Soaring Toronto condo market slows
The chill that has crept over some segments of the Toronto housing market may soon extend to one of its persistent hot spots: condominiums.
Evidence of a slowdown is emerging as new rules make it tougher to get a mortgage and borrowing costs rise for the first time in almost a decade. That’s reducing the appeal of Toronto condos, whose average price now exceeds $560,000. Projects are taking longer to sell and, in some areas, developers are using incentives to move units.
“There are cash incentives being offered, discount parking being offered,” Robert Gidwani, a broker at REsource Realty, said by phone from Toronto. “We’ve seen a bit more incentives especially in the resale market, we are seeing fewer multiple offers coming in.”
Christopher Bibby, a broker at RE/MAX Hallmark Bibby Group Realty, said demand is still “extremely active” for condos with “wow factor,” such as a one-bedroom unit near Bloor Street with unobstructed views of the water that sold for the list price of $629,900 in less than 48 hours.
But more generic inventory is taking longer to sell. “You’re not seeing the same pace of growth or aggressiveness on the buyer side,” he said.
The question is whether condos will join the slump in the single-family home segment, signalling a broader correction in the Canadian housing market, a risk policy-makers have flagged for several years but which has so far failed to materialize. Condos accounted for 30 per cent of total Toronto sales in May.
Some developers are starting to give buyers longer than the usual six months to come up with a down payment, which usually ranges from 15 to 25 per cent. “That really increases the affordability level for people who are saving and paying as they go,” said Gidwani.
Unlike prices for detached homes, which are down almost 10 per cent from the peak last year, condo prices have continued to climb, reaching a record in May. But the pace of appreciation has slowed. On a year-over-year basis, the 8.3 per cent increase in May’s benchmark condo price was the smallest in almost two years while sales fell 16 per cent from the same month the year before.