Condo prices are finally starting to drop in downtown Toronto
A global pandemic may be all it took to pop one historically-lucrative segment of Toronto's housing bubble... or at least deflate it slightly.
Condominium apartment prices appear to be falling in the City of Toronto at a consistent rate for the first time in years as work-at-homers flee the downtown core for larger, cheaper living spaces and investors try to ditch their depreciating ghost hotels.
Fortunately for the real estate market as a whole, detached homes are more than making up the difference.
The latest Royal LePage House Price Survey, released on Tuesday, states that the aggregate price of a home in the GTA increased 11.0 per cent year-over-year to reach $922,421 in the third quarter of 2020.
In the City of Toronto, specifically, aggregate home prices reached roughly $975,980, marking a year-over-year increase rate of 11.1 per cent in Q3 (July, August and September) of this year.
Canadian #home #prices continued to rise in the 3rd quarter, despite economic shock of COVID-19, increasing 8.6% year-over-year to 692 964 $. Get the latest insights on home prices here 👉 https://t.co/kFZubIZPii pic.twitter.com/2ZkzR7y9dD— Royal LePage Canada (@Royal_LePage) October 14, 2020
Broken down by housing type, the strongest price gains were observed among standard two-storey homes, which rose 1.5 per cent, year-over-year, to hit a new median price of $1,483,510.
The median price of a bungalow in Toronto rose 11.3 per cent, year-over-year, to $974,295, while the median price of a condo grew 4.9 per cent, year-over-year, to $644,903.
Quarter over quarter, however, condo prices actually dipped — the only housing type to do so between Q2 and Q3 of 2020 — by about 0.3 per cent.
Royal LePage Vice President Debra Harris explains that, while demand for condos is slightly down, the market is still healthy.
"The detached home market is outperforming the condo market, but condo demand is still considered healthy," says Harris. "In Toronto, we are used to strong seller markets and a balanced market can seem quiet by comparison."
The #condo market is mass. Active listings are running 200% above last year’s levels. As a result, average prices are dropping about $10,000 per month with #rents tumbling even faster. 🏢📉💸 #Toronto #realtorlife #RealEstate https://t.co/ELKKsjaAEg— Dr_Silberschmelzer (@silberschmelzer) October 9, 2020
Bloomberg News warned of "condo trouble" on Toronto's real estate market nonetheless, writing Tuesday that condos are "trailing other kinds of housing in the city" and noting a 215 per cent increase in condo listings within the downtown core at the end of September.
The Financial Post reported similarly on Tuesday that demand is lagging for "micro-condos" in particular. Sales of units sized 500 square feet or less were down a whopping 20 per cent, year over year, in September of 2020.
"Pre-COVID-19, these condos were the hottest on the market. Investors flocked to them because they were the only form of housing under $500,000 available in Toronto and the high rents they could charge on these units meant that making profit was close to a sure thing," reads the Financial Post piece on micro-condos.
"Now they’re the ones flooding the market with listings."
Looking forward, Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 8.5 per cent in the fourth quarter of 2020 compared to the same time last year, though no predictions for condo prices specifically were provided by the real estate company.
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