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It’s not unsurprising that detached homes would cost far more than your average Toronto-area condo. However, the price difference between the two property types has grown to its second-widest point in more than ten years, a trend that could lead to significant condo price growth this year.

New findings released by Zoocasa show that the average detached home price and condo apartment price in the Greater Toronto Area have reached a significant price gap in recent history.

Using Toronto Regional Real Estate Board (TRREB) January data from 2011 to 2021, the brokerage found that the ratio between condos and detached properties was 1.99, where detached homes cost nearly twice as much as an apartment. Now, that ratio has grown to 2.33, the second-widest gap in the last 11 years.

The last time the average price of GTA condos and detached homes were this far apart in price was back in January 2017, when the ratio was 2.41. That year, the mortgage stress test and Ontario’s Non-Resident Speculation Tax were announced according to Zoocasa.

Using the 10-year average price ratio, the current average price for a condo apartment in the GTA would be about $875,034, approximately $100,000 more than what they’re worth today.

“With the gap between the two home types widening beyond the historical average, and upcoming market factors that could make lower-priced homes more popular, condo apartments in the GTA could see stronger price growth in 2022,” said the report.

Condos expected to lead price growth in 2022

Although detached homes and condos are far apart price-wise these days, a few factors could send the values of Toronto-area condos upward this year.

Zoocasa points to the rising interest rates we’ll see as the Bank of Canada winds down its “emergency-era monetary policy,” which saw the overnight rate plummet to 0.25 per cent in 2020, where it has stayed since. As a result, growing rates could see more affordable condo homes soaring in demand compared to pricier housing types.

This would be similar to 2018, the last time rates were hiked. During this period, sales were down, but prices for GTA condo townhomes and apartments shot up the most, increasing between nine per cent and 10 per cent that year. Detached homes, by comparison, rose in price by four per cent during the same period.

In 2022, Zoocasa predicts that condos will lead price growth, a factor that could be supported by the returning desire for city living as pandemic restrictions ease.

“Taking cues from 2018, when interest rates rose last, we can predict that the most affordable price points in the market, like condos and townhomes, will lead growth in 2022 as a result of higher borrowing costs,” said Lauren Haw, CEO of Zoocasa.

Big year for GTA condos on the horizon

Already a couple of months into 2022, condos are moving quickly on the Toronto-area market.

According to Zoocasa sales representative Ross Aitken, the average price of a GTA condo increased by $36,000 in the first month of 2022. After two years in and out of lockdown, buyers are optimistic and excited to return to an urban lifestyle, he noted.

“Usually, when we see detached price gains slow, condos will grow. Heading into the new year, major bodies like the Toronto Regional Real Estate Board are expecting price appreciation to moderate from the record pace we saw in 2021, and rising interest rates will only make the most affordable homes on the market more attractive,” said Aitken.

“I’m anticipating that we’re going to see a big year for condos in the Region,” he added.

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