Condo sales have dropped by more than 50% in some downtown Toronto buildings
If ever you need solid evidence of how much Airbnb has impacted Toronto's condo rental market, look no further than the city's waterfront communities in 2020.
The COVID-19 pandemic has changed the residential landscape unlike anything we've ever seen in Toronto, driving up demand for detached homes, flooding the market with tiny condos and subsquently pushing rent prices into a downward spiral that shows no signs of stopping.
One reason behind this increase in condo supply pertains to office workers leaving their tiny downtown pads in search of larger, less-expensive homes — places where they can comfortably live and work, no commute required.
Another major driver of the trend has to do with Airbnb-lords selling off their vacant short-term units now that borders are closed and tourists are no longer clamouring for places to stay.
In an effort to better understand "the extent to which condo buyers and sellers were impacted by market shifts caused by the pandemic," Canadian real estate and analysis firm Zoocasa recently pulled some some data on ten condo buildings in downtown Toronto that "allow, have previously allowed, or were known to be popular for short-term rentals."
Zoocasa calculated the estimated unit price per square and sales shifts within these 10 Airbnb-heavy buildings, all of which were used for a similar analysis over the summer that showed atypically-high growth in new listings for rent and for sale.
"Our new findings show that while the estimated average price per square foot for sales over the last 8 months between Mar 15 (the start date of COVID-19 emergency measures) and Nov 15, 2020 remained similar to the same time period last year, sales volumes dropped considerably, in some cases dropping over 50 per cent," reads the company's latest report, as released Thursday morning.
"However, the number of condo listings grew significantly in these buildings, offering active buyers more inventory to choose from this year."
The estimated price per square foot in the last 8 months for buildings included in our latest report was in the $900s -$1,000s, but sales dropped significantly. See how condo buyers and sellers in the downtown Toronto area were impacted by COVID-19: https://t.co/4fb44NVcS7 pic.twitter.com/AN6QqlgOR0— Zoocasa (@zoocasa) November 26, 2020
Among the 10 downtown Toronto buildings included in their analysis, only three actually saw year-over-year sales growth despite a sharp uptick in availability: Harbourview Estates II, Maple Leaf Square and 300 Front.
"Everywhere else, sales declined y-o-y," writes Zoocasa. "Ranging from drops of -14% at Parade II and -54% at Peter Street Condos."
Part of this may have to do with the fact that sellers in ghost hotel buildings are still pricing their units quite high: Half the buildings analyzed had an average price per square foot over $1,000, according to Zoocasa, indicating that they're "still priced at a premium compared to condos across Toronto."
No longer a surefire investment opportunity for prospective short-term (or even long-term) landlords, these units are staying on the market longer than they have in previous years, and buyers have more negotiating power when it comes to price, closing dates and conditions.
You can check out the full report to see how the estimated average prices per square foot have changed at all 10 of the buildings analyzed here, as well as how sales rates have changed throughout the COVID-19 pandemic.
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