The great Toronto condo craze heads for the suburbs
By Desi Auciello, President of the Greater Toronto Home Builders’ Association-Urban Development Institute
“The trend for highrise sales is high, with no sign of a turning point,” writes housing economist Will Dunning in the latest edition of his monthly Housing Market Digest.
Dunning’s digest was issued immediately after the GTHBA released new home sales statistics for July. Those figures revealed that what I call “the great Toronto condo craze” continues, but with somewhat of a twist.
Let’s look at the big picture first.
According to RealNet Canada Inc., 3,096 new homes and condos were sold in the GTA in July. Total sales declined by 8% compared with July 2005; however, highrise unit sales (condo apartments, lofts and stacked product) were up 8%. The overall decrease was as a result of an 18% drop in low-rise unit sales (single-detached, semi-detached and townhouses).
In the first seven months of the year, the market was off by 5.8% compared with the same period in 2005. But highrise unit sales are up 2% year-to-date. The decline in total sales is due to an 11% decrease in low-rise sales.
The highrise and low-rise condo sales curves have been trending in different directions for quite some time now, resulting in an ever-increasing highrise condo market share of the total market — 45% of all sales through the first seven months of the year.
Here’s where it gets interesting. While highrise sales were up 8% in July, they were up an astounding 260% in Peel Region and 215% in York Region. Meanwhile, highrise sales slipped 32% in the city of Toronto.
And whereas Toronto typically accounts for 75 to 80% of monthly highrise sales, its market share declined to 49% last month as condo sales took off in the suburbs.
Are these numbers an anomaly? Partly, but not totally. The huge sales spikes are due to some high-profile new project openings in both regions.
In York Region, the Downtown Markham project made a very successful debut in July. Here is a 4,000-unit development with not a single detached home in the entire master plan (see my column “Whatever happened to the single family home?” at http://www.new homes.org/articles.asp).
In Peel Region, the exciting “Marilyn Monroe” buildings by Fernbrook Homes and Cityzen Urban Lifestyle hit the market with a bang. You know times are changing when 56- and 50-storey buildings hit Mississauga.
While these new project openings can skew the market in any given month, there are some larger trends and forces at play that suggest we are going to see more highrise condo development in the 905 regions.
First and foremost is the recently passed Greater Golden Horseshoe growth plan, which calls for 40% intensification in the built-up areas of each town and city, as well as much more intense development in the growth areas of those same towns and cities.
Secondly, while condos are the affordable option, they are much more affordable in the outlying areas, as are other housing types.
Meanwhile, as our population ages, the move-down buyer is looking for housing within the same community, and downtown Markham and the Mississauga city centre have all the amenities they are looking for.
I believe we are seeing the front edges of a gradual shift toward intensification of our suburban cores, although it won’t be quite as dramatic as we are currently witnessing.
The city of Toronto will continue to represent the solid core of the condo market, particularly as the waterfront lands come on stream. However, the 905 regions are coming on strong.
By the way, Dunning has upped his highrise condo sales forecast for the year by 40% compared with his original forecast as “the great condo craze” continues.
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