Guest Post – Sales and Average Prices Continue to Heat Up for Toronto Condo Buyers

By Sheila O’Hearn, Zoocasa

Strong condo sales and price growth continue to sizzle in Toronto real estate. Condominium apartment sales in the third quarter of 2016 were up by 22.1 percent on a year-over-year basis to 8,014, reported through the Toronto Real Estate Board’s (TREB) MLS® System. Over the same period, new listings for condominium apartments decreased by 13.3 percent.

Compare the average price sales and prices in 2016 to those in 2015, reported by the Condominium Apartment Market Summary: Third Quarter 2016:

While the low-rise market has been a first priority in supply discussions, it was reported that supply pressures have also been experienced in the condominium apartment market segment over the past year. The completion of new units was down substantially during the first three quarters of 2016, compared to the same period in 2015, and, as a result, has arguably played a role in the decline in new condominium apartment listings on TREB’s MLS® System.

With a double-digit annual increase in sales and double-digit annual decline in new listings, the market conditions for Toronto condos tightened substantially over the past year. “Regardless of the price measure considered,” the report continues, “heightened competition between condo buyers has resulted in double-digit price inflation. The average condominium apartment selling price for the fourth quarter was up by 14.5 percent to $437,281.

Many households looking to purchase their first home will consider a condominium apartment. The shortage of listings in the single-family home category has convinced many potential buyers to look at high-rise living. Interest in this market segment has continued to grow as prices for low-rise home types have increased unrelentingly, according to Jason Mercer, TREB’s Director of Market Analysis.

With demand for condominium apartment rentals remaining strong and supply diminishing significantly, the annual growth rate for average rents in 2016 was well-above the rate of inflation for one-bedroom and two-bedroom unit types. The average one-bedroom rent for the TREB market area as a whole increased by 7.4 percent on a year-over-year basis to $1,776. The average two-bedroom rent rose by 8.0 percent to $2,415.

2017 Toronto Condo Market Forecast:

Nationally, the Canadian Real Estate Association is forecasting softer sales in 2017 in comparison with the benchmark set in 2016, according to Globe & Mail sources. It is reported that tighter rules regarding insured mortgages, recently introduced by the federal government, will likely weigh on the Toronto market in 2017.

On that note, Canada Mortgage and Housing Corporation announced it will raise mortgage loan insurance premiums as of March 17, 2017, but this prediction in increased premiums is not expected to have major impacts on the average buyer. Those without a large down payment will have to pay higher monthly premiums that are paid over the life of the mortgage, with the result that the cash required on closing remains the same.

Zoocasa is a real estate brokerage based in Toronto.

Sheila O’Hearn is a freelance and creative writer, and has worn many hats throughout her career, from general staff reporter to magazine editor. She has a keen interest in business entrepreneurship and currently writes for several outlets. Visit her at LinkedIn for more info.