Toronto devel­op­ers com­mence build­ing 24,388 units in 104 projects

Urba­na­tion Inc., the lead­ing source of infor­ma­tion and analy­sis on the Toronto con­do­minium mar­ket since 1981, has released its Q4-2012 mar­ket overview.

In the Toronto Cen­sus Met­ro­pol­i­tan Area (CMA) there were 3,841 new con­do­minium apart­ment sales in Q4-2012, an increase of 16% over the third quar­ter. Over­all, 17,997 new units sold in 2012, between the five-year CMA aver­age of 20,119 annual sales (2007 to 2011) and the ten-year aver­age of 17,139 annual sales (2002 to 2011), but down from the record break­ing pace set in 2011.

The Toronto CMA con­do­minium mar­ket set sev­eral records in 2012 includ­ing: con­struc­tion starts (24,388), active devel­op­ments (355), total active units (89,251), and total units under con­struc­tion (56,866).

The aver­age sold index price in the Toronto CMA was $536 psf in Q4-2012 (up 5.2% annu­ally), while unsold suites were being offered at $568 psf on aver­age in the fourth quarter.

Over­all the active Toronto CMA new con­do­minium mar­ket is 79% sold over­all, down from 80% sold in Q3-2012 and 82% sold in Q4-2011, but above the ten-year aver­age of 78%.

“Despite con­cerns over the level of unsold sup­ply in the new con­do­minium mar­ket, the ratio of sold to unsold units has con­sis­tently been above the long-run aver­age in recent years” says Ben Myers, Urba­na­tion Exec­u­tive Vice Pres­i­dent. “There remains con­fu­sion over unsold sup­ply and stand­ing inven­tory, to clar­ify, at the end of Q4-2012 there were just 613 com­pleted and unsold new con­do­minium apart­ment suites in the Toronto CMA – some would be rented out by the devel­oper, some used for con­struc­tion offices, and oth­ers used as model suites for sub­se­quent phases, effec­tively low­er­ing this stand­ing inven­tory fig­ure even farther”.

Over­build­ing was a term cited quite often in rela­tion to the Toronto con­do­minium mar­ket in the sec­ond half of 2012, how­ever, a sur­vey of devel­op­ers, lenders and bro­kers con­ducted by Urba­na­tion in Decem­ber indi­cated that just 11% of respon­dents indi­cated that over sup­ply in the new con­do­minium mar­ket was their top con­cern going into 2013.

The resale con­do­minium mar­ket suf­fered from a lack of sup­ply in Q4-2012, as just 3.2% of the 227,700 units (1,285 build­ings) tracked by Urba­na­tion were listed for sale in the fourth quar­ter, the low­est quar­terly level in over 10 years. Resale activ­ity declined 14% quar­terly in the Toronto CMA to 2,941 trans­ac­tions. Despite the decline in resale units traded, the Sales-to-Listings ratio increased quar­terly to 40.2%, indica­tive of rel­a­tively bal­anced mar­ket conditions.

“Many investors chose to hold and rent their units in 2012 rather than sell them into uncer­tain mar­ket con­di­tions” adds Myers. “This is con­trary to the the­ory that con­do­minium unit hold­ers will panic and sell their suites at sig­nif­i­cant dis­counts dur­ing a soft­en­ing mar­ket“.

Of the 2,941 resale con­do­minium apart­ment trans­ac­tions in Q4-2012, just 0.9% of these suites were sold for less than 90% of the list price. These 27 units sold at an aver­age price of $641,000 ($282,000 over the aver­age Q4-2012 resale price of $359,000), indi­cat­ing that most of these lux­ury suites were owned by indi­vid­u­als with unre­al­is­tic value expec­ta­tions, not investors look­ing to ‘cut their losses’.

Myers adds “We do not sub­scribe to the the­ory that a major cor­rec­tion in resale con­do­minium pric­ing is forth­com­ing, the lack of reces­sion­ary con­di­tions, the nearly non-existent fore­clo­sure mar­ket, and the unwill­ing­ness of con­do­minium sell­ers to accept low-ball offers will keep prices from falling to any sig­nif­i­cant extent in 2013.“

Over­all, 15,292 resale con­do­minium apart­ments traded in 2012, down from the five-year aver­age of 15,609, but above the ten-year aver­age of 13,486.

Urba­na­tion is fore­cast­ing 14,500 resale con­do­minium trans­ac­tions in 2013 and 17,000 new con­do­minium sales in the Toronto CMA. 53% of respon­dents to Urbanation’s indus­try ques­tion­naire expected between 17,500 to 20,000 new con­do­minium sales in 2013, while 42% expected sales between 14,000 and 17,500.

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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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