If you keep up with new home real estate in Toronto and the Greater Toronto Area, you likely know that between May of this year and last, the price of lowrise homes stayed the same, and that between April and May 2020, there was a -0.7-per-cent difference. Yet from April to May of this year, condominium prices were 0.1 per cent higher, and were 26.4 per cent higher than May 2019.
Why? It's a great question, and there are several reasons why condo prices continue to rise, even during economic downturns.
The first has to do with two ongoing situations. First, demand continues to be much higher than supply. Second, we have approximately 120,000 new residents settling in the GTA each year. We also have Millennials coming of age and wanting to own homes, and they represent a big chunk of the population in the Greater Golden Horseshoe. Plus, we also have Baby Boomers retiring en masse and looking to move down in housing size. There simply are not enough residences – especially condos – to accommodate everyone who wants to buy. Before the pandemic, we were selling slightly more than 30,000 units a year, and even the COVID pandemic slowdown didn't abate those numbers. We have been selling online throughout the past few months, and some projects have sold out right away. Purchasers have embraced the electronic methods in place to prevent in-person contact as much as possible.
There is something else critical to consider: Builders' costs keep going up. Most trades worked throughout the pandemic, and once contracts are up for renewal, it is only logical to believe their prices will go up. Then, there's land. Everyone knows that land prices across the GTA will not go down in price. In fact, the opposite – as land becomes scarcer, it also becomes more expensive. Builders have to anticipate these costs, along with materials and the umpteen other costs incurred as they carry on the process of creating communities. As they bring new homes and condos to market, they are holding steady with prices and even raising them.
In Mississauga City Centre, we helped to launch a condominium that was sold 95 per cent within a short time, and when the remaining suites were released, they sold out online at prices that were the same as they were in January and February. And believe me, builders are bringing new projects to market. At In2ition Realty, we are gearing up for six upcoming launches this summer. We're experiencing high call volumes from real estate agents and we have huge registry lists. People are looking, COVID or not.
Also, although some existing lowrise inventory may have dipped a little in price, this seems to have been short-lived, as we're now back to pre-COVID pricing and in some cases – even higher. For some buyers, a lowrise home is the perfect choice. Again, however, pent-up demand, our aging population and continued immigration to Toronto and the GTA will only make condos even more desirable in the future – and rising prices will reflect that.
Debbie Cosic is founder and CEO of In2ition Realty, an innovative real estate brokerage that specializes in project marketing, merchandising and selling of new home communities and condominiums. In2ition assists clients with land assembly, market research, sales and marketing, design services, broker relations and leasing and property management. in2ition.ca