The GTA’s Q2 – 2021 Condo Market Report

Q2 2021 Condo Market Report

As the condo market started to make a steady comeback from the pandemic, condo investors saw great opportunities in the warmer months as young workers flooded back to the city. As a result, the GTA rental market started to see a recovery during the second quarter of 2021 as lockdown measures began to ease, and the entire condo market started to see an increase in sales that resembled pre-pandemic records. Sales in Q2 were 5.5 times higher than a year ago during the initial months of the pandemic (1,637) and nearly matched the level from Q2-2019 (9,075). The 905 region continued to drive growth in the GTA new condominium market during the second quarter, representing 58% of sales — the highest share on record for a Q2 period (typically the busiest time of the year for new condo sales. The activity was also robust in the City of Toronto with 3,800 sales, which was 7% above the 10-year average of 3,550 sales. Across the GTA, sales were boosted by the launch of 8,490 units, the highest total for new condominium openings in six quarters. However, the additional supply was overmatched by demand as the new units were 81% sold by the end of the quarter, the highest average absorption rate for new launches on record.

Let’s observe the findings from the Q2 Condo Market report from Urbanation to see how investors are benefiting from the recovery of the condo market.

Q2 2021 Active Condo Market

New condo launches in Q2-2021 opened at an average index price of $1,113 PSF, up 23% from the average in Q2-2020 at $907 PSF. Keep in mind that this was based on a very limited number of new project openings. If we compare Q1-2021, the average opening prices declined by 13% from the market high of $1,280 PSF due to a greater share of projects launched in the 905 area in Q2. As a result, the average unsold index price in the GTA increased by 9% year-over-year to reach a record-high $1,196 PSF. The growth rate in the unsold average index price was slightly above the 10-year average of 8%.

Q2 2021 New Project Openings

The number of new project openings within the GTA changed drastically with 32 new projects in Q2-2021 versus 6 new projects in Q2-2020, bringing this number to a 433% overall increase. This could be attributed to the uncertainty that the year 2020 brought. The number of total units also increased dramatically to 621% compared to the previous year, with 8,490 total units in Q2-2021 versus 1,176 in Q2-2020.

Q2 2021 Resale Market

In the resale market, there were 7,790 units sold in Q2-2021, which represented a Q2 record. The ratio of units sold to total listings during Q2 reached 73%, up from 45% in Q2-2020. The average resale price grew to 10%, from $638,000 to $707,000. Seeing these increases in the resale market is beneficial to pre-construction condo investors because this gives them the peace of mind that their unit will appreciate when they are ready to sell. Plus, these increases in the resale market show how the market is recovering from the previous year.

Q2 2021 New Projects Under Construction

Condo projects that completed construction totalled 4,317 units in this quarter. This is an increase of 18% year-over-year, up from 3,635 units completed in Q2-2020. Condo projects that started construction continue to outpace condo deliveries in Q2. There were a total of 6,029 units that began construction this quarter. This is down from 7,607 units from Q2-2020. However, this quarter is up from 5,892 units that started construction in Q1-2021, showing that despite lockdown restrictions from the past year, construction is still moving forward as supply needs to keep up with demand. Although there was a slight drop in the number of units that started construction, we can expect this number to increase within the next two quarters of this year. At the end of Q2-2021, there was a record high of 86,149 condominiums that were under construction in the GTA, increasing by 10% from the previous year.

Overall Message for Investors

The findings for Q2-2021 show that despite any setbacks from the last year, the condo market, rental market and resale market are climbing steadily back to pre-COVID levels. This report shows investors that despite any minor economic changes, the market can recover within a year as we’ve seen a healthy number of sales and a slow increase in the average price per square foot. Additionally, with the resale market reaching a record high for Q2, condo investors looking to sell will see a strong appreciation rate for their condo unit.

It’s also important to mention that the rental market is making a comeback as students and young workers are flooding back into the city to return to school or the office. The average cost of rent in this quarter was similar to Q3-2019 ($2,481). This is great news for investors who were worried about vacancy rates and rental rates declining only a year ago. The market is in full swing and is seeing substantial growth. We can only expect these numbers to continue to increase within the next two quarters of this year.