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Forecast sunny for condo sector: Sales, construction starts will
continue to soar
February 2011
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Mario Deo, 2nd Vice-President,
Canadian Condominium Institute (CCI), Toronto & Area Chapter |
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By Clare Tattersall
More than 20,000 new condo suites were sold in the Greater Toronto Area (GTA) in 2010, according to RealNet Canada Inc. This reflects a 30 per cent gain over 2009 figures.
The strong performance of the GTA’s new condominium sector was further reflected in the construction starts and pricing milestones it achieved last year. Construction began on more than 18,000 highrise condo units. This is not only more than twice as many as in 2009, but a Toronto record. As well, the market closed the year with an average price of $441,663, demonstrating a year over year growth of approximately 11 per cent, reports RealNet Canada.
“2010 was a hot market. People bid for condo units and prices went higher quickly,” says Mario Deo, 2nd Vice-President, Canadian Condominium Institute (CCI), Toronto and Area Chapter, and partner with Canadian condominium law firm Fine & Deo.
Deo says he suspects 2011 will be another strong year for the condo sector, though prices will somewhat stabilize.
In January, the Canada Mortgage and Housing Corporation (CMHC) reported that construction had begun on 983 condo units, up 509 per cent from exactly one year prior.
“The new projects are proceeding as quickly as they were in 2010, which (is a) surprise because prices are not increasing as much as before," he says. However, "that’s actually a sign of a healthy market where demand is strong and prices are stable."
Deo sees the strongest demand for condo units in city centres like Toronto. Although many baby boomers are trading their empty nests for these smaller and relatively maintenance-free abodes, he says first-time buyers looking for affordable housing alternatives and young professionals are the ones driving the market.
“The closer you get to the downtown core, the truer this is,” he says. “And the young professionals are the ones buying the smaller units.”
Why?
“The issue is price point. They want to live downtown and this is what they can afford.”
Today, many condo projects have units starting in the 400 to 500 square feet range. Some, such as Ice Condominiums at York Centre in the heart of Toronto, have studio units that are 308 square feet. However, this isn’t the city’s smallest.
“I was speaking with Barry Graziani of Graziani & Corazza Architects, and the smallest unit he’s designed is a 270 square foot bachelor.”
According to Deo, these units are typically sold without parking and fetch between $500 and $800 a square foot, granted this is dependant on the project. And although these units are in demand today, their long-term popularity and, consequently, resale value is in question.
“No one knows how this type of product is actually going to mature,” says Deo, who admittedly has some reservations about the micro units.
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