Navigating Toronto’s Condo Market: What You Need to Know

The Toronto real estate market is flooded with condominiums.

With single-family detached homes selling for north of $1 million, young families in North America’s fourth-largest city are choosing to purchase condo suites since they are still within reach. Even in this current climate, the demand for condos has remained strong while supplies have slipped over the past year.

According to the Toronto Regional Real Estate Board (TRREB), condo and apartment sales advanced by 20 percent year-over-year in the second quarter of 2023, totalling nearly 6,900 units. At the same time, detached and semi-detached residential property sales in the Greater Toronto Area (GTA) have slumped by 12 percent and 14 percent, respectively. Additionally, condo suites selling in the range of $400,000 to $800,000 have accounted for most of the new condo transactions.

The average selling price for a condominium apartment throughout the GTA was $737,868 in the April-to-June period this year. This is a decline of 4.2 percent compared to the same period in 2022.

On the supply front, new condo listings tumbled by 13 percent over the same time frame year-to-year. Active condominium listings at the end of June 2023 were down by approximately eight percent compared to last year.

Meanwhile, there has been a growing number of new condominium projections under construction in the GTA this year.

Why Condos Anyway?

But while younger first-time homebuyers have typically been the target demographic for condos, new data suggest that downsizing households have driven a part of the demand.

Indeed, since the coronavirus pandemic, there has been a significant increase in the number of downsizers, with many people selling their larger properties and choosing to move to smaller units. Of course, preference is generally given to condos with more generous layouts and extended family space.

That said, condos are also attractive for buyers because they offer several amenities such as pools, gyms, and, in some complexes, even quiet workspaces for remote workers. Some buildings have specific BBQ areas and party rooms. Another attractive benefit of living in a condo is that residents are not required to shovel, cut grass, or maintain any outside area except their own living space. Residents may have to pay a maintenance fee to avail of these services, but the benefits are worth the cost for most.

Condos also possess heightened safety and security with surveillance cameras, reliable access control systems, and on-site security.

Is a Slowdown Coming?

A recent RE/MAX report suggests that the Toronto condo real estate market could be headed for a slowdown amid higher interest rates, something that usually affects first-time homebuyers more than other households acquiring residential properties. With four consecutive months of sales that surpassed 2022 levels, there is speculation that homebuying activity in the GTA condo market could slow down in the coming months.

Interestingly enough, many individuals are fleeing the downtown core and finding condo listings outside of the 416 area and exploring the 905 area. The 905 area includes Brock, Uxbridge, King, Clarington, Georgina, Richmond Hill, Vaughan, Burlington, and Stouffville. Notably, 905 buyers do not have to pay the municipal land transfer tax applied in the 416 location.

In addition, buyers are wary about purchasing real estate due to inflation, an economic slowdown, and low housing affordability opportunities.

RE/MAX also reports that single detached homes remain the dominant housing time in the GTA, followed by condo apartments. But since the housing market is slowing down, new construction projects are also being delayed. However, despite a slowdown in the condo market, condo sales still make up more than 37 percent of all TRREB sales in 2023 compared to about 36 percent in 2022.

While new condo sales drive a significant portion of the Toronto housing market, the re-sale condo market is also quite resilient, particularly for units with more desirable features such as unprotected views, good natural light, a terrace, an efficient layout, and a den or office space. These types of basic amenities are terrific selling points.

Overall, while predictions are that condo sales are likely to decline, how likely buyers can sell their condos still depends on where it is located and how much it costs.

The Future of Condo Space

The future will see more interest in condos with better floor plans. Small floor plan condos are already not in demand, and this trend is expected to continue. Bigger condos with more bedrooms will be in demand as not everyone can afford a house. Moreover, with more people working remotely these days, many buyers are interested in extra space they could use as their home office.

Ultimately, Toronto condos are likely to remain popular despite rising interest rates and low affordability. There may be periods of slow activity, but the condo market has proven to be resilient and quick to bounce back.