Once seen as a cheap and in some ways inferior form of residential housing, Toronto’s condominium market appears to have come of age, with buyer and renter demand pushing available inventory to an almost record low. Thus, industry pundits are confident in predicting a significant increase in new construction to meet demand, as well as a steady rise in pricing this year.
Unsold condo inventory within the Greater Toronto Area by the end of 2016 amounted to 9,932 units, reflecting a 47 percent drop from the year before, notes research firm Urbanation Inc. This unsold inventory equates to 4.4 months of supply versus the general historic yardstick of 10 months supply, the research firm observes.
Last year also saw a 34 percent jump year-on-year in condos sold across the GTA. That said, Urbanation expects a reduction in sales this year due to a lack of existing stock. “The new condo market is experiencing broad-based demand that will carry forward into 2017,” says Shaun Hildebrand, senior VP at Urbanation.
This prediction is backed up by a PriceWaterhouseCoopers report “Emerging Trends in Canadian Real Estate 2017”, which notes that Toronto’s condominium inventory has hit a ten year low. “…Demand remains strong, so respondents [those industry participants surveyed for the report] expect to see more high-rise multi-residential projects enter the pipeline in the years ahead.”
Notably, the benchmark price of a condo in the GTA rose to $381,500 by the end of December 2016, showing a 15.2 percent gain on the same period the year prior, according to the Toronto Real Estate Board (TREB).
Furthermore, Urbanation’s research shows a closing gap between resale pricing of houses versus condos across the GTA. The year-on-year increase of the average home resale price for 2016 came in 17.3 percent higher compared with a 15 percent gain in condo pricing.
Rental demand for condos in Toronto have also remained strong, with the average rent having climbed by 11.7 percent in the fourth quarter of 2016 compared with the same period the year before, according to Urbanation research.
“For the first time in many years, the market was tighter  for condominiums than single-detached homes,” comments the Canadian Mortgage and Housing Corp. (CMHC).
If resale pricing is anything to go by, the luxury condo market appears to be particularly attractive. According to Re/Max, condos priced at over $2 million within Toronto notched up a remarkable 42 percent year-on-year price increase for 2016. Re/Max largely attributes this to an aging “baby-boomer” demographic in that older people relieved of family responsibilities are looking to downgrade size without losing comfort.
Sam Mizrahi, president and founder of Mizrahi Developments, believes the influx of immigrants to Canada is also driving growth in the luxury condo segment. For a long time Toronto did not have a “luxury condo market” that would match the needs of a sophisticated homeowner. “But, Toronto has become an international city. We’ve got immigration from around the world, and with that is a very sophisticated homeowner who has lived in Asia and Europe and the Middle East and has seen old-world timeless architecture. They know what luxury is,” Sam Mizrahi adds.
Just what is a luxury condo? Price? No, says Mizrahi, “Luxury is giving the homeowner something beyond their expectations…It’s creating the ‘wow factor’.” Mizrahi compares the luxury condo market to amenities of a five-star hotel: “From hardwood to walling, soundproofing, home automation systems to 24/7 concierge and security services. The “wow” factor also extends to communal areas of the building as well, such as lobbies, hallways and how elevators are kept,” he notes.
Sam Mizrahi recently sold all of the units in his latest luxury condominium complex, 128 Hazelton, located in Toronto’s high-end Yorkville neighbourhood. The main attraction to this nine-story boutique building is that buyers can choose the amount of space they require based on a price per square metre.
Overall, several outside factors could have significant impact on Toronto’s condo market at all segments. The two prime factors industry pundits point to is whether demand for high-rise housing will be boosted by new immigration and the value of the Canadian dollar – a lower dollar presents more attractive pricing for foreign investors.