CANADA: Condo Listings Surge in Downtown Toronto – Signals Real Estate Weakness – Opinion

Living: Condo Listings Surge 215% in Signal of Downtown Toronto Weakness

  •  ‘Crazy slow’ market sees sales ratio drop to early 1990s level
  •  Immigration slowdown, pandemic causes rents to slide
Benchmark prices for Toronto condominiums fell for a second-straight month in September.
Toronto condominiums fell for a second-straight month in September. Photo: Brett Gundlock/Bloomberg

September data from the Toronto Regional Real Estate Board and research firm Urbanation Inc. show a surge of units for sale, the beginning of a weakening trend for condos, along with a sharp decline in rents. That’s in spite of a boom in other segments such as single-family homes in Canada’s financial capital.   

The trend means condo prices in October will likely fall on an annual basis, Urbanation President Shaun Hildebrand said. “Demand is just not keeping up with new supply right now,” he said.

The weakness suggests the rosy picture for real estate that emerged over the past few months may be overstated in a city that UBS Group AG says is among the world’s most vulnerable to a “sharp correction.”

Rarely Down

Across the Toronto region, owners listed 6,480 condos for sale in September, up from 5,599 in August and 3,403 in the same month a year earlier, TRREB reported Tuesday. With sales not keeping up, benchmark prices fell for a second straight month and are down 1.8% since May, even as values for detached homes have surged over that time.

Lackluster demand for condos is beginning to act as a drag on the overall Toronto housing market, with total home sales falling on a seasonally adjusted basis in September for the first time in five months.

Downtown Pain

According to real estate professionals, the weakness is concentrated in the downtown core. A glut of units began to form after the pandemic halted immigration and people left the city center in search of more living space to work from home. At the same time, a flurry of new condo completions and a raft of Airbnb operators shifting to longer-term rentals has added to the inventory.

The ratio of sales to new listings for condos in downtown Toronto fell to 24% in September, the lowest level since the early 1990s, Hildebrand said.

In the core, average rents were down 14.5% in the third quarter on average from the same period last year, Urbanation data show.

“It’s simply because of all the new construction completions and absolutely no new blood of tenants coming in,” said Simeon Papailias, co-founder of the Real Estate Center, a management company. “We’re going to see people move to get cheaper rents.”

Rental units are sitting longer on the market — 26 days in August, compared with 14 a year earlier — and the sales-to-new listings ratio for downtown condos has been below 40%, the threshold between a balanced and a buyer’s market, for the past several months, Hildebrand said.

“It’s crazy slow,” Beth O’Donoghue, a broker at Brad J Lamb Realty in Toronto, said by phone. “So much is on the rental market and it’s inevitably trickling down to the retail market.”

O’Donoghue says it’s not panicked selling, but rather “people who have owned units for a long time. They’ve already made so much money.”

Average condo resale prices remain above year-earlier levels, but analysts believe more declines are coming in the next few months. Right now, some investors are dumping their units below market value just to sell immediately.

Owners are dropping their prices by as much as C$20,000 relative to comparable units to lure buyers, according to John Pasalis, founder of Realosophy, a Toronto brokerage.

“People are pricing units below what they would have gotten even two months ago,” he said.

— With assistance by Erik Hertzberg

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Comments

  • kamtanblog  On October 10, 2020 at 5:02 am

    Great news….
    Only desperate people would live in
    a condo aka towering inferno !

    K

  • dennis albert  On October 10, 2020 at 1:25 pm

    This article proves that mass immigration is a ponzi scheme to artificially boost rent prices in the ABCE countries?

  • Clyde Duncan  On October 11, 2020 at 12:59 pm

    de Castro wrote:

    Guys
    I am talking about Real estate values in TORONTO.

    This market has NOT only stalled … it will go down … first in Condos; then in detached homes.

    The worst example of over-valued properties I have ever seen in my 40 + years in the real estate business occurred a couple of months ago … at the peak of the Market:

    A client purchased a 3 bedroom condo in a prime location in Toronto in 2014 for $1.1 Million from the Builder’s Plans . She has not yet taken possession as the building is still incomplete.

    When I spoke with her two months ago…. the Resale value of the unit was $3.6 Million … That MY Boys …tells ME something has got to give ….. the giving has begun .. at this moment – I would say THAT unit has lost at least $500,000 in value over the last two months

    Between 1989 and 1996 the average price of a property dropped 27% from $273,000 to $195,000 … NOTE the price then … also, the average price today is just under $1,000,000

    It is cheap money that is mostly driving the price … The major Banks are beginning to tighten up on their lending and it is just a matter of time that in Renewal of a mortgage … where the bank will simply send an offer of the different terms and rates for you to choose from…The bank will be asking for an appraisal BEFORE committing to renew .. this is it… The shit will really hit the fan as the appraised value will in some cases be LESS than the outstanding balance of the mortgage.

    Also rents are dropping like crazy .. In the 1970s, in my long career when I used to rent townhouse that I own .. I have seen rent increase from $250 per month to $450 per month and then back down to $250 over a few years.

    I would admit that I expected this Drop in prices/rents years ago but the interest rates kept dropping and therefore prices kept going up – BUT, we all know De FREE MONEY rates cannot continue indefinitely.

    • Dennis Albert  On October 11, 2020 at 6:15 pm

      Toronto real estate mad mad. Canada does launder illegal money or what?
      Guyanese from there tell me that they wish that they haven’t left Guyana, or that they would have chosen America rather than Canada. They tell me that Canada is inhabited and most of the population live in Toronto. Canadians accuse Toronto of being a ruling state within a country.

    • Dennis Albert  On October 11, 2020 at 6:25 pm

      Edit: Comment was under moderation

      Can you ask de Castro if the Canadian dollar will collapse because of the Toronto real estate bubble?

      Many Guyanese in Canada lament that the rents and house prices are mad mad mad, and that there are tensions because a certain groups of of people from the Old World are parking their money. They tell me that gentrification displaces many people from the Jane & Finch area. They lament that police would hardly protect the community, but ever since the Canadians and foreign wealthy are moving in, the police are harassing the non-whites more. In Bronx and Manhattan it is the same problem with police.

      Canada and Lilian Chaterjee have the nerve to accuse Granger and Harmon of facilitating crime, when Toronto has a real estate bubble because of lawlessness.

      Toronto is going to become a future war zone if the poor people can’t pay the rent.

  • tiffany  On October 12, 2020 at 12:05 am

    Canada is not a young country like the developing world. The median age of Canada is 45. In my parents’ homeland of Guyana, the median age is 27.

    The aging Canadians would not let the real estate market revert to the true market value for the sake of future generations. We, the younger generations will not live to see the day of having our house prices quadruple in value like the Boomers.

    The schoolkids from elementary to junior high tell us that the COVID is the Boomer remover. A blessing in disguise. My generation, those born from 2002-2008, could care less for some old fart dying of COVID after living 80 or 90 years happily married and having a good life, such as seeing their home prices rise from $5,000 to 1.5 million in forty years.

    These same Boomers and their trust fund babies start appropriating the idol worshipping cultures in Asia, and then they refuse their mortality that religion teaches us. They force yoga classes and tell us to breathe and watch the butt cheeks of the yoga teacher when he or she bends down, and tell us that it will solve our problems…Yea, like poop or fart!

    The Canadian peso might end up like Wiemar Germany at the rate the BoC is expanding the money supply.

    • kamtanblog  On October 12, 2020 at 4:57 pm

      Is BoC also printing money 💰 ?
      USA uk Eu have been doing so for over
      a decade….

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