By Tony Wong – Toronto Star MoneyVille

High rise con­do­minium sales in the Greater Toronto Area accounted for more than half the new home sales last year for the first time ever, accord­ing to fig­ures released by Real­Net Canada Inc.

“The pop­u­lar­ity of con­dos has been an increas­ing trend that we have seen over the last decade,” said George Car­ras, pres­i­dent of RealNet .

High rise sales accounted for 52% of all pur­chases last year, com­pared with 42% in 2009. Afford­abil­ity issues, along with a lack of build­able lots for low rise devel­op­ment have helped con­dos become the pop­u­lar choice with new home buy­ers.

“Within the last decade, the share of the GTA hous­ing mar­ket cap­tured by high rise condo devel­op­ers has risen steadily from one quar­ter, which was con­sid­ered nor­mal, to a third, which was called the new nor­mal,” said Build­ing Indus­try and Land Devel­op­ment pres­i­dent Stephen Dupuis. “To the point today where more than half of all new home sales annu­ally are high rise.”

Dupuis notes that when condo sales hit the 40% level some builders dubbed that the year of the condo. But this is the first year on record that con­dos offi­cially passed the half way mark.

All that condo build­ing has some ana­lysts wor­ried that there is a mas­sive over­sup­ply in the works. Ana­lysts have been warn­ing that there could be a cor­rec­tion in prices as a result.

So far that hasn’t happened.

Car­ras says one prob­lem is struc­tural. Builders are going flat out, but they can only put so much sup­ply on the market.

In 2010 there were 15,874 occu­pan­cies for high rise build­ings, about aver­age for the decade.

“They’re not sit­ting idly by. But they only have so many resources. It’s not like you’re Ford Motor Com­pany and you can put on an addi­tional mid­night shift. So the sup­ply is not com­ing on as fast as the demand,” says Carras.

That has helped to hold prices up, at least so far.

New home prices also hit new records at the end of 2010.

Aver­age prices of sin­gle detached homes exceeded the $500,000 thresh­old, clos­ing the year at $503,190.

Con­do­mini­ums passed the $400,000 thresh­old, hit­ting an aver­age price of $441,663.

Many of the recent sales have been to for­eign investors from Asia and the Mid­dle East. There is some con­cern that units will ulti­mately come back on the resale mar­ket if investors do not see price appre­ci­a­tion, or if they are unable to rent their prop­er­ties because of a glut.

Part of the pop­u­lar­ity of con­dos though is by default. Low rise sales have taken a hit because builders have had trou­ble find­ing lots. Another com­plaint has been red tape at city hall in get­ting project approvals.

“You can’t sell what you don’t have,” says Car­ras. Sales of low rise homes decreased by 10% over 2009, fac­ing the sec­ond worst year since 2000.

Over­all, 2010 sales were up by 8% to 33,996 units com­pared with 2009.

How­ever, that makes it the third worst year since 2000.

The low was in 2008 was when the reces­sion hit hard and con­sumers were par­a­lyzed with inde­ci­sion. Sales plum­meted to 26,768.

In terms of builder sales, Mat­tamy Homes, had the biggest year sell­ing 1,815 new homes.

Monarch Homes was in sec­ond place at 1,403 and Tridel Corp. came in third at 1,277.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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