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Urbanation Reports a Hot Condo Market for Q3
Yearly new condo sales paced to smash 2007 sales record
TORONTO – November 3, 2011: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, today released its Q3-2011 market overview.
The new condo market in the Toronto Census Metropolitan Area (CMA) continues its torrid sales pace, with Q3-2011 marking the fourth consecutive quarter in which sales topped 5,000, with 6,318 new condo sales. That marks an increase of 66 per cent over Q3-2010 (3,805) but a decrease from the record high sales of Q2-2011 (9,445).
There have been a total of 27,244 sales in the past 12 months, while new condo sales through the first nine months of 2011 have already surpassed the 2010 year-end total (20,964 versus 20,491).
Approximately 58 per cent of the CMA sales in Q3 were realized in 33 new site openings (3,694 sales, a 56 per cent absorption rate) as newly launched projects continue to sell well and attract new purchasers.
“With these unprecedented sales successes continuing and with the increased investor activity, there are concerns that pricing will, or is, rising too rapidly on speculative buying decisions,” says Ben Myers, Urbanation Executive Vice President and Editor. “However, annual index price growth remains below the five-year average of 8.1 per cent, at 7.4 per cent in the new market, and equal to the five-year average in the resale market (7.6 per cent increase).”
Myers notes, however, that some factors could mask the fact that prices are rising too quickly, including the influx of lower-priced condominium projects in the ‘905’ and outer ‘416’ areas, which can pull down the overall average index price in the Toronto CMA. Key areas in the CMA are experiencing year-over-year index price inflation that is above the five-year CMA average, including Mississauga (10.2 per cent), the former City of Toronto (9.0 per cent), and Markham (8.6 per cent).
In response to concerns about the amount of investment activity in the Toronto CMA, Myers points out that data indicate the investor market is comprised of more long-term micro-landlords than short-term speculators.
“The majority of buyers that do not intend to occupy the suite they purchased are adopting long-term investment strategies and avoiding short-term market price fluctuations resulting from potential over supply or other factors,” he says.
Urbanation tracked a total of 346 new condominium projects in Q3-2011 (an increase of 18 per cent annually). Unsold inventory increased 7 per cent quarterly in Q3 to 13,259 units, but is virtually unchanged annually from the 13,257 unsold units in Q3-2010.
There were 5,364 construction starts and 1,607 completions in Q3-2011, while the 42,573 units under construction are a record high for the Toronto CMA.
But projected population growth, cultural changes, longer commuting times, shortage of land, greenbelt legislation and high-density targets within the Places to Grow provincial initiative are all precipitating a fundamental shift away from low-rise housing, Myers says.
“All of these reasons will continue to tip-the-scale towards apartment living.”
Looking ahead, Urbanation predicts that the CMA will smash the annual sales record of 22,654 recorded in 2007, with approximately 26,000 sales expected by years-end.
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Urbanation is Canada’s leading condominium market research company. Since 1981, Urbanation has analyzed the Toronto condominium market, publishing the “industry bible” – Urbanation’s Condominium Market Survey. This quarterly report tracks new, resale and future condominium projects. The newest report from Urbanation is UrbanRental, which tracks activity in the condominium rental market. Urbanation also provides the development community with essential consulting services, which include site and topic specific market studies and surveys.
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