Toronto Condo Prices Soar 28%, Pass Half-Million Mark

TORONTO, ON - MARCH, 17   Condo buildings clog the downtown core where the CN tower is often obscured from the street.  This is at the corner of Yonge street and Queen's Quay.  condo apartment housing balcony living downtown        (Richard Lautens/Toronto Star via Getty Images)

Forget single-family homes: Even condos are moving out of affordability range for Toronto’s middle class.

Despite the slowdown in the broader market, new data from the region’s real estate board shows condo prices in the Greater Toronto Area have now passed the half-million-dollar mark, after soaring 28 per cent in the second quarter of this year.

The average condo in the region sold for $532,032 in the second quarter, up from $415,454 in the same period of 2016.

TORONTO, ON - MARCH, 17   Condo buildings clog the downtown core where the CN tower is often obscured from the street.  This is at the corner of Yonge street and Queen's Quay.  condo apartment housing balcony living downtown        (Richard Lautens/Toronto Star via Getty Images)

TORONTO, ON – MARCH, 17 Condo buildings clog the downtown core where the CN tower is often obscured from the street. This is at the corner of Yonge street and Queen’s Quay. condo apartment housing balcony living downtown (Richard Lautens/Toronto Star via Getty Images)

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This makes condos unaffordable for many middle-class households.

With an average household income of $75,000, a typical Toronto family can afford some $380,000 to $420,000 in insured mortgage debt, following the federal government’s new mortgage rules announced last fall.

“Despite the recent dip in overall GTA home sales, the condominium apartment market was quite resilient, especially when compared to low-rise market segments,” Toronto Real Estate Board President Tim Syrianos said in a statement.

“Condo apartment sales accounted for a greater share of overall transactions during the spring compared to the same period last year. Market conditions also remained tight, which resulted in the continuation of strong annual rates of price growth.”

Condo slowdown ahead?

But those tight conditions in the condo market may be coming to an end.

In June, the last month covered in the period of TREB’s report, condo sales turned downwards, with sales activity down 23.4 per cent from the previous June. Prices, however, were still up 23.2 per cent from the same month last year.

It may be that the slowdown in the overall Toronto market is beginning to infect the condo market.

According to preliminary mid-month data for July, Toronto’s housing market continued to sputter, with sales down 39.3 per cent from the same period a year ago.

Single-family home sales are down 45 per cent, and the average price has fallen 17 per cent from its peak earlier this year, BNN reported, though it’s still 6.5 per cent higher than it was a year ago.

Too much regulation?

The sudden slowdown in Toronto’s market has some experts worried the government may be taking its mortgage reforms too far.

The Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking watchdog, has proposed a “stress test” for conventional 20-per-cent down mortgages that would require borrowers to qualify at a rate two percentage points higher than the one being offered.

That follows a similar rule put in place last fall for insured mortgages, which have less than 20 per cent down. But many housing experts note a majority of mortgages in Canada are conventional, and the proposed OSFI rule would have a significant impact on how much money households can borrow to buy a home.

NURPHOTO VIA GETTY IMAGES
Condo towers on the shore of Lake Ontario in downtown Toronto.

Mortgage expert Rob McLister estimated it would shave 18 per cent off the buying power of conventional mortgage borrowers.

The rule has “the potential to notably slow down growth in mortgage originations,” CIBC economist Benjamin Tal wrote in a report last week.

“Given current slowing activity in the market, it might be advisable to rethink the timing of the implementation of those policies.”

One response on “Toronto Condo Prices Soar 28%, Pass Half-Million Mark

  1. Condo Assignments Toronto

    People contact me just about every day and ask me about assignments – I want to buy an assignment! I want to sell my condo by assignment! The truth is, most people have no idea what is involved when buying and selling an assignment. When the Average Joe learns just a fraction of what there is to know about assignments, 95% of the time Average Joe ends up returning to the comparatively simple world of pre-sales and resales.
    So for all the sellers of assignments, as well as those who may be thinking about buying a condo by assignment, I’d like to introduce to the the top-5 reasons why many assignment listings never sell:
    1. No Market Exposure. You are not allowed to advertise assignments on the MLS. Many assignment listings don’t sell because no one knows about them!
    2. Lawyers. Most lawyers hate assignment deals. They often look for reasons to kill the deal – and with assignments, you don’t have to look to hard.
    3. Price. This is probably the #1 reason why many assignment listings don’t sell. You can’t price an assignment like a resale property. Investors buy assignments and investors don’t pay current market value for property!
    4. Closing Day Too Far Away. Buying a pre-sale condo then trying to flip it a month later is a fool’s game. The unit must be at or very close to occupancy so that market value can be accurately predicted and the investor can safely determine if they are getting a deal.
    5. Closing Costs. Did you get your closing costs capped by the developer when you first bought your condo? If not, there is no way to tell exactly what they might be. Buyers of assignments need some degree of certainty as to what closing costs they will incur, otherwise they will move on.

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