GTA home sales slumping, but condos are still going strong
Condo market 'surviving' recent slump because of affordability, realtor says
The Greater Toronto Area housing market may be dimming, but there's an unexpected bright spot in the sky, according to new data from the region's real estate board.
While year-over-year sales slumped in June for all housing categories, the condo market proved more resilient to the cooldown.
And while the average price rose in all housing categories — albeit more modestly than in previous months — condominiums made the biggest gains, seeing growth of 23 per cent, according to the Toronto Real Estate Board's monthly report for June.
This comes after plenty of concern in the GTA real estate market about major growth in condominium construction and the potential for oversupply.
"Two or three years ago if we were sitting here, one of the questions would have been, 'What's going on with the condo market?'" Jason Mercer, TREB's director of market analysis, said at a news conference on Thursday. "We're seeing record levels of completions, all the supply is going to hit the market place, [and] now we're talking about the condo market being the tightest market segment."
Along with its sales data, TREB also released the results of a consumer survey of homebuyers, which found 40 per cent of likely buyers in the second half of 2017 would be purchasing their first home.
"We're seeing a shift in terms of the types of homes people are looking to buy over the next year, less on the low-rise side of things, and moving to the condominium sector of the market," Mercer said.
"That's an important entry point for those buyers."
Condos still affordable
Toronto real estate agent Desmond Brown attributes the relative strength of the condo market to the fact that, while there are fewer sales, prices continue to rise and houses remain out of reach for many.
"The condo market is surviving all of this because of the affordability factor."
Brown says he's still seeing lots of buying activity in the "entry-level to $600,000 range."
"What I'm hearing from buyers is that this is an opportunity," Brown said. "There's more product and they don't feel like there's a gun to their head."
According to TREB, the average sale price of a GTA home rose 6.3 per cent last month, compared to June 2016.
Detached home sale prices rose by 7.1 per cent during that time, while condominium sale prices tripled that level of growth.
Shaun Hildebrand, senior vice president of the real estate consulting firm Urbanation, says that throughout the recent growth in the GTA real estate market, condominium prices remained more stable than other housing categories.
"Condo prices didn't rise as excessively as single family home price, which appear to have been influenced by foreign demand, speculative activity and overall psychological factors," Hildebrand said in an interview.
As for concerns about oversupply, Hildebrand says we shouldn't mistake condo construction with market supply.
Many of the units being developed, he says, never hit the housing market.
"Investors represent, in most cases, the majority of buyers in these buildings, but pretty much all of them add their units to the rental market and do not list them for resale."