Condos alone withstood housing correction, RE/MAX says

By TESS KALINOWSKIReal Estate ReporterTues., Nov. 13, 2018

Condos represent more than a third of residential property sales in the Toronto area so far this year, accounting for about 25,000 sales or 36.7 per cent of real estate transactions between January and October this year.

That is up from 30.1 per cent in the same period five years ago, including both new and resale units.

It is the only housing market segment that maintained its upward momentum through the 2017 market correction, according to a report from Re/MAX released on Tuesday. The average price of a condo apartment rose about 8 per cent or about $40,000 year over year in the period between January and October — to $551,761, from $512,552.

Condo townhome prices remained essentially flat in the same period, says the report.

The success of condos is largely a function of the region’s affordability challenges, said Christopher Alexander, Re/MAX Ontario-Atlantic Region executive vice-president.

Most of the growth in condos has come in the last two years with the largest jump of nearly four percentage points occurring between 2016 and 2017. Before that, he said, “There wasn’t a lot of inventory and there wasn’t a lot of price appreciation.”

Although condos have gone mainstream, they are still a compromise for a lot of buyers, who would prefer to own a house, Alexander said.

“You look to an area where you’d love to buy a home but a condo is 30 or 40 per cent less. You can still be in the neighbourhood you want, just in a lot less space,” he said. “Affordability really propelled the condo market in both market share and just it really carried the resale market in the last year and a half.”

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Higher downtown Toronto condo prices are pushing some buyers, including first-timers, to areas outside the core. About 10 per cent of resale condo transactions were near the Yonge St. corridor north of Hwy. 401 and along the Sheppard subway between Bayview Ave. and Leslie St., says the report.

Buyers such as Cherry Qin, who studied actuarial science in Waterloo, Ont., and is now looking for a full-time job in Toronto, said it makes sense to buy a condo rather than paying the high rents the city demands.

Given that rent is costing about $2,700 a month, “I think it’s more reasonable to get a house,” she said.

The “house” Qin bought is a two-bedroom-plus den that is close to transit, relatively quiet compared to downtown locations and has amenities, including a pet grooming station.

But downtown Toronto remains the hottest condo market, says the report, with one in five sales occurring in an area bounded by Bloor St. and Lake Ontario to the north and south, and the Don Valley Pkwy. and just past Dovercourt Rd. to the east and west.

Fourteen per cent of Toronto region sales this year have been in Mississauga thanks in part to teeming development there, said Alexander, who cited the M-City project near the Square One mall, which is expected to house about 10,000 people when it is completely built.

Half of GTA condos are priced under $500,000, says the report, which notes that the number of condo sales fell 14 per cent in the 10-month study period this year, when compared to the same time frame last year. A shortage of inventory is a factor, Alexander said.

A report from Altus Group, which tracks new construction home sales and prices, on Monday, said traditional (non-stacked) townhouse sales have plunged in the Toronto area in the last two years, to just 7 per cent of the total new home in the first half of this year. Stacked towns, lowrise homes with upstairs and downstairs units, are a “niche market” accounting for one in five townhouse sales.