Urban condo markets in the Toronto and Vancouver region have seen their fortunes reversed most dramatically during the pandemic thus far.
While single-family home sales and prices have recovered and then some since the summer, once in-demand condo markets are seeing relatively sluggish activity with price appreciation threatening to turn negative in the coming months.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
But, in a recent interview with Financial Post, Royal LePage CEO Phil Soper said that many of the factors challenging the condo markets in these two big cities are temporary and their impact is expected to wane next year.
That said, the market may be in for some short-term pain in the interim.
First, in the interview with Financial Post’s Larysa Harapyn, Soper said that the Toronto region is currently experiencing an oversupply of condos on the market, with the Vancouver region suffering from a less acute version of the same challenge.
For Toronto in particular, the market saw a large number of new condos arrive in 2020 just when renters and purchasers were “pushed back from the market,” Soper said.
As the pandemic dragged on, rents began to fall as Canada’s typically large foreign student population stayed home, immigration fell steeply and short-term rentals in urban centres nosedived.
Since rent prices are a leading indicator of where resale prices are heading, we can expect to see condo prices soften through the winter, explained Soper.
“But these numbers will return quickly,” he told Harapyn. “This is a very short term thing. By the spring, we’ll be talking about impending [housing] supply shortages, even in condominiums.”
Soper anticipates the condo market’s fortunes will reverse in a similarly speedy fashion as 2021 progresses. Students will be back completely to normal by September 2021, but some will even return by January, he said.
Adding to that, the federal government recently announced plans to boost its immigration targets for the coming years to make up for 2020’s significant shortfall. Soper said that the level of immigration the government is targeting hasn’t been seen since the early 1900s. According to Royal LePage research, newcomers typically rent condos in their first three years after arriving in Canada.
John Pasalis, President of the Toronto brokerage, Realosophy Realty, told Livabl earlier in November that he doesn’t anticipate the downtown condo market to pick up until fall 2021, as offices reopen, student renters return and immigration bounces back.
In the market for a new home? Homewise finds clients the best mortgage options from over 30 banks and lenders and helps clients understand the fine print to save the most money on their mortgage. The process can all be done online or over the phone and text. No in person meetings needed! Start exploring your mortgage options below.
Livabl by BuzzBuzzHome may earn a commission from referrals to Homewise.