Are Toronto Condos a good investment? Is the bubble in the Condo Market going to burst? These are common questions I get asked as a realtor. Let’s have a quick look at just what is happening in the markets for the first quarter of 2016.
The rising trend for condo prices may well be the diametric opposite of what many market watchers were warning about as countless cranes busily infilled Toronto’s skyline with gleaming residential tower after residential tower stuffed with tens of thousands of 700-square-foot condo units.
Yet despite the dire warnings of overbuilding, the market has held firm and prices have continued to grow in the first quarter.
“Condo prices have posted respectable gains despite earlier concerns about the risk that the condo construction boom might flood the market,” RBC economists said in a Feb. 29 report on housing affordability.
A surge of condos has indeed hit Toronto’s property market, RBC chief economist Craig Wright and senior economist Robert Hogue say, but it has been “readily absorbed for the most part.”
Some of the sources of stability – reasons why the record glut of new condos hasn’t triggered a crash are numerous, experts suggest. To start, the thought of long commutes on ever-more congested roadways continues to push more millennials into downtown living.
The long-term demographic force of foreign immigration that’s underpinned the Toronto region’s economic growth continues to do the same for housing demand. And with prices for single-family homes climbing out of reach for an increasing share of buyers, the inevitable trickle-down effect is boosting condo sales.
More recently, new mortgage rules implemented this year have made purchasing more expensive homes (those listed above $500,000) more difficult for first-time buyers, providing another support for the condo market.
Finally, the tide of workers that poured into energy-producing regions when jobs were plentiful is now sharply reversing course. Workers are turning to Southern Ontario’s bigger and more diversified economy to find jobs.
The exodus from Alberta, Saskatchewan and parts of Atlantic Canada has bolstered an already tight regional rental market, experts say, making finding tenants to fill condos an easier chore for landlords and investors.