Toronto’s Growing Condo Market
According to new data from the Royal LePage, luxury condo homes are growing in value compared to detached houses with an average of 10.4% increase in prices over the last four months. The Greater Toronto Area (GTA) has experienced declining homes sales in a season that bring in high volumes. The decline is attributed to government interventions, high mortgage rates, and low sales activity.
Sales activity across the GTA has been slowing down as both buyers and sellers adjust to economic measures the federal and provincial governments put in place to cool off the markets after the high experienced in 2017. The government introduced a 15% tax on foreigners buying home prices in the GTA and Golden Horseshoe Area making it harder for foreigners to acquire real estate.
In January 2018, Canada's banking regulator put in stringent measures making it more difficult for buyers to access mortgages. In the wake of all this, luxury condo market has remained consistent considering the effects of the measures implemented. Phil Soper, the President, and CEO of Royal LePage notes the resilience of home values reflect the strong aspirations of luxury buyers to reside and work in cities that are consistently ranking among the most desirable on the planet.
With the increasing prices, the number of luxury detached homes sales fell in the first quarter by 67.9% compared to a 28. 1% decline in the same period in 2017. John Mercer of Toronto’s Real Estate Board attributes this decline to housing bubble Toronto faced last year. The decrease in the luxury detached home sales were modest compared to the same period in 2016 that saw a drop of 18%. When compared to 2016 condo sales, it’s a big jump by 90.6%.
2019 forecasts estimate the average value of a luxury condo will increase by 8 percent, year-over-year to $1.9 million. The goal is to have healthy price appreciation long-term forecast for the GTA real estate market. Toronto area has a growing economy, a great international reputation as a place to live and work but for many years, it has experienced shortages which is the reason why prices are going up.
A demographic shift is happening in Toronto’s housing market. According to Soper, retirees are looking to downsize their homes. People are starting to appreciate the condominium homes that are outpacing the large residential properties like the detached homes. In the GTA area alone 35 condo developments are set to launch this fall. This is a strong indication of how the housing market is shaping for the years to come. With the baby boomers outgrowing their need for large family homes and downsizing to low maintenance homes, condos are the preferred option.
There has been a shift in attitudes when comparing housing types. Condos are seen as entry-level homes, therefore, targeting single detached homes is a luxury. Millennials are moving out of their parents' houses and buying condos of their own. Now parents are being left with a big empty house that is expensive to maintain hence the need to go small in a place with more amenities away from the cities where they have access to parks. These green conscious millennials are looking to own smaller homes that leave a smaller footprint on the environment while still being luxurious.
By Ryan Condominiums.ca contributor