The condo market, hit by the city’s flight at the start of the pandemic, is showing signs of recovery, and that could be a good thing for Canadian housing in general.
In the latest data released yesterday, benchmark condo prices were up 10.6% from a year earlier, the biggest gain since 2018, says TD economist Rishi Sondhi.
“Although overshadowed by the overheated single-family market, condos are quietly making a comeback,” Sondhi said. Reference prices have risen month-over-month for nearly a full year, and gains in the past three months are the strongest since the housing boom in 2017.
“Should condo sales consume a growing market share going forward (as we expect), downward pressure would be applied to the median home prices of these lower priced units,” he said.
Appropriately, an online real estate agency recently studied how home prices have appreciated in the greater Toronto area since the last peak and found that of all home types, condos have gained the most.
Condo prices in the GTA are up 44% since 2017, while townhomes have gained 27% and detached houses 21%, according to Properly.
“Last year, condo sales were the hardest hit by the pandemic. While sales have now returned to pre-pandemic levels, it is a relief to condo owners to know that their investments have appreciated significantly over time, ”said Anshul Ruparell, co-founder and CEO of Properly. “Going forward, strong growth in condo sales is forecast to continue as pandemic restrictions ease.”
In the first quarter of this year, condo sales in the GTA were within 4% of pre-pandemic sales, as focus on the 905 region outside the city core returned to downtown Toronto, Urbanation says. Inc. in your condo market study. Condos sold in the city of Toronto itself exceeded sales in the first quarter of 2020.
“The downtown Toronto condo market turned the corner in the first quarter of the year due to low borrowing costs and renewed optimism about the outlook, but also in part due to a chain reaction after that suburban home prices skyrocketed 30% over the past year and brought attention back. on urban properties, ”said Urbanation President Shaun Hildebrand.
Overall, the data shows that the Canadian housing market is cooling down from the torrid pace set at the beginning of the year. Home sales in Canada fell 7.4% in May from April.
All provinces saw a decline, the most pronounced in Manitoba (-10.6%) and the Atlantic provinces (18.5%). Sales fell 1.6% in Quebec and 7.4% in Ontario.
However, sales remain “very strong,” Sondhi said. In fact, May sales were nearly 20% above the highs reached in early 2016, during the peak of the last housing cycle.
Here’s why a bit of cooling may be welcome.
A Bloomberg Economics study has found that Canada is among the most sparkling housing markets in the world, second only to New Zealand.
The higher the reading of the Bloomberg “bubble rating”, the greater the risk of correction, and the price indices for Canada and many OECD countries are now higher than they were before the financial crisis of 2008, Bloomberg said.