Rental demand was also up and investor interest in Toronto’s condo market remained strong as first-time buyers found themselves priced out of the GTA’s low-rise house market.

Susan Pigg – Toronto Star

New condo sales soared back in 2014 from their 2013 slump, with developers across the GTA recording their third-highest level for sales ever, behind the previous highs of 2011 and 2007, according to market research firm Urbanation.

At the same time, construction hoardings came down and lanes of traffic reopened in spots, as a record 20,809 condo units were actually completed, some 86% of which had been pre-sold.

Comment: Which completely destroys the old argument of “Wah, all those new condos are going to flood the market, run for the hills!!!” doesn’t it? And those are built and occupied, once title transfers, another 10% will be sold. The average has been over 98% sold by the time the condo corporations are registered. Which means just over 300 of those 20,809 will not be sold by the time they are registered. Ooh, scary!

Almost 52,500 new condos were under construction in some 198 new projects across the GTA as of the end of 2014, Urbanation said in a year-end report released Monday. An additional 28,447 units are in pre-construction projects that went up for sale last year and are already 69% pre-sold.

Comment: Stop and think about that for a second. Of the condo projects that have yet to start construction, 69% are sold. Of those that are ready to occupy, 86% are sold. And once title is granted to the buyers, 98.5% are sold. If that doesn’t testify to the absolute rock-solidity of the Toronto condo market, I don’t know what will. How about the 17% or so that are rental units, with a vacancy rate around 1% downtown? Sure, people buy them to rent them out, but there is a huge demand for that type of housing. Mortgage rates are not rising, oil prices have nothing to do with Toronto housing price and experts predict another 100,000 people will move to the GTA every year for the next 25 years. Where is the downside in any of that?

Even the resale condo market showed stunning strength, with sales up 14% in 2014 to a record 17,819 units. Resale prices were also up, coming in 3.8% by the end of 2014 over 2013, to an average of $431 per square foot or $389,000.

Comment: I predicted this years ago. As houses become more and more expensive, more buyers will be forced to condos. As the supply of house listings drops almost every month, there is simply no supply to buy and thus buyers are forced to condos. As more and more new condos are built, there are simply more and more of them in the resale market, pushing up the number of sales. This isn’t going to change, people, this is the way things will be from now on.

“After taking a break in 2013, new condo buyers were enticed back into the market as pricing and incentives became more competitive across a greater selection of available units,” said Shaun Hildebrand, Urbanation’s senior vice president, in a statement.

While developers have “cautious optimism” for 2015, fewer new projects are expected to be launched this year, even in the face of lower interest rates and the anticipated strengthening of the Ontario economy as Alberta struggles with the impact of slumping oil prices.

Comment: None of which have anything to do with new condos in Toronto. It depends on what land is for sale, how long it takes for projects to get approval and/or financing. How long it takes to get a sales centre up, to sell xx% of them, etc. Even weather can have an impact, if it slows the completion of one building, a developer may not be able to move crews over to new projects… even frozen ground can make trouble for digging foundations. All of which have a much stronger effect than the price of oil in Alberta.

Rental demand was also up and investor interest in Toronto’s condo market remained strong as first-time buyers found themselves increasingly priced out of the low-rise house market across the GTA.

The average selling price of a new condo reached $560 per square foot across the GTA in the fourth quarter of 2014, the strongest rate of growth recorded in two years and up 3.6% over 2013.

The average opening sale price on new condos in the sought-after downtown core was well above the GTA average, at $716 in 2014. That’s still slightly below the record $725 per square foot recorded in 2012 before the 2013 slump in sales.

Comment: There was no “slump”. Fewer projects meant fewer sales, that is all. If there are fewer new condo project launches in 2015, then sales will be down frim 2014. That does not mean there was a slump, it just means there were fewer condos for people to buy. If there are 25,000 new units offered for sale in one year and 70% of them sell, then there would be 17,500 sales. If, in the next year, there were only 20,000 units for sale but 80% of them sold, then that would be only 16,000 total sales. The pessimist would say that there were 8.6% fewer sales in that year, even though a higher percentage of the available supply sold. Which is really the better year?

A few new trends took hold in 2015, according to Urbanation’s research.

More mid-rise, family-style projects were launched. Some 50 buildings between four and 11 storeys are in active development in the City of Toronto alone. Those buildings accounted for more than 1,000 condo sales in 2014.

Comment: Good, we need these. I have been saying that for years.

Developers also started shifting their focus to construction of more two-bedroom units and the creation of rental apartments, although both trends are in the early stages, Urbanation stressed.

Comment: No no. Developers have had entire projects bought by institutional buyers who want to turn a condo into a rental building. The developer did not suddenly change their mind and change the project. VERY different situations.

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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.
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