New condo openings in first two months of 2008 nearly double that of first quarter of 2007
2007 Toronto CMA Condo Market numbers shattered records - Urbanation’s 2008 outlook sees continuing growth, despite affordability concerns
In the first two months of 2008, the Toronto condo market has seen nine new high-rise condominium openings, compared with five during the same period last year, according to Urbanation.
“In fact,” says Urbanation’s Editor and Executive Vice-President, Jane Renwick, “we are forecasting 19,000 sales in the Toronto new condo market and 17,000 sales in the resale condo market for 2008.”
Other results and projections include:
* 2007 was a record breaking year for the Toronto condo market.
* Annual unit sales increased by 40% (22,654 new unit sales in 2007 vs. 16,114 in 2006 and 16,224 in 2005).
* 104 new condo projects opened in 2007 vs. 84 in 2005, the previous record.
* 2007 Toronto condo prices rose 11.3% in the new sale market and 15.1% in the resale market over 2006 prices.
* The double digit price increase in the new sale market was partly driven by growth in Toronto’s luxury and “super luxury” condo segment, defined as projects that trade over $600 per square foot, which represented 3,784 new units in 2007 and averaged $844 per square foot.
* “Non luxury” unites in the new sale market, by contrast, averaged $360 per square foot, once the luxury units where factored out.
* Price increases in the resale market were even more sustantial, rising 15.1%, from $278 in 2006 to $320 per square foot in 2007.
Balancing the 2007 price increases, mortgages remained affordable, as interest rates stayed at historically low levels. Amortization periods also extended to 40 years, creating lower monthly payments and allowing for the purchase of a more expensive unit at the same monthly carrying cost of a 25-year mortgage.
The definition of a conventional mortgage changed in 2007 from 25% to 20% down, reducing mortage insurance requirements at the same time. Unlike the U.S. subprime market, however, Canadian lenders did not relax their credit evaluation standards, and the Canadian mortgage default rate remained at a very low 0.25%.
Renwick adds, “The Toronto condo market remains buoyant because of low unemployment, low interest rates, high population growth and positive demographic changes that favour condo living.”
Can Toronto continue to absorb high levels of new supply, especially in light of the considerable number of units that will be added to the resale universe in 2008? Urbanation expects the general sales momentum of recent years to hold through 2008, although the sales performance of 2007 will be difficult to duplicate.
About Urbanation
Urbanation is one of Canada’s leading condominium market research firms. SInce 1981, the firm has been analyzing the Toronto condominium market, publishing the “industry bible” - Urbanation’s Condominium Market Survey. This quarterly report tracks new, resale and future condominium projects. Urbanation also provides the development community with essential consulting services, which include site specific market studies, surveys and focus groups.
————————————————————————————————————
Contact the Jeffrey Team for more information - 416-388-1960
