Condo Watch

Condo craze continues

Both record highs and near-record lows were recorded in the GTA new-home market in 2011. But what will 2012 bring?

The Building Industry and Land Development Association (BILD) and market research firm RealNet Canada met recently to discuss the final GTA market results for 2011, reporting 28,466 new high-rise units sold last year. That makes 2011 a record year for the Toronto condo market, up 23% from 2010. New low-rise sales set records for other reasons: With just 17,460 new-home low-rise sales throughout the GTA — due to a lack of inventory — 2011 was the third-lowest year over the past 12 in that category. RealNet reported 45,926 new houses (worth about $22-billion) sold in 2011 throughout the GTA — the second-highest year ever.

Sales tower above records

Preliminary results indicate best year yet

If their New Year’s resolutions involved selling more suites, Toronto’s condominium developers got that and more in 2011. While the final sales numbers for the year are still to be determined, the Greater Toronto Area’s condo market has already reached record highs this year, beating out 2007’s former record of approximately 22,500 condo sales.

Ben Myers, executive vice-president and editor of market research firm Urbanation, the Toronto CMA should see high-rise sales of about 26,000 to 27,000 units by year’s end.

But what’s the story behind the numbers? What were the biggest trends that kept the Toronto condo market hopping through 2011?

Are new condos overvalued compared to resale units?

Let’s compare GTA prices for both new and resale condominiums and see what the gap looks like.

Back in January 2004, the price of a new condominium stood at $254,409, according to RealNet’s monthly New High Rise Home index. At the same time Toronto Real Estate Board (TREB) figures showed that the median price of a resale condo stood at $185,000. The difference between the new and resale prices was almost $70,000.

Nearly eight years later, as of Sept. 30, 2011, the RealNet index was at a near-record high of $444,378 (up 75 per cent from 2004). The TREB median price of a resale condo stood at $310,000 (up 68 per cent).

This means the price gap between the new and resale condominiums has grown to almost $134,000, nearly double the price difference that existed back in 2004.

The steep social costs of vertical living

Some might see quaint and charming, but when Richard Witt looks at his old-fashioned High Park home, he sees red.

“I hate the poorly constructed, outdated house that I live in that constantly needs to be fixed,” he said. Mr. Witt, an architect with Raw Architects and Designers, would like nothing more than to move back into a loft apartment from his pre-marriage days. Call it a common architect’s dilemma: Peter Clewes, an architect with architectsAlliance, lives in a 20th-century Beaches home, but longs for a downtown condo in one of the sleekly modern buildings that he likes to design.

“The problem,” he says, “is that the downtown core, where a lot of tall buildings are being constructed, is not an area I would want to live in. It is not an issue of height and density, but of neighbourhood quality.”