The good times roll on for Toronto’s condo market… but for how long?

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The hot market often blamed for a potential housing bubble has recorded record sales numbers once again, indicating that if said bubble exists it may only be getting bigger. 

“Sales this past summer reaffirm that the new condo market in Toronto is on track for one if its best years on record,” Shaun Hildebrand, senior vice president of Urbanation said in an official release. “There is still quite a bit of pent up demand that came out of the slowdown last year.

“Should market confidence continue to hold in spite of the recent turmoil in financial markets, this sales momentum will carry into the final months of 2014 and early 2015.”

4,753 new condos were sold in the third quarter of this year, marking a 53 per cent year-over-year increase from a 10-year low in 2013. It was the third best summer for the market, trailing only 2011 and 2007. The number of unsold units also dropped 11 per cent during the quarter to 16,743.

These impressive stats will surely dredge up the question about how much foreign investment is bolstering the market – a question the CMHC continues to wrestle with.

“CMHC continues to explore opportunities to enhance the availability of information on foreign and corporate investment activities in the housing market,” Bob Dugan, chief economist at CMHC’s Market Analysis Centre said in a summer release.

For his part, one of Toronto’s most prolific developers, Brad Lamb, told the CBC in August that he estimates foreign investors make up about 50 per cent of the ownership of condos in Ontario’s capital city.

Related:
Toronto’s condo construction is still booming
  • Angela Wong-Liao - Invis on 2014-10-30 12:38:21 PM

    Our Toronto real estate market is continuing to be robust which raises the question of when our market will slow down?
    I believe in any investments, stocks, bonds, real estates, ultimately, there will be bull and bear market.
    In my opinion, if 50 per cent of the Toronto condos are owned by foreign investors, it can be risky because there can be so many variables that can affect our market, ie: political instability or government policy changes from other countries that can directly affected our real estate value.

  • Quentin Stossel on 2014-10-30 1:11:08 PM

    Angela - interesting point, but I'm pretty certain those foreign investors aren't all located in the same geographic region. So likelihood of a political instability event in say, Pakistan, won't affect investors from China, Russia, etc.

  • Jane on 2014-11-02 6:34:07 PM

    LIES, LIES, LIES DIFFERENT PROVINCE BUT THE SAME PEOPLE, GOVERNMENTS AND ORGANZATIONS

    http://www.cbc.ca/news/canada/newfoundland-labrador/real-estate-reality-just-how-hot-is-the-st-john-s-market-anyway-1.2808774

    Real estate reality: Just how hot is the St. John's market anyway?
    Big-ticket homes on the rise, but there's also strong evidence of a downward trend
    By Adam Walsh, CBC News Posted: Nov 02, 2014 6:23 AM NT Last Updated: Nov 02, 2014 6:23 AM NT

    The inventory of houses for sale at the moment in St. John's is up from last year.
    The inventory of houses for sale at the moment in St. John's is up from last year. (CBC )

    Condo market rapidly cooling off in St. John's area
    Housing starts expected to slow in St. John's area
    External Links

    Globe and Mail: St. John’s housing market on a ‘winning streak’
    (Note: CBC does not endorse and is not responsible for the content of external links.)

    I'm never going to own a million dollar home, but according to Royal LePage, someone's sure buying them up in St. John's.

    A recent media release pointed out there's been a doubling of the number of homes selling over the $1-million mark.

    At first glance, it seems like something substantial is happening in the local market. So I checked the numbers with the Canadian Mortgage and Housing Corporation.

    So far this year in the St. John's metro area, six homes that were listed at $1 million or more have been sold.

    Last year, there were two.

    Is this significant at all?

    "Six sales in excess of a million dollars in this market is substantial," said Chris Janes, the province's senior market analyst for CMHC.

    "That has an upward impact on the average price obviously but again when you talk about that doubling or tripling, it's really irrelevant."

    That seems to match what you hear on the street. The talk at the proverbial office water cooler is that the market has changed.

    Friends and co-workers now talk about seeing more "for sale" signs around St. Johns, hearing about houses staying on the market for longer periods of time, and questioning whether or not the breakneck construction of new homes has slowed down.

    Winning streak?

    That's why many eyebrows were raised locally when the Globe and Mail picked up on the Royal LePage release and published a story with the headline, St. John's housing market on a 'winning streak.'

    Phil Soper of Royal LePage
    Royal LePage CEO Phil Soper says the St. John's housing market is leading the way across the country. (Royal LePage)

    The accompanying article quoted Royal LePage CEO Phil Soper as saying the local "market continues to drive ahead at a faster pace than the rest of the country," and that St. John's is a "very boisterous market."

    Taking that opinion into account, I placed another call to CMHC's Chris Janes, for his take on that report.

    "When you look at articles or headlines such as these, they may be a little bit self-fulfilling," he told me.

    "They may lag the overall market in terms of what we see here on the street by a few months or even a year or two. So for me, it's a bit surprising to see that kind of a headline ... given the current market conditions," said Janes.

    No longer a seller's market

    Janes told me that since last year, sales are down eight per cent, new home construction is down 24 per cent and inventory is up 14 per cent.

    "So the market is certainly in a down trend right now, a downward cycle, which is normal when you come through an aggressive growth phase like we have over the past five or six years," said Janes.

    Glenn Larkin, a realtor with Royal LePage in St. John's, says that the local office is on track to have another record year for sales, albeit by a very small margin.

    He acknowledges that the market has changed.

    "We have a big inventory right now and sales have declined. So when you get those two things, you're moving into a buyers’ market. I think prices, there will be pressure on prices," said Larkin.

    Incentives offered

    The picture Larkin paints does indeed sound rather friendly for anyone looking to buy.

    "We're seeing a lot of contractors offering incentives — anything from electricity to be paid for a year, to appliances, to bonuses, to selling agents and bonuses, condo fees for a portion of time, and so when you see incentives moving into the marketplace, you know the market's cooled."

    Buying's one thing, but what if you're looking to sell?

    Larkin says to listen to your realtor and look at making your price "more competitive than what is currently on the market, because those that have been on the market for 30 or 60 or 90 days probably need a price adjustment."

    And if you can wait to sell?

    "If you're not in a hurry, you might want to wait until the spring. And who knows what spring will bring, " said Larkin.

    Is there a bubble about to burst?

    All the same, Royal LePage's CEO says St. John's is in better shape than other cities. Soper said the St. John's area "market continues to drive ahead at a faster pace than the rest of the country."

    Janes begs to differ. He says the hottest markets right now are the big city heavyweights of Toronto and Vancouver.

    Pessimists watching the marketplace are worrying a bubble bursting, especially since oil prices have fallen recently.

    But Janes says that as long as the economy stays solid, there's no reason to worry.

    "I guess the key message that I want to put out there is that we don't see prices declining," he said.

    "So with the economic strength that we have in terms of population income, employment growth, all that is still in play and that's providing some pretty good support to the housing market despite the overall slowdown. "

  • Alain Payette on 2014-11-03 7:55:03 AM

    If I ad a million dollars I would buy Kraft dinner and eat it with Dijon Ketchup! They should do the same in St-John.......Before it becomes real.

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