Everywhere you turn, it seems as though there’s a new condo building popping up. And that’s not just a trend reserved for the downtown core – even the suburbs are seeing a condo boom.
That’s a testament to the sky-high prices of traditional detached and townhomes, as more and more buyers are seeking out lower-cost housing opportunities. And condos typically fit the bill.
It’s not just young urban professionals who are choosing condo living as a means to be close to conveniences and minimize home maintenance, either. Even families with kids are moving into condos, and the demand continues to meet the supply as more and more condominium developments continue to spring up all over the GTA.
And while there may have been an exodus to the suburbs over the years as buyers seek out more land for their buck, city living seems to be in higher demand these days. Toronto is seeing a lot of growth, and hence needs to keep up with it. That’s where the condo boom comes in.
But how much longer can this boom last before things start to settle down? Experts have been calling for a plateau in the condo market for months now, but such expectations haven’t come to fruition just yet.
Even though the prices for single-family homes have settled down, they’re still extremely high relative to other markets across the nation. At a median home price of $850,400 in Toronto, that price is still out of range for many buyers, especially first-timers. And even though the price of condos isn’t exactly cheap, there’s still plenty of savings that can be realized with the purchase of a condo.
Investors are also playing a key role in the rise of condo development. With an increased demand for such investments, developers have an easy time finding buyers who purchase during the pre-construction phase and either rent or flip as soon as construction is complete.
The healthy rental market is also helping to keep the condo development industry healthy. Rent is certainly not cheap in Toronto, with the average rental price of a 1-bedroom unit in Toronto currently standing at around $2,300. But compared to the cost of a mortgage, that number is relatively affordable when considering all the costs of homeownership.
Right now, the demand for rental units is high among those who are either unable to secure a mortgage for a home purchase or prefer the flexibility and freedom that comes with renting. And with mortgage stress tests making it even more difficult to get approved for a mortgage, renting continues to be the best – and often only – option for Torontonians.
The current rules surrounding rent control are also good for new condo developers. With no rent control on buildings completed after November 2018, many investors have been selling off their older units to purchase new ones in condo developments completed after this date. This allows them to have more control over rent and possibly make their investment a more lucrative one. This selloff, along with the higher demand for rentals, continues to help fuel the condo development market.
So, will the condo boom finally slow any time soon? Only time will tell. We’ll just have to continue keeping our finger on the pulse of condo development and sales to see just how much longer this trend will continue. But one thing’s for sure: the demand is still there, and until that dies down, condo developers will have no shortage of buyers.