Housing Market and Stock Market Forecasts

Toronto Condo Market Report – Update and Forecast

Toronto Condo Market Forecast

March 21, 2020. 2019 was another great year for the Toronto housing market and for condo sales in Metro Toronto.  However, as you well know, the Corona Virus shutdown is producing what might be described as a temporary market crash.

60 Cent Loonie coming?

With oil prices, Covid 19 returns, and global recession talk, we can never be 100% sure of the housing markets.

The conditions in Toronto however, are much different from other cities such as Calgary, Edmonton, St Johns, Dallas and Houston. The plummeting price of oil is flattening those housing markets. In Toronto’s case, a severe shortage of homes and condo apartment rentals will mean something more would be needed to take the Toronto real estate market down.

TRREB February Summary. Chart Courtesy of the Toronto Real Estate Board.

The Toronto Economy Could Boom in July

The CAD vs US exchange rate is very favorable to sellers and foreign buyers who has US dollars. And for buyers, ultra-low mortgage rates are making buying much easier if they can find an affordably priced condo.

This chart from Zolo say everything about the GTA condo market. Not as steep as the single detached market, but because buyers should be more aggressive in the second half and in 2021, prices could rocket.

Zolo Condo Toronto Price History. Chart courtesy of Zolo.ca

For foreign buyers with US dollars, Toronto real estate has never been cheaper and the upside never greater. February’s condo apartment prices rose again in February in most TREB districts.

As discussed in the US housing market report, buyers will come back out after the Covid shutdown like caged animals on release. With oil prices so low, ultra low mortgage rates, low inflation, stimulus spending, and huge latent demand from the shutdown, the bounce back will be extraordinary.

Chart Courtesy of TRREB.

Return of a Roaring US Economy

And when the US economy roars, Toronto’s economy purrs.  With oil price forecast predicting continued low prices, even dropping as low as $5 a barrel, the international business for Ontario and Canadian companies is unparalleled.  These could be very good times for the Toronto housing market ahead. Realtors should be very happy as long as they can find sellers which they’ll do through marketing excellence.

Chart courtesy of TRREB

Serious condo buyers will be on the hunt for new or resale condos in the 3rd and 4th quarters Toronto in 2020. As this chart reveals, they’re likely to find very limited supply and soaring condo prices.  You can see the strong price appreciation in the charts below.

Some are happy with the low mortgage rates, high construction releases, and Corona Virus deflation factor because it opens up availability and affordability.

Some real estate experts fear strong price deceleration and a bursting housing bubble. For now, due to supply issues, the forecast for the summer ahead is still for rising rents and condo prices in Toronto in 2020, if the Corona Virus pandemic is abated. So far the stock markets are worried but Toronto employment should come back strong.

With few single detached homes in the affordable range within the Toronto housing market, most buyers will heading to Toronto’s condo market for an investment condo or a place to call home. All signs to point to much higher prices this summer.

New Condo Construction Data

Good news for prospective condo buyers: Bild most recent report shows January’s new condo construction sales were up in January. They reported 1,100 new condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units. This is a rise of 33% from January 2019 which is 12% above the 10-year average.

Of course, 300 more units is a drop in the bucket for a huge housing market such as Toronto. And there’s no word really on whether condos are at the right price point and in the right location.

January New Condo Sales in Toronto. Screenshot courtesy of globenewswire.com

TRREB continues urging politicians to ease up on restrictive building policies and their lack of support for housing development. Demand is far outstripping supply even at unrealistic price points. Despite that, in Toronto, buyers are increasingly confident of their buying intent, and that somewhere, the perfect condo is available.

TRREB’s Market Outlook for 2020

In its recent press statement TRREB forecasts: “Strong underlying demand drivers should see home sales crest the 90,000 mark in 2020, with a point forecast of 97,000 – up by almost 10.5 per cent compared to 87,825 sales reported in 2019.  Sales growth will be driven by the higher density low-rise market segments (semi-detached houses and town houses) and the condominium apartment segment. These home types are more affordable, on average, and will remain popular as the OSFI mortgage stress test, although under review by the federal government, appears to be remaining in place for the foreseeable future.”  from Globe Newswire release.

TRREB’s Quarter 4 Condo Sales Report

Toronto Real Estate Board reported 5,367 condominium apartments were sold in the last quarter of 2019. That’s 3.8% better than the 4th quarter of 2018.

Whether resale or new condominium apartment listings, supply is the big issue. Condo listings dropped 11.9% on a year-over-year basis when comparing to Q4 2018.

The average price of a condominium apartment rose 10.4% (from $558,733 in Q4 2018 to $616,591 in Q4 2019). Condo sales in the City of Toronto accounted for 71% of GTA transactions, rose 10.3% generating an average price of $660,379.

Toronto Condominium Sales Stats January 2020. Screenshot courtesy of the Toronto Real Estate Board

In January 2020, sales of townhouses in Toronto grew 15.9% to 782 units, while condo apartment sales rose 8.35 to 1335 units. Average price of townhouses rose 8% to $693,845, while condo apartments saw a 15.1% rise to $630,047 from December’s numbers.

The newest report on new home sales shows York region is particularly hot with Toronto surprisingly second. Halton appears to flatlining while growth in Durham and Peel is good. Inventory of new homes has risen 4% while new condo listings alone have rise 12.2%. This is the strongest performance in the last 3 years.

As you can see in TREB’s condo apartment sales report for January, the median price of a condo in the GTA is $557,000 and in the city of Toronto, just slightly higher at $591,000. The affordable cities are Newmarket, Oshawa, and Burlington. However, available listings are squeezed.

Summary of Toronto Condo Apartment Sales in January 2020. Screen shot courtesy of the Toronto Real Estate Board.


The Rich are Fleeing Hong Kong

China’s communist leader’s oppressive action in Hong Kong won’t stop. For that reason, they’re getting out and Canada is a welcoming country. They’ll bring their money with them and buy real estate, including housing for their kids studying here.

They’re smart buyers even if they over pay for condos and houses in Vancouver. But Vancouver’s full and that money will find its way to Toronto. Hong Kong buyers don’t pay much heed to Canadian media propaganda.  If Toronto realtors get smart, they can access the Hong Kong procession.

With all economic signals positive, there’s no reason to believe condos will be getting cheap anytime soon in Toronto. Condos in the 905 area code hit an all time high recently. What’s coming will be hard for southern Ontario’s renters and buyer hopefuls.

Condo Demand Impervious To Government Restrictions

Regardless of what regulatory blockades politicians put on condo development in the GTA, or use of government long term housing initiatives, or mortgage restrictions, Toronto region buyers are confident about their possibilities.

Toronto’s economic situation looks good, but recent news suggest Canada’s economy may flatline. This might moderate demand for condos and curtail new construction. In a construction unfriendly zone, few investors would be willing to commit billions to new condo construction.

As Toronto’s urban millennials attempt to flee the city with their new families, they’ll find little affordable in York Region, Mississauga, Halton, Peel, or Durham regions.  They’ll be looking at more condos, such as those being built in the new city in Innisfil. There’s nowhere to go in the GTA region.

Here’s a chart showing the progression in Toronto Condo Prices in February to back 8 years ago. In some regions, prices have risen over 50% in the last 8 years.

Toronto Condo Market Price Chart
Area Toronto Condo Prices February 2020 Toronto Condo Prices November 2019 Toronto Condo Prices March 2018 Toronto Condo Prices August 2017 March 2012 Price Change over 8 years
City of Toronto $666,358 $659,855 $651,100 $550,299 $361,800 45.7%
Toronto West $612,453 $580,616 $494,400 $434,218 $286,366 53.2%
Toronto Central $805,982 $723,398 $656,000 $615,680 $422,396 47.6%
Toronto East $525,756 $491,626 $411,000 $403,028 $237,909 54.7%
Halton Region $531,706 $522,795 $465,300 $528,579 $442,625 16.8%
Burlington $510,174 $494,802 $520,300 $476,222 $370,667 27.3%
Halton Hills $507,400 $469,667 $486,300 $446,971
Milton $533,600 $502,667 $432,000 $427,594
Oakville $556,871 $572,066 $442,100 $523,507 $485,800 12.8%
Peel Region $528,851 $494,852 $423,600 $395,188 $433,780 18.0%
Brampton $445,420 $424,987 $360,000 $350,401 $351,500 21.1%
Mississauga $547,524 $513,566 $435,000 $402,344 $453,250 17.2%
York Region $584,451 $556,203 $507,000 $500,456 $537,903 8.0%
Aurora $519,167 $506,325 $477,000 $685,874 $525,000 -1.1%
Markham $592,115 $600,954 $509,000 $503,455 $527,518 10.9%
Newmarket $475,111 $420,214 $536,000 $400,340
Richmond Hill $555,734 $504,187 $475,400 $470,076 $596,667 -7.4%
Vaughan $627,684 $595,726 $531,000 $521,400 $554,211 11.7%
Durham Region $442,154 $524,450 $407,800 $376,250 $274,350 38.0%
Ajax $409,750 $441,113 $396,000 $379,431 $281,688 31.3%
Oshawa $310,100 $267,408 $358,000 $315,075 $210,667 32.1%
Pickering $534,654 $460,784 $501,000 $402,316 $340,667 36.3%
Whitby $472,053 $441,467 $410,000 $457,143 $294,350 37.6%

City Of Toronto Condo Prices

Compared to the peak, condo prices in some districts is down considerably. Lots of upside for higher prices later this year.

TREB District City of Toronto Avg Price February 2020 Avg Price August 2018 Avg Price November 2017 Average Price April 2016 Price Change Since March 2017
Toronto W01 $1,126,333 $1,527,178 $1,269,500 $1,405,442 -20%
Toronto W02 $1,219,137 $1,291,146 $1,256,500 $1,331,780 -8%
Toronto W03 $904,551 $769,639 $774,021 $666,904 36%
Toronto W04 $816,226 $863,846 $819,469 $786,951 4%
Toronto W05 $636,666 $835,118 $800,063 $749,333 -15%
Toronto W06 $821,347 $1,080,539 $914,017 $795,840 3%
Toronto W07 $1,487,111 $1,102,601 $1,086,386 $1,112,233 34%
Toronto W08 $909,547 $1,439,304 $1,378,995 $1,204,013 -24%
Toronto W09 $813,362 $981,972 $886,872 $839,479 -3%
Toronto W10 $620,795 $746,907 $691,261 $613,488 1%
Toronto C01 $890,335 $1,661,600 $1,597,750 $1,528,085 -42%
Toronto C02 $1,711,636 $2,900,875 $2,109,010 $1,580,181 8%
Toronto C03 $1,332,572 $2,302,956 $2,327,333 $1,761,787 -24%
Toronto C04 $2,057,487 $2,265,493 $2,204,173 $2,033,140 1%
Toronto C06 $1,099,083 $1,316,250 $1,293,688 $1,318,750 -17%
Toronto C07 $1,081,867 $1,601,680 $1,609,066 $1,657,822 -35%
Toronto C09 $1,748,221 $3,153,333 $3,538,371 $2,998,401 -42%
Toronto C10 $1,223,586 $1,348,333 $1,856,406 $1,864,333 -34%
Toronto C11 $1,090,923 $1,730,650 $2,344,375 $1,542,867 -29%
Toronto C12 $2,423,824 $3,921,393 $3,729,125 $3,141,244 -23%
Toronto C13 $1,050,883 $2,085,556 $1,342,464 $1,926,266 -45%
Toronto C14 $1,089,039 $2,140,941 $2,235,856 $1,996,137 -45%
Toronto C15 $827,503 $1,700,385 $1,587,250 $1,766,219 -53%
Toronto E01 $1,155,904 $1,213,600 $1,102,667 $1,164,343 -1%
Toronto E02 $1,224,341 $1,498,600 $1,457,515 $1,333,475 -8%
Toronto E03 $1,083,049 $1,068,716 $913,430 $947,611 14%
Toronto E04 $757,448 $773,338 $777,377 $717,890 6%
Toronto E05 $798,142 $940,400 $899,419 $991,136 -19%
Toronto E06 $844,270 $926,850 $822,917 $766,782 10%
Toronto E07 $639,461 $914,842 $911,018 $874,280 -27%
Toronto E08 $748,926 $966,582 $930,974 $810,560 -8%
Toronto E09 $695,431 $741,992 $714,451 $664,378 5%
Toronto E10 $840,530 $886,408 $821,381 $821,126 2%
Toronto E11 $617,348 $807,083 794,238 $720,672 -14%

Zoocasa’s recent report shows prices of condos in some Toronto neighborhoods have grown at phenomenal rates. In Scarborough’s Scarborough Village and West Hill, prices are up 147% in the last 5 years.

Should You Buy a Toronto Condo in 2020?

The price of a median home in Toronto is predicted to rise above $1 million soon.  Few buyers will be buying at those prices. Which means, as usual, they’ll be buying new construction and existing condos.  That will put big price pressure on condo sales. Buyers will not be liking what’s coming to the Toronto condo market in 2020 or the next 5 years.

Although few economists will admit it, the next 4 years look bright for our top trading partner south of the border.  And that economic forecast will spill over into Canada.  We won’t see a true recession until 2025.

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

Urbanation Condo Report

Urbanation in their recent report says last year’s new condo sales were the third highest in Toronto’s history.

They reported new condo apartment sales in the GTA grew by 27% in 2019 to a total of 25,097 units.  Sales grew fast in last few months of the year.  8,044 new condo units were sold in Q4-2019. That was 38% higher than the same period in 2018 nearly a record.

75% of the 23,953 units built by developers in 2019 were sold.  That was 12% more than in 2018.  The averaging per foot selling price of $967 was almost 5% more than 2018.

Urbanation says unsold inventory at year-end declined by 4.8% to 13,373 units. That’s well below the usual inventory of 15,907.   New condo inventory fell to 6.4 months of supply — substantially below what is considered to be a balanced level of 10 months. Prices rose 9% to a record high $1,073 psf effectively leading to a doubling of new condo prices over the past 10 years.

“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.

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.

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?  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.  But Canada’s trade agreement with the US is good and after the Corona Virus Scare is over, the economy will roar again.

Build To Rent Market

Toronto’s rental condo market has seen the strongest surge in building since the 1970’s. In a Toronto Star report, Urbanaton reported that 12,367 apartments were built at the end of 2019. To put it in perspective, there were only 18,602 units built during all of the 1980s and 1990s.

And there was a 43% yearly increase in the number of development applications for purpose-built rentals in 2019. This may add another 17,082 units to the housing supply.  69,564 apartments were under construction or proposed for development at the end of 2019.  They add that it could take many years before those condos are occupied. So for now higher rents and intense competition for stressed out renters is the rule.

According to padmapper.com, the average rent in Toronto is now $2300 per month, almost $200 higher than congested Vancouver.

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.


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