As affordability issues persist in the single-family home market, resale condo market share continues to climb, according to a new report from RE/MAX.
According to RE/MAX and based off figures from the Toronto Real Estate Board, resale condo sales (including apartments and townhomes) represent nearly 37% of total residential sales in the Greater Toronto Area. The market share has been trending upwards since 2013 when the share was 30%.
"The condominium lifestyle continues to resonate with buyers in the Greater Toronto Area for a number of reasons. While the affordability aspect is first and foremost, we've also a seen strong investor presence in recent years," says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada Region. "The income potential, given today's tight rental market, in addition to the overall return on investment, has been a serious draw for real estate investors."
There are a number of factors contributing to the growing demand for condo living, aside from affordability, such as immigration, population growth, and the desire for shorter commutes and living close to transit. There’s also an environmental element; people want to decrease their carbon footprint.
The majority of condo sales occured in Toronto proper with more than 20% of condo sales located in the downtown core. There are only six weeks of condo inventory in the downtown core, which is basically nothing. This means that if no new listings were to hit the market, all the available condo units would be sold in a month and a half. In the GTA, condo apartment inventory is sitting at 1.7 months, and there are 2.1 months of condo townhomes.
"In spite of a proliferation of condominium developments over the past decade, supply and demand issues continue to persist in the core," says Alexander. "Limited inventory continues to place substantial upward pressure on prices, with fewer affordable housing options available—and that includes condominium rentals."
While condos are relatively more affordable, prices are on the rise. For the period between January and October 2018, the average price of a condo apartment unit was $551,761, which is an 8% year-over-year increase. The average price of a condo town during this time was $571,058, up slightly from $568,165 during the same period last year.
The average resale price for available condo units in Toronto is around $700,000, and new construction prices are around $1,000 per square foot.
"The necessity to 'build up' has never been more prevalent in a city that has seen its population climb from one census to the next," says Alexander. "To prevent the run-up we've seen in housing values in the past, all levels of government must work together with developers to streamline the building process. We need to create more affordable GTA housing options that can accommodate buyers and renters at every price point."