in 2018 will put an extra burden on them, and force them to stay in the rental market, they will likely have more money in the spring to buy a condo.

There’s big investor demand for condos too. Student housing is in a severe crunch in Toronto and Vancouver. Investors are well aware of the rental potential of condos and many may be investing in the Vancouver condo market and here in Toronto because of so much rental demand.

If you can’t earn a profit on capital appreciation, you can still make it on rental income.

 

Big Demand for Condos as Entry Level Homes

Most home buyers in the Toronto area can only hope to own a condo. Homes are averaging over $1.5 million in some areas in the GTA. And condo developments are offering more for tenants. And perhaps the key feature of Toronto condos is their proximity to work, leisure, restaurants and shopping and freedom from the grinding commute that many Torontonians face each day. So there are good reasons to buy a condo in Toronto.

Oddly, the condo market in Toronto is much less volatile than the single housing and townhouse market in Toronto. Her foreign buyer tax and rental price controls look like they’ll miss the mark.

Where are Toronto’s Best Investment Condos?

As the graphic above shows, the top location for investment condos may be Toronto Central (where home prices are highest too), Toronto West and Mississauga. The bulk of these listings are in huge mega-sized condo towers and there are more of them being built. Toronto Central is also close to the U of T, Ryerson, and other colleges where off campus housing is in hot demand.

It’s the same situation for Vancouver condo rental and investors should take note.

Toronto’s C02 district is your million dollar listing area. With an average price of $1,050,000 these are your Toronto luxury condos. This area is located just north of Downtown/Bloor st, near the University of Toronto. This suggests that proximity to U of T and downtown offices may be the primer driver of Toronto condo prices.

What are the Predictions for the Toronto Condo Market?

Is there a market for investment condos in Toronto?  Urbanation says  Toronto condo rental rates will shoot up another 11.2% .  That ridiculous might tell you that condo prices themselves will be rising through 2019 and 2020. The shortage will begin to show and if trade is smooth with the US, prices could rocket.

“The $231 average increase over the past year was the largest ever recorded by Urbanation, with rents having risen by $367 in two years,” — Urbanation

Should I Buy a Condo in Toronto?

Should you buy a condo in Toronto, Mississauga, Scarborough, or Brampton?  As we’ve seen in the Toronto housing report, demand for condos arises from a lack of traditional single detached family homes. Toronto is crowded, and politicians are not saying they will solve the crisis.

That means there likely will be intense pressure on condo availability and prices. For income rental housing and condo as investment for Toronto’s workers, the value seems obvious.

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