Experts continue to sound alarms about the unbridled influx of condos onto Toronto’s real estate market over the last few months, which has posed an advantage for buyers, but served a huge blow to sellers, developers and agents.
TD Economics is the latest to speak on the topic, calling the region — understood to be in a housing crisis — “oversupplied” with the housing type at this point.
It’s like people don’t want to live in overly expensive boxes with no room
— K Pena (@dperador) May 4, 2024
“GTA resale condo supply is highly elevated, and the gradual recovery expected in sales means that it will take time for supply and demand to become more balanced,” the bank’s economists wrote in a new report this month.
Because of months of atrocious sales figures (down double digit percentages compared to last year) and an abundance of units on the market (with available supply up double digit percentages from last year), the average price for a condo in the area has dropped by five per cent from this time in 2023.
And TD’s experts only expect prices to decline a further “mid-to-high single-digit” percentage point as we move into the New Year.
Well, the market will always correct.. You all thought that people will continue to pay unseen amounts of money for pieces of boxes that are mostly poorly constructed in the medium/long term?? O.K..
— Nick A (@MRSlickNickGuy) September 4, 2024
While lower interest rates should spur more activity as the year comes to a close, the report states that price growth across the GTA condo sector “will probably trail by a considerable margin,” in large part because “affordability in Toronto is historically poor, challenging the market’s ability to sustain a stretch of rapid price gains.”
Other factors include the lack of return on condo investment due to lower rents, and the present sales-to-active listings ratio, which is 60 per cent below its long-term average due to skyrocketing number of listings that are sitting on the market longer, particularly resale units.
Lots of investors bought 350 sq ft units@ $1600 sq foot. Barely big enough to swing a cat & horrible in quality. They’ll never get rid of them unless they take a huge loss .
— Rotten Johnny (@MrJohnnyLarue) July 18, 2024
“Condo listings have been rising sharply for a full year, leaving them about 30 per cent higher than what is typically seen, after adjusting for population and job growth,” TD writes.
“Weak sales activity is not absorbing supply fast enough… [there is a] wave of completions hitting the market recently alongside elevated rates that have made it difficult for some buyers to close on their mortgages. Investors are seemingly listing their properties as well, as a share of them are cashflow negative and rents are dropping in the GTA.”
Indeed, similar reports have shed the same light, like one that said as of July, 80 per cent of GTA condo investors are now losing money on their units.
