CBC News

A boom­ing con­do­minium mar­ket caused hous­ing starts to sky­rocket in April, beat­ing what econ­o­mists had been expect­ing by an annu­al­ized pace of more than 40,000 units.

The Canada Mort­gage and Hous­ing Cor­po­ra­tion says there were just over 21,000 actual starts in April. That works out to a sea­son­ally adjusted annual pace of 244,900, up from the rate of 214,800 units in March and the strongest month for hous­ing starts since Sep­tem­ber 2007. Econ­o­mists had been expect­ing an annual pace of 204,000 units.

“The increase in this seg­ment is partly a reflec­tion of the high level of pre-sales in large multi-unit projects since 2011,” CMHC econ­o­mist Math­ieu Laberge said.

“Wow,” Sco­tia­bank econ­o­mist Derek Holt noted in reac­tion to the data. “This report reflects unbe­liev­able strength …and all of the gain was in mul­ti­ples again which reflect the ongo­ing Cana­dian condo craze.”

The sea­son­ally adjusted annual rate of urban starts increased by 18% to 226,200 in April, while urban sin­gle starts were essen­tially flat, increas­ing by 0.6% to 67,700.

Mul­ti­ple urban starts, which include con­dos, increased by 27.4% to 158,500 units.

Region­ally, the growth was focused in cen­tral Canada.

A total of 95,400 of the 244,900 starts were in Ontario, while Que­bec hous­ing starts came in at 55,000, a 56.5% gain from the pre­vi­ous month, Holt noted. The rest of Canada saw more mod­er­ate growth.

Indeed, there are signs that much of that home-building is com­ing in the form of con­do­mini­ums in Canada’s largest city.

Toronto condo craze

Research firm Urba­na­tion tracks the Toronto condo mar­ket. A total of 29,059 new condo units have sold in Toronto over the past 12 months, with 6,070 in the first quar­ter of 2012 set­ting an all-time record for that time of year.

As many as 35,000 more condo units could come to mar­ket in Toronto in 2012, Urba­na­tion says. But that influx of new sup­ply isn’t being absorbed into the sys­tem, Holt says.

“Canada cur­rently has the high­est stock of unsold con­do­mini­ums since the early 1990s, but far more sig­nif­i­cant is the empty-condo phe­nom­e­non,” Holt noted.

Com­ment: This phan­tom syn­drome that no one can prove. All I can say is that it makes NO sense what­so­ever for peo­ple to buy con­dos and then leave them empty. Even so, who cares? They are bought and paid for.

“This is the ghost city phe­nom­e­non we’ve dis­cussed with clients over time,” Holt noted.

Other ana­lysts are not so con­vinced that the condo mar­ket is over­heated. CMHC’s senior mar­ket ana­lyst, Sean Hilde­brand, notes that condo demand remains strong. Indeed, those new units are sim­ply fill­ing the grow­ing need for apartments.

Com­ment: Toronto cre­ates about 50,000 new house­holds every year – who need somwhere to live. The 28,000 new con­dos help some­what, but there are still more needed. Some new hous­ing, some 905 homes. But there is a con­tin­u­ing demand for addi­tional hous­ing, year in and year out.

The lat­est CMHC esti­mates are that about 22% of con­dos aren’t owner-occupied, but rather rented out as invest­ment properties.

Com­ment: Because the Toronto rental mar­ket is now being served by con­dos. Investors do not buy con­dos to sell, they buy them to rent them out. There are no new rental apart­ment build­ings being built, all new inven­tory is com­ing from con­dos. And with a vacancy rate just over 1%, I would say we could use more.

“Even though we see so much devel­op­ment tak­ing place, I still think it’s a bit pre­ma­ture to sug­gest we’re cre­at­ing a condo bub­ble,” he told CBC’s Metro Morn­ing on Wednesday.

“I do agree that because of the level of con­struc­tion we’re see­ing in con­dos, it leaves us vul­ner­a­ble to a cor­rec­tion … but it’s prob­a­bly not going to lead to a sit­u­a­tion where condo prices need to come down by any sort of con­sid­er­able amount.”

Com­ment: Why do they “need” to come down?

—————————————————————————————————–
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.
—————————————————————————————————–

Related posts:

1. With no sign of cool­ing in Toronto condo mar­ket, hous­ing starts to rise sharply Ontario, par­tic­u­larly Toronto, had the country’s biggest increase in multiple-dwelling…
2. Hous­ing starts climb­ing again Hous­ing starts in the Toronto area bounced back in August,…
3. Young buy­ers drive Toronto condo boom The Toronto condo build­ing boom that began sev­eral years ago…
4. What’s pro­vid­ing the lift to Cana­dian hous­ing starts? The fact home prices are con­tin­u­ing to increase – year…
5. Hous­ing pace cools on fewer condo starts National starts have been gen­er­ally ris­ing in recent months as…