The COVID-19 pandemic has helped cool Toronto’s condo market to levels not seen since the Great Recession.
According to a new report by Urbanation 1,385 units changed hands in the Greater Toronto Area (GTA) during the second quarter of 2020. That’s the fewest since the first quarter of 2009 when only 885 units were sold.
New condo sales plunged 85 per cent year-over-year. Only six projects were launched for pre-sale compared to 40 in the second quarter of 2019.
David Fleming, broker at Toronto Realty Group, says he typically sells around ten condos a year to investors.
“I have not sold a condo to an investor since pre-COVID, the phone just stopped ringing,” said Fleming last week during the virtual Toronto Real Estate Summit, hosted by Realosophy Realty.
The cool down is in contrast to the semi-detached and detached market, especially in the GTA’s suburbs. If those types of homes are included, recent Toronto Regional Real Estate Board data show sales are only down 1.4 per cent compared to last year, but up 89 per cent month-over-month, pushing the average selling price of all home types to $930,869.
“If it was me right now, I’d probably look to buy a semi-detached house in Leaside and keep it for 25 years because for $1.2 million to $1.3 million, I think in 25 years only the city’s absolute rich will own freehold houses,” said Flemming.
Condo prices have held up, despite the drop in sales activity.
“As a whole, average selling prices for units in actively marketed new condo projects in development across the GTA averaged a record high $867 per square foot (psf), edging up from $864 psf in Q1-2020 and rising 8 per cent year-over-year, reflecting broad-based increases in selling prices,” read Urbanation’s report.
“For unsold units remaining in Q2-2020, prices increased from $1,080 psf in Q1-2020 and were up 9 per cent year-over-year to a record high $1,087 psf.”
There are factors at play that could continue to put downward pressure on the condo market. Rents have trended lower since the pandemic started. Recent restrictions and a steep decline in tourism and immigration means condos are less attractive for Airbnb use.
A new report by Zoocasa looked at 10 Airbnb buildings and found new listings for sale grew 108 per cent in June 2020 year-over-year. New listings for rentals jumped 257 per cent.
Brian Persaud, broker of record at Re/Max Realtron Real Experts Realty, specializes in pre-construction condos. He says it’s more important to consider the specific building you’re thinking about buying versus numbers on a spreadsheet.
“With these projects I’m working on right now, for 28 Eastern I had almost 300 people reach out to me on some forum, saying they were interested,” said Persaud during the Toronto Real Estate Summit.
“I’ll probably get less than four units.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.