The price difference between Toronto’s homes and condominiums is now the largest ever

The price difference between condominiums and detached houses has widened in Toronto.

The lack of new supply drove property prices higher than ever in November, when the average selling price for all types of housing – including detached, semi-detached, terraced and owner-occupied – rose to $ 1,163,323. Detached houses in the city of Toronto are now selling for an average of $ 1,807,983 and condominiums are selling for an average of $ 745,951.

According to the Toronto Regional Real Estate Board (TRREB), the price difference between detached houses and apartment apartments in November 2021 was slightly larger than its peak in February 2017: $ 1,062,032 against $ 1,058,198.

As the price of detached houses continues to rise to new, increasingly unattainable heights, an increasing number of potential first-time home buyers remain stuck in the rental market or remain returning to turn to the second-best thing on the owner-facing front – condominiums.

“We saw detached houses take a real majority of the excess demand in the latter half of 2022 and until 2021,” said Phil Soper, president of Royal LePage. “The difference between the price of a detached house and a condominium became bigger and bigger to the point that we think there will be greater interest in a person, a family or a person who is a first-time buyer of housing who wants to enter the market. turns into condominiums. ”

With GTA’s housing market characterized by a relentless shortage of supply – especially for detached houses in the heart of Toronto – and soaring prices far exceeding incomes, there is no doubt that more children will be brought up in condominiums in the coming years. Developers adapt appropriately, with large condominiums in multifaceted buildings – or vertical communities – that come with a range of family-friendly facilities, from playrooms to children and pods to teens to an abundance of green spaces and pet lanes.

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“Buyers only have so much money to spend, so they will buy what they can afford. If detached houses have become unaffordable for them, they will buy semi-detached houses, and if they can no longer afford a semi, they will buy an apartment. with two bedrooms, “says Toronto-based real estate agent Davelle Morrison.” We saw that happen when the government changed the mortgage rules a few years ago. Buyers could not qualify for as much money as they had before, so it forced more buyers in. “It’s a good thing, there are so many condominiums being built.”

The price of buying a place to call home in the GTA – whether it’s a condominium, townhouse or detached house – will only continue to rise. Consensus among experts is that we will not see a dramatic bubble burst and subsequent fall in house prices (so do not hold your breath). This is especially true when the country finally begins to recover from the seemingly endless pandemic.

“Unless something unforeseen happens, specifically closing the borders for new immigrants, the prices of new and resale houses and apartments will continue to rise,” says Mark Cohen, founder of The Condo Store. “Scarcity of land will ensure that detached houses remain expensive. As a result, expect more variations of rod-built products, ie. townhouses, townhouses (stacks), back-to-back townhouses and new cluster dwellings. “

Daytime aerial photo of Toronto cityscape

With affordability in the forefront, condominium prices could rise as long as they remain an affordable alternative for consumers, Cohen says. “Developers marketing condominiums will sleep a little easier, as this gap in the market will allow them to price accordingly to compensate for ever-increasing costs both hard and soft,” he says.

Even in pandemic times, Canada remains an attractive opportunity for new residents, Soper says. This will inevitably only contribute to the unshakable demand for housing in major cities like Toronto.

“We have about 840,000 who typically study in Canada and they come back; Canada stands out on the global stage as one of the places where one would not mind living during a global pandemic,” Soper says. The vaccination rate is over 90% and there are sensible COVID protection protocols, but not so restrictive that you can not live your life. Like many things Canadian, it is a good balance between economics and social welfare. “

Relatively speaking, condominiums really look like a coup and therefore an attractive opportunity to call home, says Soper.

“The place we see happening most markedly is in GTA; it is also the place where we saw the largest emigration of investor landlords in 2020, with a real emigration of individual owners during that period, ”says Soper. “People ran scared; they were heavily leveraged and some of these owners sold. People who bought properties were first-time home buyers, so we saw an increase in first-time home purchases during the early part of the pandemic, but it looks like the period is over and investors are back in force. I’m not talking about people buying to flip condominiums; I’m talking about people investing in real estate to create income through being a landlord, and there is a need for rental space. ”

With the price of condominiums expected to rise – making ownership more and more out of the question for both houses and condo units – the availability of these rental properties remains as important to Toronto’s residential landscape as ever. With the average Toronto apartment now costing up to $ 700K, the reality is that they are also unaffordable for many young home seekers. The good news? As the city continues to move toward Manhattan on an affordable front, we will see the stigma surrounding rentals continue to decline in Toronto, experts predict.

(So ​​at least those who have completely abandoned the prospect of home ownership in Toronto will not feel so bad about it).

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