Toronto condo listings have been surging since the summer. This, combined with a shift in buyer preferences away from high-rise living and a slower pace of sales and price growth relative to single-family homes, has introduced more uncertainty to the market than end-user buyers and investors are accustomed to.
In its third-quarter condominium report for 2020, the Toronto Regional Real Estate Board (TRREB) noted that the 17,613 new condos listed during the third quarter amounted to an 84.6 percent increase over the same period last year. At the end of the quarter, active listings had doubled in contrast to 2019 levels. While condo sales were robust compared to a year ago, they were still significantly outpaced by new listings.
But, even amidst this change in condo market dynamics, some realty professionals say that purchasing pre-construction condos in Toronto is still a lucrative opportunity despite the potential challenges presented by the pandemic. Simon S. Mass, CEO of The Condo Store, explains that Toronto’s pre-construction market remains resilient alongside high activity levels and positive market reports.
“The past three months in Toronto’s pre-construction market has been an extremely busy and hectic one,” said Mass. “The exact opposite of what may seem the norm has been taking place as developers have been on a major accelerated drive to bring a series of master-planned and stand-alone projects to market with great success.”
While headlines have focused on blistering activity in the single-family home market segment, new condo sales have logged impressive gains compared to a year ago. In September, the Building Industry and Land Development Association (BILD) recorded a 15 percent annual increase in sales for new condo apartments.
Canada’s relatively adept handling of its COVID-19 pandemic response has demonstrated Toronto real estate’s value proposition to potential investors, a city that is a “real estate volatility free-zone,” Mass said. Even with the difficulties of COVID-19, coupled with new rules around short-term rentals that have impacted the city’s rental market, purpose-built apartment vacancy rates remain relatively low at around two percent, one point higher than their pre-COVID levels.
Mass also points to recent reporting from The Globe and Mail that says almost half of the new condo apartment and condo townhome listings appearing on the ‘416’ resale market last month were actually relistings of previously listed properties that were cancelled by the seller. The number of cancelled listings has been growing since April as agents are choosing to relist their property to keep it looking fresh to potential buyers. As a result, the statistics may be distorted to appear as though more brand new properties are hitting the market.
Even with this in mind, there’s no doubt that consumer mindsets have changed through the course of the pandemic, spurred by the spring lockdown and work-from-home policies. While there is a presumption that urban high-rise living has become less appealing as buyers set their sights on the suburbs, Mass explains that notion this is inaccurate.
“Savvy, committed and qualified investors still see the comeback of all urban communities once we are through with the worst of the pandemic,” said Mass.
In the interim, Mass says that now is the time to choose the right projects to invest in — developments that offer proximity to transportation hubs, providing convenience and lower travel expenses for future buyers and tenants, are key.
“Ultimately, as the largest independent real estate investment firm in Canada with over $24 billion in transactions over the past two decades to local high net worth investors, we have and continue to drive home the message that pre-construction investments always outpace resale investments,” explained Mass.
“I don’t see this changing as that would mean a total change in the fundamentals,” he added.
