There is only one way to describe the Toronto condo market right now: bananas. I like to use this technical term. The average price for a resale condominium in the Greater Toronto Area, according to the Toronto Real Estate Board, has increased about 20 per cent annually. New condominium prices are up 13 per cent annually according to Altus Group. The new market is almost as hot as the resale market.
Typically, when a market is as strong as it is, developers rush to bring their projects to market to take advantage of the market conditions. However, the number of new highrise condominium apartment units launched in 2016 actually decreased 13 per cent year-over-year, from 22,748 to 19,704. There are several reasons for the decline, but it typically falls into two categories: developers don’t have approved sites to launch; or developers that do have approved sites may already have three or four developments on the go and don’t want to spread themselves too thin. Given the high price of land, most developers want to launch projects as soon as possible, and 2017 will be a big year for new openings.
According to data compiled by condo market research firm Urbanation, as many as 86 projects and 30,407 units could launch this year. That high level of supply should relieve some of the upward price pressure.
Surprisingly, the majority of the new projects are launching outside the prime condo areas. In 2017, five projects are scheduled to open in the downtown east, four in the downtown west, four in the Entertainment District, and just one development in the downtown core! So, just 14 of the potential 86 projects are in these prime downtown Toronto condo submarkets.
We remain very bullish on the markets outside of downtown, and are launching a project on the Danforth this year, a couple stacked condo townhouse developments outside of Toronto.
Another major surprise was the huge volume of transactions in the 905 region last year and in early 2017, and we’ve been shocked at the high level of demand at our Burlington project. We expect a similar level of success at our upcoming Oakville waterfront development.
2017 should be a year with a lot more choice for buyers, and unlike the resale market, you won’t have to deal with bidding wars.