TORONTO, Aug. 19 /CNW/ - Toronto condominium market remains solid despite
the U.S. housing crisis, according to a Report released today by Urbanation
At the end of Q2/08, Toronto's condominium market returned to a more
historically 'normal' level of activity after the 2007 boom. Although supply
and demand indicators still point to a 'seller's' market, both pricing and
sales in 2008 have slowed to a more sustainable level from last year's record
pace, according to the Urbanation Report.
Said Urbanation's Editor and Vice President Jane Renwick, "2007 was an
extraordinarily good year for the Toronto condo market and an extraordinarily
bad year for the U.S. housing market. The continuing health and resilience of
the Toronto CMA real estate market in Q2/08 is good news for buyers and
The relative financial conservatism of Canadian buyers (reinforced by the
recent withdrawal by Canadian financial institutions of U.S.-style low-deposit
and 40-year amortization periods) has significantly reduced the chance of a
real estate meltdown in Ontario, especially in Toronto.
That conservatism also means that cooler heads have prevailed in the CMA
after the excitement of 2007's record year, leaving Toronto with the prospect
of a strong, 'normal' 2008 in the high-rise condominium market.
According to Urbanation's Report, 147 condo projects are currently under
construction in the CMA and 38 new projects were launched to the market in
Q2/08. "Yet, it's still a 'seller's' market in terms of sales absorptions,"
added Ms. Renwick.
The Second Quarter's total condo unit sales were healthy, at 4,962, but
average sales per project were down significantly over 2007, as the Toronto
condo market has grown by 20 per cent to a record breaking 295 projects,
representing 66,310 units and 151 developers.
Added Ms. Renwick, "Absorbing 2008's condo unit production will take
time. However, the fact that prices have remained relatively stable again this
quarter, averaging $396 price per sq. ft. (psf) compared to $388 psf in Q1/08
and $371 psf in Q2/07 is very positive for the overall market. This stability
suggests that a correction is unwarranted because overall price has stayed in
line with value.
"Toronto condos still hold their value for consumers," said Ms. Renwick.
"Low interest rates, low inflation and continuing consumer demand from first
time, second time and move down buyers underlie the continuing strength of the
Ironically, problems for the condo market going forward may be caused by
supply and supply constraints, specifically in the areas of financing,
construction costs and land prices, rather than any cooling of buyers' love
affair with their homes in the sky.
Construction financing is proving to be more difficult and more expensive
to attain, while Toronto's taller, denser buildings and multi-phased
developments mean larger loans for longer periods of time.
Rising construction costs are also a concern. The Toronto construction
industry has been operating at or beyond full capacity for some time now, and
annual material and labour cost increases have been in the double digits.
Finally, the recent escalation in land prices, specifically grade 'A'
sites in the former City of Toronto, appear to be outpacing index prices. The
Toronto CMA condominium market is built on affordability, but the Urbanation
Report questions whether developers will still be able to bring affordably
priced condominium units to the market given the combined effect of these
"A return to a more 'normal', balanced market is ultimately the goal. A
greater acceptance of condominium living both from first and second time
buyers and empty nesters; relative affordability compared to low rise housing
in better locations; and, historically low interest rates and growing
household wealth, which encourages home ownership, all contribute to
Urbanation's positive long term outlook for the Toronto CMA condominium
market," Ms. Renwick added.
Urbanation is Canada's leading condominium market research company. Since
1981, Urbanation has analyzed the Toronto condominium market, publishing the
"industry bible" - Urbanation's Condominium Market Survey. This quarterly
Report tracks new, resale and future condominium projects. Urbanation also
provides the development community with essential consulting services, which
include site specific market studies, surveys and focus groups.
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