Toronto condo developers are bracing themselves for a downturn as sales dropped year-over-over for the first quarter of 2024. The market may finally be shifting towards buyers, who now have a wider selection of available homes to choose from.
According to the Toronto Regional Real Estate Board (TRREB), condo apartment sales saw a modest 5.3% year-over-year increase, with a total of 4,747 units sold. However, the number of new condo listings surged by more than 23% during the same period.
As a result of the increased inventory, the average condominium apartment selling price in the GTA slightly decreased by 1% to $693,754, compared to $700,704 in Q1 2023. The City of Toronto, which accounted for nearly two-thirds of total condo sales, experienced a 0.5% decline in the average selling price, reaching $723,186.
blogTO recently reported that some companies have taken drastic measures to respond to the dip in sales, with some going as far as indefinitely deferring entire complexes that were already underway. There are also in-progress communities going into receivership due to the inability of developers to attract enough buyers to fund their completion. Individual owners are also feeling the impact, often having to sell for less than their asking price or even at a loss.
According to data cited by blogTO, during the first quarter of the year, only 50% of pre-construction units in the GTA were pre-sold, a decrease of 11% compared to the same period last year and well below the 70% threshold required by stakeholders to finance construction.
The number of condo projects breaking ground in the GTA has also decreased by 52% compared to the first few months of 2023. In April, the GTA market saw a 74.4% year-over-year increase in active home listings and reached a record high for the number of units on the market relative to declining sales.
The publication also cited how some local project leads are employing various, almost desperate strategies. Camrost Felcorp, for example, launched a “Mortgage Madness” campaign in March, offering to cover two years of mortgage bills for anyone who buys a unit under $1 million in three of its upcoming buildings in the GTA. Other developers, like Verge Condos, are reducing minimum down payment requirements or offering incentives such as free or discounted parking and rental guarantees.
TRREB President Jennifer Pearce, citing consumer polling conducted by Ipsos, says that data suggests many renter households are reaching their tolerance for rent increases and may consider purchasing their first home. But not yet — Pearce anticipates that condo sales will pick up once interest rates begin to trend lower, as more first-time buyers enter the market.
Information for this story was found via TRREB, blogTO, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
