Toronto Condo Market
Buyers have regained their interest in buying a condominium in the GTA. Sales are up 11% and condo prices rose 9% during August, year over year. The average Toronto area condo hit $764,742.
It’s been a long frustrating period for condo sales teams, apartment owners and condo rental managers in the GTA but it looks like sales will continue to the rise in both 416 and 905 area codes. As the detached housing market dwindles to almost no listings, buyers who are returning to work in the City of Toronto will have to consider a condo purchase. Rental demand too will drive speculation in condos this year and next.
Last month’s sales volume shows the pandemic fears of high density living are abating and some buyers may be giving up on single detached houses to buy a condo. Q2 sales hit their 3rd highest number of all time.
There were forecasts for a drop in condo prices and sales reductions in late 2021, but with the delay caused by Covid, pent up demand will simply shift forward from this summer into the fall. Many buyers are becoming increasingly desperate to buy a home as the fall work season loom and this will add upward pressure on prices. Sellers may be encouraged to hang on a little longer to get a better price.
2nd quarter condo sales were particularly strong and Delta Variant or not, it looks like Toronto is ready for a return to normal. Condo prices in the GTA fell slightly to a new average of $674,090 (down $9000 vs last month) which is much more affordable than $1,633,649 for a house in Toronto.
Covid infections have been the major force in the Toronto real estate market for more than a year, but Ontario’s vaccination numbers are some of the highest in the world. The latest Covid case counts are alarming, and it’s no doubt resulting in some buyers waiting even longer to commit to buying. This market is waiting for immigrants to return and for International business to resume.
Are condo buyers aware of this, or are they simply jumping on the Toronto condo boom again expecting a nice ride? It’s likely that big corporate investors are behind the sales growth. Overall, sellers are relinquishing their condominiums quickly, some are selling fast for cash. perhaps not sure of what the 2nd half of 2021 will bring. With many Ontario workers having to return to the city, and with immigration expected to make up for lost ground since 2020, vacant condos for sale won’t last. Days on market is down 31% to 13 days.
Experts say young buyers are catching up to the market, and condo prices dropped slightly in July making right now a good time to buy. When the pandemic is crushed, resistance to buying or renting a Toronto condo will ease. For investors, the appreciation and rental income outlook going forward is promising. Condo construction is subdued and will not keep pace in demand. Many young buyers who have been living with parents are still coming back to the market. They may have bigger down payments to aid in their condo quest.
Q2 Toronto Condo Prices and Sales
Growth in prices and sales vs 2020, was astonishing, sales up 155%. The reason? Vaccinations and gradual reopening.
TRREB expects condo prices to rise strongly later in the year. New condo construction is back up to pre-pandemic levels and new condo sales are rising faster this Q!.
“There is no doubt that the condominium apartment segment has improved markedly over the past six months, after lagging the low-rise market segments in the second half of 2020. Consumer polling conducted by Ipsos for TRREB suggested that about 40 per cent of buyers in 2021 would be first-time buyers … we expect further upward movement this year with accelerated migration back to cities and heightened immigration,” said TRREB President Kevin Crigger.
Toronto Condo sales report q1 2021. Screenshot courtesy of TRREB.
Condominium Prices and Sales for Second Quarter of 2021.
This graphic of Toronto GTA region sales reflects slightly weaker prices, yet buyers will see rising prices in the coming big sales season in the 2nd half of 2021.
As the City of Toronto gets back to full business and residents return to their workplaces and as Toronto tourism and immigration resume, Toronto condos are going to be in limited supply once again. Speculators may be snapping them up so buyers need to start their research and contacting a Toronto Realtor to get their bids in before it gets too heated.
“Even with discounted prices, it’s still well above $750,000 for an 800-square-foot condo. I was surprised by how much competition there is,” said Siddiqui, who works for a major Canadian bank and lives in downtown Toronto. She says the only place where she sees inventory and less demand is in smaller condos under 550 square feet. — from Toronto Star post.
New Condo Sales in Toronto
Urbanation reported that new condo sales in the Greater Toronto Area totaled 5,385 units in the first quarter of 2021, which is less than the 5,593 units sold during Q1 of 2020. 2,886 new units were sold in the downtown core which was double the sales in the 2nd and 4th quarters of 2020.
Urbanation also reported the total inventory of condo units under construction across the GTA reached a record 83,497 units in Q1-2021. That was a 10% growth from 76,145 units sold in Q1-2020. The City of Toronto slumped to a lower share of condo sales while the 905 area code increased its market share to a new record high of 32%.
Their survey of newer completed purpose-built rental apartment projects in the GTA since 2005 reported a vacancy rate of 6.6% at the end of Q1-2021. That’s up 5.7% from the last quarter of 2020, yet it is still down 1.1% from one year ago. The City of Toronto saw its vacancy rates increase to 8.8% in Q1-2021 from a revised 7.3% in Q4-2020. Vacancy rates in Toronto one year ago were 1.1%. The market has lots of room to recover.
TRREB reported that apartment rents in Toronto had fallen in Q1. 13,168 condominium apartments were rented via TRREB’s MLS® System during the first quarter and this is an increase 81.6% from Q1 of 2020 when 7,251 rentals ocurred. Condominium rental apartments listings rose 78.8% year over year.
The average 1bedroom condominium apartment rent dropped 16.8% year-over year, from $2,187 last year to $1,820 this quarter. And as well, the average 2 bedroom condominium apartment rent fell 13% year over year, from $2,812. to$2,447 to
Toronto Condo Market Stats
“While the condo market was slower to recover compared to low-rise market segments, many Realtors have noted a marked increase in condo interest since the beginning of 2021. This interest will likely continue to increase as the economy improves and vaccine take-up accelerates, resulting in more confidence for first-time buyers,” said TRREB President Lisa Patel.
Here we see sales growth in the last 4th quarter was beginning.
TREBB hasn’t released the detailed stats for February as yet, but the trends are the same as in December. The fact is, the Toronto real estate market is heating up and this spring could bring huge price gains. CMHC has apparently backtracked on their precious warning about a potential housing market crash. Howeve,r if the economy does falter in 2022, we’ll likely see them reiterating that earlier warning.
Toronto suffers from a severe housing shortage, and the glut of apartment and condo units on the market now, will be bought up and renters will begin to return to Toronto, out of their parent’s houses and shared living situations.
Toronto Condo Rental Market
A big glut of condo rental units came onto the market courtesy of China’s Covid 19 virus. Without condos for sale, we’ll see rental prices rise again, which draw investment buyer’s interest.
“The GTA rental market began to resemble pre-COVID times during the second quarter, which is a testament to a strong foundation of demand that will only grow going forward as immigration recovers, schools and offices reopen, and expensive ownership housing leads to greater levels of renter household formation. While new construction activity is also on the rise, the level of supply underway is expected to lag behind demand, creating conditions for rents to continue rising towards pre-covid levels and beyond in the months to come.” said Shaun Hildebrand, President of Urbanation.
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.
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 2021, 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.
|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%|
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|
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 2021?
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.
Urbanation Condo Report
Urbanation reports that selling prices for new condominium units which launched for presale in 2020 averaged a record $1,063 psf, up 10.3% compared to average selling prices for new launches in 2019 ($964 psf). And average condo selling prices increased 16.9% in the 905 region to $928 psf, while City of Toronto prices grew 10.8% to $1,227 psf.
Urbanation also reported that new condominium apartment sales in the GTA fell 28% during 2020 to 18,247 units, the lowest annual total since 2013 and 15% below the 10-year average (21,421). Sales remained in line with new launches of 18,004 units last year, down from 25,296 launches in 2019.
The 4,642 new condominium units sold in Q4-2020 was 43% less year-over-year and 22% below the 10-year Q4 average (5,960). However, the record third quarter sales brought total units sold during the second half of the year to 11,031 units, above the 10-year average of 10,491 units for 2nd half sales.
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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