City Condos are Hot!! Sales and prices rise!

Posted by: Elise Stern, Created date: November 3, 2014

There seems to be no end in sight to the condo boom, especially in the City of Toronto. Prices keep rising. In September, the average selling price for a condo apartment in Toronto was $395,505, an increase of 9.2 per cent compared to the same time last year. The average price in the 905 regions was $300,273, up 3.5 per cent from a year ago.

Why are all these condos selling while even more are under construction? Clearly the demand is strong. With several new office buildings under construction in the city, more people are attracted to work and play downtown. About 75,000 new people arrive in the area every year and need places to live. Although it seems
like many of the new buildings would take buyers away from the resale market, Toronto’s construction industry is only able to complete about 19,000 units a year – not nearly enough to satisfy demand.

Real estate investors are also interested in buying condos to rent out as Toronto has few purpose-built rental buildings and a low vacancy rate.

Despite the rising prices, condos are still affordable. Mortgage interest rates are at rock-bottom and are unlikely to start rising until some time next year.

Demographic trends also support the condo market. People who live alone are the fastest-growing type of household in Canada. The never-married, separated, divorced and wid- owed are population categories that have all increased since the 1970s. Between 1996 and 2006, the homeownership rate for one-person households increased from 40 per cent to 48 per cent. During the same period, the overall homeownership rate went up by only 5 percentage points, to 68 per cent.

In 2006, of the 915,725 households that lived in owner-occupied condominiums, about 41 per cent were people living alone, says Canada Mortgage and Housing Corp.

“As a consequence of population aging and the increased tendency to live alone, one-person households are expected to show the fastest pace of growth to 2036, making it the single biggest type of household by the 2020s,” according to the CMHC.  

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