Toronto Condo Market Report – Update and Forecast

Toronto Condo Market Report – Update and Forecast

Toronto Condo Market Update and Predictions 2019 2020

Not too many experts are sticking their necks out on predictions of the Toronto condo market. The political, trade, and demographic factors are complex.

However, with listings diminishing, we should at least see a repeat of this year in 2019. If trade issues are resolved, Toronto economy would boom again in response to the US economic boom.

New condo construction starts are at a record pace, so there is supply coming and it might be the opportunity investors are hoping for. In fact most new construction units are investor owned, according to a CBC report, although many of them are cash flow negative. That may deter some rental investors in 2019.

Commentators have said that as the US goes, so goes Canada. They believe there is no dire situation here. If you’re just checking out Toronto condo prices, you’ll find the monthly chart down below.




The Toronto housing market will continue to be overshadowed by severe detached house supply shortages, stagnant sales, and ultra-high prices. The Toronto condo market in Toronto is a slightly healthier one, although as the latest stats reveal, resale and new condo listings are drying up. Look for rents to continue their relentless rise until new construction fills the void by 2023.

New condominium project registrations or units recently completed – a strong source of new rental supply — plummeted by 28 per cent to 3,264 units — Urbanation.

Some are called Toronto’s housing healthy and balanced, while others say that’s a bad joke. One thing for sure, whether it’s townhouses, apartments, condos or houses, demand is heating up Toronto’s apartment and condo rental prices.

Insatiable Demand

What’s so interesting about Toronto’s market is that even though governments have been doing everything possible to dash buyers homebuying dreams, buyers persist in trying to buy a home. Without homes to purchase, they’re settling for condos. But so are property investors. And money to buy condos is coming from foreign lenders, however buyers are Canadian, not foreign as commonly believed.

Currently the condo market is driven by first time buyers, however with high consumer debt, rising interest rates, and tighter mortgage lending rules along with NAFTA trade concerns, this demand may not last.




Toronto Condo Sales 2nd Quarter 2018

According to TREB, average selling price for condominium apartments in Toronto from April through June rose 5.4% from last year  to $561,338. Within the city of Toronto, prices rose 6.5% to an average price of $603,480.

That is robust demand and price growth in what is not a strong Toronto housing market.

Listings down and sales down. Condominium apartment sales dropped 16.5% in the 2nd quarter of 2018 compared to the same period on 2017.

This last spring, Toronto condo prices rose 9% year over year while sales plummeted a staggering 29.7% YoY. New condo listings in the GTA dropped 11.1%.

 

Strong demand relative to supply will see this segment perform well from a pricing standpoint for the remainder of 2018 and beyond,” said Jason Mercer, TREB’s Director of Market Analysis in Spring report.

Sales of condos particularly in the under $500k market are rising and prices have risen as well. The latest Toronto condo market sales report for the 2nd quarter from TREB has been released. While TREB doesn’t publish stats on the condo market specifically much anymore, you can see the averages for each district below.

Toronto Central, Milton, Oakville, and Peel region continue to enjoy strong market demand while other areas have seen a decline in price since last fall.

 

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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.

Condo construction has been brisk, but hasn’t kept up with immigration and Millennial aged buyer demand, nor has compensated for a severe lack of detached homes. Screen capture courtesy of Betterdwelling.ca




New Construction Condo Sales and Prices

BILD reported 1,960 total new home sales in March which includes 1,649 condominium apartments sold in low, medium and high-rise buildings, stacked townhouses and loft units. That is down 67% from March 2017.

Incredibly, the benchmark price for new condominium apartments rose 39.4% to  $742,800 above last March prices.




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 condomium 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.

Toronto Condo Rental Market

As you know in markets such as Florida or California, condo rental markets are hot. The ROI is significant and rental property investment is always a hot ticket in markets with perpetual low housing availability. The Toronto condo rental market is worth a look.

 




Toronto Rents Are About to Rise

A report from BNN shows how rental income properties, including condos in Toronto. See where the big rents are.

Why are Toronto Condos such a Draw?

Toronto Condos offer higher cap rates and a larger growing pool of potential renters and buyers. And at this point with severe shortages of detached houses and townhouses, buyers are buying condos. Barry Fenton, President & CEO of Lanterra Developments, a major condo developer suggested Toronto Condo prices could could have risen 40% and they still are rising.

When foreign investors look to escape their own country’s currency nightmares and leverage our weak loonie, they like the Toronto market. Note: If you’re a foreign real estate investor, people often refer to Toronto as being the greater Toronto area encompassing Oakville, Mississauga, Vaughan, Richmond Hill, Scarborough, East York, Pickering and even out to Oshawa. The Newmarket, Bradford, and Aurora regions are included in TREB’s housing sales reports.

Toronto GTA Condo Prices

Toronto Condo Market Price Chart

Area Toronto Condo Prices June (2nd Qtr) Toronto Condo Prices March 2018 Toronto Condo Prices October 2017 Toronto Condo Prices Sept 2017 Toronto Condo Prices August 2017 March 2012 Price Change over Last 27 months
City of Toronto $603,480 $651,100 $555,004 $554,069 $550,299 $361,800 40.0%
Toronto West $496,025 $494,400 $446,794 $450,485 $434,218 $286,366 42.3%
Toronto Central $671,109 $656,000 $620,322 $615,654 $615,680 $422,396 37.1%
Toronto East $436,063 $411,000 $407,775 $395,859 $403,028 $237,909 45.4%
Halton Region $513,275 $465,300 $478,611 $519,348 $528,579 $442,625 13.8%
Burlington $458,536 $520,300 $553,029 $514,755 $476,222 $370,667 19.2%
Halton Hills $449,800 $486,300 $516,450 $294,500 $446,971
Milton $438,020 $432,000 $413,808 $418,219 $427,594
Oakville $590,903 $442,100 $419,438 $606,131 $523,507 $485,800 17.8%
Peel Region $419,790 $423,600 $389,587 $385,588 $395,188 $433,780 -3.3%
Brampton $364,176 $360,000 $354,618 $336,091 $350,401 $351,500 3.5%
Mississauga $430,749 $435,000 $395,683 $393,441 $402,344 $453,250 -5.2%
York Region $492,517 $507,000 $495,973 $481,138 $500,456 $537,903 -9.2%
Aurora $423,099 $477,000 $608,750 $562,500 $685,874 $525,000 -24.1%
Markham $483,883 $509,000 $503,796 $486,369 $503,455 $527,518 -9.0%
Newmarket $436,344 $536,000 $416,260 $444,250 $400,340
Richmond Hill $457,048 $475,400 $452,319 $446,505 $470,076 $596,667 -30.5%
Vaughan $544,685 $531,000 $532,144 $513,618 $521,400 $554,211 -1.7%
Durham Region $400,182 $407,800 $399,687 $365,297 $376,250 $274,350 31.4%
Ajax $372,583 $396,000 $337,317 $397,125 $379,431 $281,688 24.4%
Oshawa $379,522 $358,000 $302,333 $226,347 $315,075 $210,667 44.5%
Pickering $442,504 $501,000 $448,036 $384,300 $402,316 $340,667 23.0%
Whitby $439,000 $410,000 $448,036 $395,633 $457,143 $294,350 32.9%

The Toronto Real Estate Board covers a huge area and below we’ll zero in on communities that may represent the best ones for you to research.




Barry Fenton, President & CEO at Lanterra Developments joins BNN to discuss the Toronto Condo market. He suggests the market is aggressively priced and complains a little about how competitive it is. He says prices will rise 40% but he has a few misgivings about the Toronto Condo market.




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.

Lets’ take a look at the most recent Toronto condo market prices and then look onward to 2018, 2018, 2019 and 2020. This blurb from the latest TREB condo market report says it all about what’s happening right now in April of 2017:

 

What else is supporting condo sales is proximity to work. Commute times are awful, gas prices are very high, and young millennials are having trouble handling rent/mortgage/ and car payments. Something has to give, so workers are choosing to move into the city near their workplaces.

Spring 2018 Condo Market Update

Where are Toronto’s Best Investment Condos?

As the graphic above shows, the top location is 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?

Urbanation says  Toronto condo rental rates will shoot up another 11.2% .  That ridiculous might tell you that condo prices themselves will be rising in 2019 and 2020. The shortage will begin to show and if a trade agreemen is reached 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

 

Spring 2017 Condo Market Update

Screen cap courtesy of the Toronto Real Estate Board. See more at trebhome.com

Should I Buy a Condo in Toronto?

Should you buy a condo in Toronto, Mississauga, Scarborough, or Brampton?  Demand for condo purchases is rising, the Toronto economy is strong and positive, and rents are rising fast.  At some point, you have to jump in, or you’ll never build homeowner equity.

What to Consider Before you Buy a Condo

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1 Comment
  • ru crowder
    Posted at 10:40h, 20 May Reply

    All the rent controls are making it impossible for small landlords to break even. Now the tenants are trying to take away the landlord right to ask for capital expenditure rent raises. How can we protect ourselves as landlords.

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