According to a recent report from Royal LePage, resale condo price growth continues to outpace the detached home segment in the Greater Toronto Area.
The report looks at the first seven months of 2019 compared to the same period in 2018. Considering transactions in January to the end of July, the median price per square foot of a condo unit in the GTA increased 9.1% year-over-year to $743. The median price of a detached home only increased 1% to $486.
"In Canada's largest cities, many younger buyers searching for affordability and baby boomers looking for maintenance-free living purchase condominiums. Not surprisingly, that strong demand has pushed up price per square foot, with the exception of Vancouver and Calgary," says Phil Soper, president and CEO, Royal LePage. "Buyers are adapting by purchasing smaller units, especially among those looking for entry-level properties."
In the City of Toronto, the average price psf increased 6.1% to $782, with the median price psf of a condo jumping 8.5% to $839 and the median price psf of a detached home rising 1.5% to $747. Toronto’s median condo size was 752 square feet, which is just about half of the median size of a detached home (1,512 square feet).
"Low inventory levels are putting upward pressure on price per square foot in the Greater Toronto Area, especially for entry-level properties like condos,” says Tom Storey, sales representative, Royal LePage Signature Realty. “Although detached homes hold more value per square foot, condos are more affordable for first-time home buyers in the region given their smaller living space and higher supply.”
"Millennials know what they want and, in some cases, are willing to pay more for less space in order to be in their desired neighbourhood. This is consistent with the trend of location being an increasingly important aspect of home ownership in today's market," adds Storey.
This is interesting because the Centre for Urban Research and Land Development recently released a report finding that during the two years before early 2019, nearly half of first-time buyers in Ontario bought a detached home. When considering all types of single-family homes (detached, semis, and townhomes), 80% of first-time buyers in Ontario purchased, with fewer than 20% buying condos.
So, which is it? Are first-time buyers combatting baby boomers in the condo market or are they waiting for baby boomers to move so they can buy a detached home? Maybe it’s both.