Toronto’s Condo Oversupply Gives Buyers, Renters More Negotiating Power
The final quarter of 2020 saw a sudden divergence between the supply and demand in the condo real estate market. According to latest data from the Toronto Regional Real Estate Board (TRREB), the number of condos either listed for sale or for rent has nearly doubled from last year’s levels, causing prices for the less-desirable shared living sector to decline amid the pandemic.
In the fourth quarter, condo sales in the GTA rose by 20.7% compared to the same period in 2019, to a total of 6,469 units. In the meantime, the number of new listings increased by a whooping 91.9% to 12,298 units, while active listings totaled 4,294 at the end of the year — over double the reported level recorded in 2019. Likewise, the selling price of condos in the GTA dropped by 1.1% year-over-year, to an average of $610,044.
The rental market for condo units has been subject to a similar trajectory, with TRREB reporting a total of 12,584 condo rentals in the fourth quarter 2020. The latest numbers amount to an increase of 86.3% from the same quarter in 2019. However, the number of condos that were listed for rent during the fourth quarter 2020 rose by 131.6% on a year-over-year basis.
The rent price for an average one-bedroom condominium apartment dropped by 16.5% year-over-year to $1,845, compared to $2,209 in 2019. Likewise, the average two-bedroom condominium apartment rent dropped by 14.5% to $2,453 in the final quarter of 2020.
The increase in supply of condo units has put buyers and renters in a favourable position, allowing them more bargaining power. The coronavirus pandemic has created a shift in home-buying behaviour, as Canadians with access to remote work schedules have left crowded city living behind, in favour of more spacious property in the suburbs and rural areas. This has caused a price surge in other housing categories, primarily single-family homes. In the meantime, the condo markets in large metro regions have seen their prices slide amid subdued demand, leaving buyers and renters with more options and more negotiating room.
Information for this briefing was found via TRREB. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.