Condo Inventories Drop as Demand for New Units Soars

TORONTO – May 6, 2016:  Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q1-2016 market results today.

A total of 5,615 new condominium apartments were sold across the Greater Toronto Area during the first quarter of 2016, surging 32% year-over-year to just shy of the Q1 record of 5,680 reached in 2012. Strong demand combined with a decline in new openings to push unsold inventory in new developments down by 16% from a year ago to 15,587 units, including a 22% plunge recorded in the former City of Toronto.

While price growth for resale condo apartments accelerated to 8% to reach an average of $467 psf in the first quarter, the index selling price for new condo apartments continued to grow at a much tamer rate of 3% ($582 psf). New condo prices have been held back by a lack of new launches in the core and a shift in activity to suburban areas. However, in a sign that price pressures are starting to build, projects under construction increased their asking prices for unsold units by 8% from last year to $618 psf, including a 14% jump in the former City of Toronto.

“The inventory shortage experienced for low-rise housing has spread into the high-rise segment. More and more buyers priced out of the single-family home market are looking for alternatives in the condo market, providing a clear opportunity for new development” said Shaun Hildebrand, Urbanation’s Senior Vice President.

Record Activity in the 905 Region

Sales of new condo apartments in the 905 Region reached a record 2,112 units in Q1-2016, more than doubling the level from a year ago. Sales in the 905 were driven higher by the launch of 11 projects totaling 2,343 units — 61% of which were sold by the end of the quarter. Only four projects (718 units) launched in the City of Toronto in Q1, limiting sales growth in the 416 area to 7%.

Supply Tightens

The percentage of total units in development that are pre-sold hit a new high of 86% in the first quarter, with pre-construction projects averaging 70% sold, under construction projects rising to 89% sold, and recently completed buildings at 96% sold. Standing unsold inventory declined by 15% from last year to a total of 1,482 units. The 8.5 months of supply on the market in new developments was down from 11.5 months a year ago and the lowest level in four years.

The inventory of condo apartments under construction totaled 50,131 units in 196 projects at the end of March, remaining virtually unchanged over the past year.

Resale Conditions Favour Sellers

Resale condo apartment activity increased by 21% year-over-year to 4,922 units in the first quarter. Over the same period, total listings declined by 5%, elevating the sales-to-listings ratio to 55% — above the 50% upper threshold of a balanced market. The average selling price for a resale unit was $411,000 based on an average size of 880 sf.