In the recent GTA Q3-2021 Condo Market Report from Urbanation, data shows that condo sales across the GTA hit record highs in Q3-2021, which once again reveals the strength of the GTA's condo market even in such unprecedented times.
One of the most significant changes to the nature of the condo sales market is the seasonal trend of the industry taking a bit of a break between the peak of Spring and Fall (Summer is often one of the slowest months of the year). However, COVID-19 has completely changed that trend as developers kept launching projects to capture the surge in demand for pre-construction units.
"During the last two quarters, a total of 16,557 units were launched for presale — 76% of which were sold by the end of the period. Indeed, with sales volumes reaching 26,791 units over the last four quarters, annualized activity is essentially back to its pre-COVID level of 27,505 sales as of Q1-2020. If this momentum continues into the fourth quarter, 2021 could be one of the top two best years ever for GTA new condo sales", says Urbanation.
Again, the star of the show is the 905 region of the GTA which led activity all throughout Q3. The region represented more than half of sales for the fourth time in the past five quarters, with sales sitting at 4,138 units, up 9% annually. There were a total of 4,693 units launched at an average price of $1,081 psf (price per square foot).
In the City of Toronto, 3,374 units were brought to market and saw a 56% sold rate at an average price of $1,285 psf. Within the downtown markets, the 1,397 units launched were 65% sold at $1,411 psf. These new launches were achieved as the average unit size remained at a record low of 665 sq ft. Although the 905 region's sales were phenomenal, the average unit size dropped below the City of Toronto for the first time ever (652 sq ft). The smallest average unit sizes were found in Richmond Hill (604 sq ft), Vaughan (611 sq ft), Oakville (652 sq ft) and Mississauga (661 sq ft). The average selling price for new launches in these areas ranged from $1,021 psf (Oakville) to $1,176 psf (Vaughan).
At 3.1 months of supply, new condominium inventory in the 905 region was at an all-time low, which is expected since Q3 saw the bulk of their inventory sold. As a matter of fact, the 905's supply was at less than half the level of the City of Toronto and has been that way since 2017. That year, new condo appreciation prices began ramping up, while 2020's pandemic acted as an accelerant to the trend. According to Urbanation, "inventories in both markets have fallen well below what is considered to be a balanced market at 10 months, signaling that further new condo price increases are on the horizon across the GTA.”
Here are some more key highlights from Urbanation's Q3-2021 report that show how investors are benefiting from the recovery of the condo market.
Message to Investors
The value of condominiums compared to the rest of the GTA's housing market has never looked better from an affordability standpoint. In September 2021, the gap between the average resale price for detached homes and condominiums grew to a record high to just under $818,000. The increase we see here is about 50% compared to a year ago, and this occurred as detached prices increased by 29%, which is an increase of $342,000 within 12 months. The last time the market experienced a price gap this wide was in 2017. Immediately after the rise, demand began to shift towards condominiums in the months following.
What investors can take away from this price gap is that there will be growing competition in the condo market as owning a detached home moves further out of reach for many would-be buyers.
Today's investors need to be intentional about location, square footage and pricing by doing their homework ahead of launches so that they are ready to be amongst the first to purchase units at launch.
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