Home Business Toronto Condo Sales Are Unusually Weak, Investors Capture A Larger Share

Toronto Condo Sales Are Unusually Weak, Investors Capture A Larger Share

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The downturn in the Greater Toronto real estate market has had limited impact on the condominium market. This was the view shared in the condominium market report. Toronto Area Real Estate Commission (TRREB). In general, prices are relatively stable due to reduced inventories and higher interest rates. And while the market is significantly more supplied than it was pre-pandemic, investors are gaining a much larger stake.

Greater Toronto condo prices are flat, no matter how they are measured

Condo sales prices in Greater Toronto have remained flat over the past year. This is better than other segments. The Q4 2022 average selling price fell to $710,500, down 1.3% (-$9,600) from the previous quarter. However, when compared to last year, there has been virtually no change. It’s only a few dollars cheaper.

Greater Toronto condo price gains are cooling off

Average selling price for condos in Greater Toronto.

Source: TRREB; Better Housing.

Benchmark prices with low volatility also showed a sideways move across TRREB. Condo benchmarks fell to $703,000 in December, again virtually unchanged, down a few dollars. It wasn’t the boom many were hoping for, but at the same time prices are better than single-family homes.

Toronto condos record worst fourth quarter sales ever

Pricing hasn’t changed much, but sales of condos in Greater Toronto have softened. Only 3,572 condos were sold in Q4 2022, down 54.1% year-on-year. It was the weakest quarterly volume going back at least a decade ago.

Greater Toronto condos report worst fourth quarter sales in at least a decade

Number of Greater Toronto condominium units sold through MLS in the fourth quarter.

Source: TRREB; Better Housing.

Toronto condo inventory stronger than pre-pandemic

At the same time, inventory pressures are beginning to ease. There were 7,509 new condo listings in Q4 2022, down 14.3% year over year. Even though volumes fell, there was less decline than sales, which eased inventory pressure.The same quarter in 2019 or 2018 saw many more new listings.

The active list, the list remaining at the end of the period, has also improved significantly. There were 3,430 active listings in Q4 2022, a 130.5% increase from the previous year. It was also more than double the volume in the same quarter in 2019, when sales volumes dropped significantly. In short, all signs point to this market being more well-supplied to buyers than it was pre-pandemic, despite prices being much higher.

Greater Toronto Condo Inventory Is Improving

Number of active listings for Greater Toronto condos in Q4.

Source: TRREB; Better Housing.

Board believes balanced market will provide condo price resilience

The Board believes the relative resilience of condo prices lies in a more balanced market. They explained that there is more demand because the segment is more affordable.

“So it makes sense that we haven’t seen the same type of price adjustment in the face of higher borrowing costs compared to other more expensive segments like single-family homes,” said Toronto Area Real Estate. Commission (TRREB) President Paul Baron said. .

What kind of demand is bringing this market to a standstill again? Well, investors are a big part of it.

Toronto condos are being scooped up by investors, and vacancies are better than pre-pandemic

TRREB shared CMHC data showing a surge in share of investor-owned condos. An estimated 37.7% of Toronto City condos were rental units in Q4 2022. This is a significant increase from the 33.4% reported in the same quarter of 2021. New condo construction (58.7%) is investor owned in Greater Toronto..

Investors capture record share of Toronto condo market

Share of City of Toronto Condos for Rent.

Source: TRREB; CMHC; Better Housing.

There is good news and bad news for this inventory availability. Meanwhile, the vacancy rate for rental apartments reached 1.6% in Q4 2022. This is a decrease of 0.1 points compared to the previous year. Many people think it’s because of skyrocketing rents, but in reality, vacancy rates were less than half what they were in 2019, and prices didn’t skyrocket like this.

Toronto Condo Vacancy Still Higher Than Normal

Share of Toronto City condos for rent that are currently vacant.

Source: TRREB; CMHC; Better Housing.

The latest TRREB condominium market report shows a relatively stable market with flat prices, soft sales and more balanced supply and demand. However, the price looks solid despite weak buying.

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