Condominium sales are taking over the Greater Toronto Area new housing market and some parts of the country are following closely behind as rising costs push consumers into vertical housing, a new report suggests.
The Building Industry and Land Development Association said there were 23,747 condo sales in the Greater Toronto Area through the first 10 months of the year, smashing the previous high of 22,316 in 2007 — with two months yet to go.
High-rise sales accounted for approximately 61% of all sales in GTA from January-October. At this point last year high-rise sales only accounted for 57% of the overall market.
“It’s very much becoming a condo market,” said Joe Vaccaro, acting president of BILD. “Ten years ago the split was 25% high-rise versus 75% low-rise.”
The trend appears contained not just to Toronto’s urban core but is now moving to the suburbs. “There seems to be a new trend setting in over the last couple of months with the 905 [suburban] areas outperforming Toronto when it comes to [condo] sales,” said Mr. Vaccaro.
Suburban land costs have skyrocketed because of what the industry refers to as regulatory inertia with no new land developments approved in the suburbs over the last five years. It has led to the hoarding of land and rising prices for single detached homes.
A report Tuesday from Altus Group suggests the GTA will not see any sort of slowdown in new condo construction in 2012.
“New condominium apartment sales in Toronto and Ottawa continue to hum along, which will continue to buoy apartment starts in Ontario through 2012,” said Altus.
Peter Norman, chief economist for the Altus Group, says population growth has supported the Toronto condominium market. “That number of people generates a fair amount of housing demand no matter what is happening,” says Mr. Norman. “Add in the interest rate environment, and them not going up, and that adds to it. There has been a restriction on [new] lots and a lot of people have been shoved into apartments.”
The group looked at 10 real estate markets across the country and found only Alberta is set to rise in 2012. Regina, along with Toronto, is forecast for flat sales.
“Calgary and Edmonton employment growth in 2011 has more than made up for 2010’s declines,” says Altus. “Although employment growth will be more moderate in 2012, the strong showing this year is favourable for stronger housing starts in 2012.”
Altus is forecasting apartment starts to jump to 5,475 in 2012, up from 3,975 in 2011. Single family construction is also forecast to jump to 22,325 in 2012 from 20,906, putting high-rise construction at almost 20% of the Alberta market.
Phil Soper, chief executive of Royal LePage Real Estate Services Inc., says his company has noticed the trend in top condominium apartments in its corporate owned franchises in Toronto and Vancouver. “There is the cost of the commute, the hard costs like gas and insurance but then there is the soft costs in time,” he said, noting consumers look for housing that is closer to subways and urban cores.
If anything, he says Canadian cities, including Toronto, are playing catchup when it comes to high-rise construction. “Look at big established mature cities like New York. They have much more vertical living per resident than we do, they just don’t have as much on per capita basis that is new,” says Mr. Soper. “We have hundred of thousands of new Canadians that have to be accommodated in Toronto.”