The pandemic impacted Canada in many ways, including the real estate market. The industry was quickly able to adapt to virus conditions by relying on technology solutions like virtual open houses and e-signatures to facilitate transactions. Although many in-person practices have been taken up again, virtual practices for buying and selling homes have remained popular, especially for those who may not live in the area and are unavailable in person.
When market conditions change, some choose to size up their investments to determine if there are other opportunities to explore. With the remote work trend allowing for alternate living arrangements, many are wondering if now is the right time to dip their toes into the condo market, and whether it is a wise investment.
While vulnerabilities in the condo market became evident at the onset of the pandemic, the big-city condo segment was most impacted, and those impacts were short term.
And for the opportunist looking to buy, there is an upside to a down market, for someone who’s willing to take on some calculated risk.
Below, we dive into current Canadian condo market trends, to help hopeful investors make an informed decision:
Condo Sales Canada-Wide
Across the country, condo submarkets have experienced varying levels of cooling.
In Canada’s largest condo market, Toronto raised interest rates to curb pandemic inflation, have created a considerable deterioration in sales of new condominiums. According to RE/MAX Ultimate Realty Inc., Brokerage, sales dropped by 79 per cent in Q3-2022 to just 1,748 units, their lowest levels since the financial crisis of 2009. A record high of two-thirds of all GTA condo projects with available inventory reported zero sales in the same quarter.
Condo listings are spiking in markets like Toronto, Vancouver, and Montreal, an inverse trend from what we’ve seen over the past few years. The average price for new condos is sitting at $1,427 in Q3-2022, down one per cent from the record high in the previous quarter. However, new condominium prices remain 15 per cent higher than in 2021.
Due to high interest rates, buyers who purchased a new condo in Q3-2022 are facing a mortgage of approximately $3,300 per month, a 58-per-cent increase from 2021 when interest rates sat at just two per cent.
These popular markets have long attracted people to city-living – even causing people to compromise on space in order to live near attractive amenities. As a result, construction of new condominiums pushed onward and was up 40 per cent year-over-year. A record volume of units ready for occupancy is expected in the first half of 2023.
Canadian Condo Prices
In tighter downtown condo submarkets like Toronto, a dramatic increase in condo supply is evident. Unsold condo units are sitting vacant across the city, and since the peak in home prices and interest has come and gone, Toronto condo market prices and rents are expected to decline in the months ahead. Although the pandemic seems to have reached its end, sales price growth in the condo segment continues to trail behind the housing segment.
While the average price of a detached home in the GTA decreased by 13.4 per cent, the average price of a condo only decreased by 0.9 per cent. It is expected that as Toronto’s housing market softens and more inventory becomes available, the trend will continue downward through the first half of 2023.
Why Condos are Still a Good Investment Today
Although the condo market is weaker during this time, this doesn’t mean it won’t rebound. Market observers are projecting that it is unlikely that people will stay away from condos for the long term; the shifting preference from urban to suburban has been modest at best. As immigration restrictions continue to loosen, people return to offices, and amenities reopen indefinitely – buyers will flock to the city once again to enjoy the metropolitan lifestyle and conveniences that urban condo-living has to offer.
The condo market could quickly rebound in the next few years, based on the strong sales activity and prices just prior to 2020. Investors can take advantage of lower condo prices now to buy and hold a unit to sell once the market strengthens. Decreased condo demand in expensive submarkets, means buyers can scoop up condos for lower prices yet reap the benefits when demand returns.
Across the country, there has been decreasing demand for urban condos and increased demand for suburban and rural condos, although both markets seem to be experiencing reduced activity. As more condos become available, growth will likely return. Homebuyers can scoop up a condo at a reasonable price and potentially realize their profits from their investment as the market strengthens.
Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!
