Toronto condos tighten their grip
February 15th, 2008By Derek Raymaker - Globe and Mail
High-rise condominiums not only dominate the skyline, they dominate the overall new-housing market. The final construction, sales and price data for 2007 are in, and, for the first time ever, both construction and sales figures for condominiums outpaced those for new low-rise dwellings.
High-rise sales have been creeping up steadily on those for low-rise dwellings (detached and semi-detached dwellings) since 2001, when the former were a mere 25% of total new-home sales. Last year, 23,234 condominium sales accounted for 52% of new-home sales in Greater Toronto, according to data published by N. Barry Lyon Consultants and RealNet Canada.
When combined with resale condominium suites, a total of 44,381 condo products changed hands in 2007, up 25% from 2006.
At just under 21,550, new low-rise sales were at their lowest level ever, and almost half of what they were in their record year of 2002, when sales flirted with the 38,000 mark.
This distribution of sales is something a lot of market observers had been only quietly predicting. The trend was certainly in the direction of high-rise sales dominating the new-home market, but few people thought it would happen so quickly, and hardly any thought it would happen in 2007.
It would be convenient to apply some grand theory to the trend - some great revelation among new-home buyers that high-rise utopias have so many maintenance-free perks and conveniences that they were willing to leave the dream of a deep lot on a quiet street behind. But it’s not nearly that complicated or visionary.
There are certain demographic factors that continue to bolster high-rise sales, such as buyers taking advantage of record low interest rates, and the ever-growing number of baby-boomers, unburdened of dependant children, looking to downsize.
It comes down to affordability. The average price of a condominium was $397 a square foot at the end of 2007. That’s a fairly significant increase of 11.8% over the average price of $355 in December, 2006. But when you look at the overall average price of $355,998, high-rise suites are still more affordable than low-rise products.
The condo average has been pulled up substantially in recent years by an abundance of super-luxury projects that have hit the market, such as the Four Seasons Residences, Ritz-Carlton Residences, Museum House, and Shangri-La. Average suite prices in those projects are easily over $900.
It’s important to remember that there’s still a good deal of choice when it comes to condominium suites in central Toronto for under $300,000. And that’s where the affordability gap between new condos and new detached homes really opens up.
New detached houses sold for an average of $515,325 in 2007, according to data released this week by Canada Mortgage and Housing Corp. That’s a 10.5% increase over last year’s average of $466,230. (Taking freehold townhouses into account, Realnet reports that the average price of a new single-family home in Greater Toronto was $414,141 in 2007.)
If you’re looking for low-rise housing whose prices are competitive with those of centrally located high-rise suites, you have to go to Durham Region, which includes Ajax, Pickering and Oshawa. It was the only area in Greater Toronto with detached housing selling at an average price of less than $400,000 - $370,001, to be exact.
Going forward, condominium developers are aggressively looking to expand their market by appealing to small families, especially in redevelopment projects such as the West Donlands and Regent Park, in the downtown’s east end. Considering the growing price gap between low-rise and high-rise, the current market conditions might be working in their favour. The trend in condominium sales would certainly indicate that.
————————————————————————————————–———-
Contact the Jeffrey Team for more information - 416-388-1960
