By Nate Hendley
Urbanation, which describes itself as “Canada’s leading condominium market research company” recently released a market overview of condo sales in the Toronto Census Metropolitan Area (CMA). The study pegged new and resale condominium sales at 37,041 in 2010—only three percent lower than the 2007 record of 38,306 sales.
Urbanation also forecasts that 15,000 – 17,000 new condo units will be launched in the Toronto CMA during 2011, with 16,000 sales.
Studio Toronto interviewed Ben Myers, executive vice-president and editor of Urbanation for more details.
Q. Condo sales in the Toronto CMA reached a near-record high in 2010. What’s driving this surge?
A. New investors are buying units in droves to rent them out because we’re not building a lot of new rental buildings and we’re still getting plenty of immigration. Then, there are first-time buyers. People realize the benefit of getting into real estate as soon as possible. With interest rates low and units small, they’re able to purchase. We see also single women getting into the market more than they ever have before.
Q. Is the trend towards strong sales going to continue into 2011 or are we going to hit a slump very soon?
A. I don’t think we’ll hit a slump. If we have a slow-down it’s going to be more gradual, it won’t be a drop off a cliff. I think people realize the benefit of owning over renting if you’re going to be there for any significant period of time.
Investors are still purchasing even though prices keep going up. People keep looking and saying, ‘Oh, is this the point where investors are going to drop off?’ because they’re not going to get the returns that they want. Every time we think that’s going to happen we have another quarter where we had 6,000 sales and that’s what happened in Q4 2010 in the new condo market. It doesn’t seem like anything can slow [the condo market] down.
Q. What’s the average price people are paying for new condos?
A. In the new market we track … the sold price per square foot (psf) and the unsold price per square foot (psf). The sold price per square foot basically takes into account projects over the course of their life, as long as they are still active in the market. That’s about $471 per square foot in the Toronto CMA area. The unsold is basically the average of all the unsold units in the Toronto market and that was $530 per square foot in the Toronto CMA at the end of the fourth quarter 2010.
Q. What parts of the Toronto CMA have the most new condo developments and strongest sales?
A. Certainly, the downtown core is always very strong, but North York city centre has been very strong too. Even the Etobicoke waterfront is doing very well. I think people see the value of having a waterfront view even if it isn’t downtown.
Q. What neighbourhoods are going to be hot in the next year or two?
A. I always keep my eye on the downtown east. There seems to be a pretty big gap between Parliament Street and the DVP (Don Valley Parkway) where there’s not a lot of activity. I think that’s an area where developers are going to look now that we have the West Don Lands getting a little built up.
Q. What kind of condos are doing well in this market?
A. Smaller suites, as in, 500 square feet … 500 to 600 square feet is kind of the unit investors look at because they can find easier rents. First-time buyers [also like them] because those are the ones that are affordable. Developers aren’t building as many large units now.
Q. Are there any particular developments you’re keeping an eye on?
A. We put out a list of the top sellers from 2010. One Bloor was the best selling site in 2010, with somewhere in the neighbourhood of 550 sales.
Q. Anything that isn’t doing well on the market? Anything you’ve noticed over the last year or so that’s fizzling?
A. We did mention in our January press release, there’s a kind of flatness overall in the resale market. It was at $374 per square foot in Q4 2010 and that’s only up from $369 per square foot overall in Q1.
Q. Are you seeing more seniors getting into condos?
A. I don’t think so. Everyone’s kind of waiting for this with the baby boomers, but we certainly haven’t seen that in droves. A lot of the buildings are aimed at first-time buyers in the investor market because that’s what’s selling. As a senior, you may not necessarily want to be living in a building that’s 40 – 50 percent rented with a whole bunch of students. You’ll want more of a boutique style in a quieter neighbourhood with larger suites and those just aren’t getting built right now, certainly not in the former City of Toronto. There’s a few being built in the suburbs, but if you’re used to living in Toronto all your life you may not want to move to Aurora.
Q. Is there a demographic of the typical condo buyer in the Toronto CMA?
A. The typical condo buyer is either a young single or a couple … first-time buyers and move-up buyers.
Q. Are any new demographics emerging?
A. I think the new demographics probably came out five years ago where we started to see what we call “marriage casualties”. Lots of divorcées buying units for themselves and single women getting into the market.
[In the past] a lot of families would buy a condominium unit as a first time purchase. They would get some appreciation for [the unit] then buy a house. But now we’re seeing people buying the smaller unit—500 to 600 square feet—then they move up to a 700 to 800 square foot unit and then potentially even buy a third unit as opposed to going out to buy a house. That’s certainly a change from where we were 10 years ago.
Q. Are there any upcoming projects we should keep an eye on?
A. The spot to watch is Waterfront Toronto’s waterfront projects. I think that’s going to totally change the city … You’ve obviously seen the Corus building being built. It’s completed now. Great Gulf is going to launch a condominium tower—the first residential down there. I think that’s going to be a fantastic transition down there. They’ve looked at other cities [to see] what works and what doesn’t. [They want commercial space at ground level] and I think that will really drive it as opposed to other areas where we’ve had giant patches of land that we’ve put a bunch of towers up and there’s no life at the bottom—people just going to work and coming back. This is actually going to be an area where people stay, 24/7.
Q. Final question. What are your thoughts for this year?
A. I’m a little more bullish than some people out there. I think it’s going to be a good 2011.