Is Canada’s biggest city turning into a condo town?
According to the Building Industry and Land Development Association, only 35 new “low-rise” homes – also known as single-family houses – were sold last month in Toronto, home to 2.79 million people.
That was down from 50 new homes in the same month last year and a fraction of the 885 new high-rise unit – or condominium – sales in February. BILD’s figures don’t include existing homes that are essentially rebuilt, a BILD spokesman said.
With 20 times as many new condo sales as sales of single-family homes, it’s becoming increasingly clear that condos are becoming a permanent fixture of the city’s skyline.
The reason? There’s not a lot of space to build anything anymore in Toronto, once nicknamed Hogtown.
Thanks to a provincial cap that limits urban sprawl, developers are opting to build up rather than across to address the growing demand for new homes, said Gary Switzer, chair of BILD’s Toronto chapter and the CEO of MOD Developments, a real-estate developer.
“There’s suburban home builders that saw a slowing market occurring in the hinterlands of Toronto, while changing demographics and affordability is making people want to live back in the heart of the city,” Mr. Switzer told Canada Real Time.
The scarcity of new homes being built in Toronto will undoubtedly push prices of single-family homes even higher, leading many first-time homeowners to seek a more affordable option like a condo.
“The shortage of single-family homes for sale combined with strained affordability for first-time buyers will buoy resale condominium demand in the year ahead, though prices should be restrained by sizeable new inventory of recently completed units” said Adrienne Warren, an economist at Scotiabank, in a research note released Friday.
Mr. Switzer said that, while single-family homes will never disappear from the market, more families will choose to live in condos, a move that might change the makeup of some neighborhoods in Toronto.
“It’s almost becoming like New York,” he said. “You get a nice two-bedroom [unit], you stay there and as soon as you get a kid, you don’t feel like you have to move to the suburbs.”
The average price of a home in the Greater Toronto Area – an area that spans across five regional counties – went up 8.6% in February to 553,193 Canadian dollars ($500,627), according to the Toronto Real Estate Board.
According to BILD, the average price of a new low-rise home in the GTA was C$656,814 last month, up 3% from a year earlier, while the cost of a new high-rise unit was up 2% to C$438,556.
Source: The Wall Street Journal Canada (DAVID GEORGE-COSH)
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