Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

Condos in Toronto

I started off selling mainly condos, helping first time buyers get a foothold in the Toronto real estate market. Now working with investors and helping empty nesters find that perfect luxury suite.

Toronto Real Estate

Toronto Real Estate

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Condo demand in Toronto remains high, analysts find

The market has plenty of supply, but immigrants and milennials are seeking the affordability of tower living.

Eric Andrew-Gee – Toronto Star

Two new reports on Toronto real estate suggest the city’s condo boom has staying power, with landed immigrants and millennials propelling continued growth.

Comment: I have been saying it for years. But no one listens to me. I guess I need to issue a report!

“Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line of defence would be immigration and its critical role in supporting demand,” CIBC economist Benjamin Tal writes in a report co-authored with Nick Exarhos.

Comment: And the fact that condos are more than 80% sold by the time you see them start to rise. You can’t be overbuilding if they are selling – some 98.6% by completion. So I guess you could say we are overbuilding by 1.4%. I am not too concerned.

Toronto condo demand
Though that paper doesn’t mention condos specifically, Tal expanded on the subject in an interview. “I think that the condo market is misunderstood; I think that people count cranes and they say, ‘This is crazy,'” he said. “This is a market clearly with a lot of supply, but the demand is there, too … I do believe that new immigrants can add to this demand, and it’s definitely happening.”

Comment: People fear it because they don’t understand it. They don’t know the details. And most of the media perpetuate the myth that it is all about to collapse. No wonder they are concerned.

Tal noted that Ontario’s Greenbelt, which restricts development in a ring around the GTA, has capped the availability of land and restricted the supply of low rise houses in the region.

“The condo market is introducing an element of affordability,” he said. “We’ve basically priced out first-time home buyers in this city.”

“Everybody was going to the suburbs – now the opposite is the case.”

Comment: Exactly! Changing preferences and price pressure are the main reasons. Not so much the greenbelt. Look at Pickering, about to building some 80,000 homes right smack on top of the moraine.

In a separate analysis presented at the Toronto Housing Outlook Conference on Wednesday morning, Canada Mortgage and Housing Corporation analyst Dana Senagama said that relatively inexpensive housing types have received a boost from the influx of young immigrants.

“Condos are the affordable choice,” Senagama said in an interview. “If you’re a new immigrant who settles in Canada, it’s a good entry point to the market.”

Comment: Or just a first time buyer in general.

Some 55,000 condo units are currently under construction in Toronto, way up from years past, but the share of “unabsorbed” units has remained constant, Senagama said. That points to continued strong demand for condos, especially among Millennials.

Some 28% of first-time buyers in the GTA have opted for condominiums so far this year, CMHC figures show, up from 13% in 2004. First-time buyers choosing single-detached houses dropped from 57% to 31% during that time.

Not all glass tower-dwellers are buyers, either, Senagama noted. New immigrants often rent first. “The typical progression is, yes, you have to establish credit history, work history, overall integration into the community, and that will take two to three years” before buying becomes viable, she said.

Still, despite the uptick in condo rental units, vacancy rates hover around 2%. Millennials are helping drive the high occupancy levels, Senagama said.

Comment: Under 2%, actually, more like 1.8%. Vacancy rates haven’t been over 2% in a long time.

“They want to live in the downtown urban centres,” she added. “There’s this growing appetite amongst the mid-20s folks to the mid-30s folks who want this type of living.”

A 1.1% employment spike among 25- to 44-year-olds in the Toronto Census Metropolitan Area this year – a prime condo-buying bracket – could also spur the market, CMHC projects.

Senagama and Tal both expect a slight cooling in the condo market by 2016, when interest rates are expected to rise. But expensive mortgages affect sales of detached houses, too, which could funnel some buyers back into cheaper options.

“Even if rates go up, they’re not going to go up at a rapid pace,” Senagama said.

Comment: IF rates go up.

Nor is overbuilding much of a concern, she added. Of the 55,000 condo units currently under construction in Toronto, some 98% have been pre-sold.

Comment: Exactly. With that level of sales, it is hard to cry “overbuilding” isn’t it?

Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.


Condo demand in Toronto remains high, analysts find
Article Name
Condo demand in Toronto remains high, analysts find
Two new reports on Toronto real estate suggest the city's condo boom has staying power, with landed immigrants and millennials propelling continued growth.