Canada's Condominium Magazine
Sunny but partially overcast appears to be the forecast for the Toronto new homes market as 2017 proceeds. Whether one sees the sun or the cloud cover will depend on one’s vantage point. The market will experience “modest but healthy” growth and will remain tight, favouring those with money and becoming less attainable for those without it. Fewer new low-rise homes will be built, while the condominium market will continue to grow, bolstered by the baby boomer generation’s move to luxury condos for retirement. Younger people, especially the millennials, on the other hand, are more likely to rent than purchase, despite their relatively high interest in home ownership as a retirement strategy.
The 2017 housing market outlook for Toronto from BuzzBuzzHome offers a somewhat bleakish view of the landscape, at least for those would-be home buyers who are not flush with cash. That “modest but healthy” growth in the new residential market will be through “low-volume, high-price sales,” and new purchases will be increasingly unattainable for those on the low-to-medium income scale. New mortgage regulations that make it harder to qualify for a loan could add to the difficulty for some first-time buyers.
Looking at employment statistics for Ontario and Canada in 2016, when the total number of people working full time in the province increased by less than 1 per cent and decreased in the country as a whole, the survey does not see “a friendly market” toward the average resident. Part-time work cannot support the real estate market, the report bluntly states.
All in all, we predict modest but healthy growth for the Toronto CMA new residential market in 2017. The bulk of this growth will be through low-volume, high-price sales, as new purchases get increasingly unattainable to consumers on the low-to-medium income scale, but increasingly appetizing to high-income resident and investors seeking a blend of stability and yield.
This will be especially true in the detached homes market, where younger workers, with an estimated median income of $73,000, cannot afford the average single-family home in Toronto. This market will be caught between the supply-side pressures of increased competition from the resale market and higher production costs, and demand-side pressures of unaffordability and lack of interest among those in the high-income range. According to BuzzBuzzHome, 53 per cent of home purchase enquiries it receives from first-time buyers concern condos; 32 per cent concern single-family homes. CMHC also forecasts a 20 per cent year-over-year decrease in the number of single-family home starts for 2017 in Toronto.
The condo and townhouse market will do well, says the survey. This is partly the result of a growing trend towards densification across Canada. The number of new condo developments was up 11 per cent last year, while the overall number of housing developments was down by 10 per cent, a reflection of increasing demand for downtown living and walkable neighbourhoods, as well as the increasing unaffordability of single-family homes in cities like Toronto.
Pending (proposed or in planning stage) new multi-family developments in the GTA outnumber single-family developments by about ten to one (101 vs 14). The difference is greater when measured by the number of units: 51,599 multi-family compared to 1,110 singles.
The number of active condo developments increased by 18 per cent in 2016; in 2017, according to BuzzBuzz, there will be more rental units, as ownership becomes less affordable for more people. Nevertheless, first-time buyers will be very active in the market, especially the condo sector: the Toronto Real Estate Board forecasts that half of all sales in 2017 will be by first-time buyers, many of whom will buy condos.
New condo prices rose by up to 10 per cent in Toronto in 2016, says BuzzBuzzHome, though in the case of a one-bedroom condo, the average price dropped from January ($364,900) to December ($356,200). The real estate company is forecasting average prices of $383,115 and $599,913 for one- and two-bedroom condos respectively in the first six months of 2017.
Which neighbourhoods are most popular with Toronto homebuyers? Based on the number of developments underway, the Entertainment District (twenty-four current developments), centred around King Street West and Spadina, is the favourite. Other hotspots include the St. Lawrence Market (fifteen developments), Moss Park at Dundas and Church (now being called the Garden District, fifteen developments), the Fashion District, (seventeen developments), and the Church-Wellesley Village (seventeen developments).