Toronto's population growth outpaces Phoenix, Arizona - the second fastest-growing city in North America - by more than three times. This rapid increase in residents is driving Toronto’s condo market to unprecedented heights. Despite economic fluctuations and tighter mortgage regulations, Toronto's real estate market remains resilient, with high demand for condos and continued construction across the city.
In this article, our team at Precondo explores why Toronto’s condo boom is not only continuing but intensifying, analyzing key trends, market shifts, and investor insights.
Whether you're a first-time buyer or a seasoned investor, understanding these dynamics can help you make more informed real estate decisions.
Quick Summary
- Despite economic challenges, Toronto's real estate market remains resilient.
- Condos built after 2000 have a turnover rate of 6.62%, nearly double that of older buildings at 3.40%. The younger generation prefers newer developments closer to downtown, contributing to the condo market boom.
- Smaller developments with less than 200 units have a turnover rate of 6.12%, close to that of larger buildings with over 200 units at 6.38%.
1. The Demand for Accessibility Drives Higher Prices
Accessibility is a premium in Toronto’s real estate market, particularly in neighborhoods like Liberty Village. Reports show that condos with easy access to downtown and public transit boast the highest turnover rates, reflecting strong demand for centrally located properties.
In Liberty Village, for example, the turnover rate reaches a remarkable 7.99% - well above the city average. The added cost of these highly accessible condos does little to deter buyers, underscoring the trend of buyers prioritizing convenience over price.
Key Insight: Condos in accessible areas show turnover rates double or even triple those in less accessible locations, making these properties highly desirable for both buyers and investors.
2. Newer Buildings are in High Demand
The younger generation prefers to invest in a condo that is closer to downtown instead of the waterfront where more older people live [1]. They prefer houses which are nearer to their work, making the commute easy and time-saving. Also, they are expected to sell their places at an early stage compared to a retiree.
| Property Category | Turnover Rate | Market Significance | Buyer Preference |
|---|---|---|---|
| Buildings Built After 2000 | 6.62% | Nearly double older buildings | High demand for modern amenities |
| Buildings Built Before 2000 | 3.40% | Lower investor activity | Less attractive to young professionals |
| Liberty Village (High Accessibility) | 7.99% | Well above city average | Premium for transit access |
| Smaller Communities (<200 units) | 6.12% | Competitive with large developments | Intimate community appeal |
| Larger Developments (200+ units) | 6.38% | Standard for amenity-rich buildings | Amenity-focused buyers |
| City Average | ~5.5% | Baseline comparison | Mixed market appeal |
3. Smaller Communities are Becoming More Attractive
Contrary to the trend of sprawling developments, smaller condo communities are gaining traction among Toronto’s buyers. Buildings with fewer than 200 units show a turnover rate of 6.12%, close to the 6.38% rate seen in larger developments. This indicates that while people appreciate amenities, they also value smaller, more intimate communities.
Investor Tip: Smaller developments can offer strong returns with potentially faster turnover, making them attractive for those looking to sell within a shorter period.
4. Construction Is at Its Peak
Toronto's skyline is a testament to the ongoing condo boom, with over 100 cranes dotting the Downtown area alone. Data from Urbanation, a firm that tracks condo developments, reveals that 71,378 units across 242 projects were under construction in early 2019—a significant increase from the previous year.
However, rising construction costs in the GTA mean developers are proceeding with caution. Still, the high number of ongoing projects reflects steady demand despite economic challenges, as fewer projects were canceled over the past year than anticipated.
For Buyers and Investors: Continued construction indicates robust demand, but be mindful of potential delays and higher prices due to rising construction costs.
5. Toronto Always Bounces Back from Pitfalls
Toronto’s real estate market has shown remarkable resilience in the face of economic challenges, bouncing back quickly from setbacks that have slowed down other markets.
A. Population Growth Fuels Demand
Toronto has been a leader in job creation, particularly in the tech sector. The city has generated more tech jobs in recent years than even major U.S. tech hubs like Seattle and San Francisco. This has driven an influx of young professionals and families, intensifying the demand for housing.
Did You Know? Toronto’s population grew over three times faster than Phoenix, Arizona, the next fastest-growing North American city, further fueling demand for housing. – Jordyn Posluns, NarCity
B. Quick Recovery from Economic Downturns
Toronto's real estate market, including the GTA, has shown resilience through economic downturns, bouncing back within a matter of months. This swift recovery demonstrates the market's stability, driven by underlying factors such as population growth and high demand for urban housing.
C. Mortgage Stress Tests and Resilient Demand
Mortgage stress tests, introduced to stabilize the market, were expected to slow down condo sales. However, the effect was short-lived, with demand remaining strong, particularly in the GTA. The condo market in Toronto has stayed robust, with high competition among buyers even in challenging periods.
What This Means for Investors: Toronto’s resilience makes it a relatively safe market, especially for long-term investments. The demand for condos, bolstered by a growing workforce, means the market is likely to remain stable.
The Splurge in Condo Sales Continues...
Toronto condo prices have increased by 8.6% compared to last year, driven by favorable economic conditions, job growth, and high-quality construction standards. Vertical communities, offering a blend of residential convenience and urban amenities, are becoming increasingly popular, appealing to buyers looking for low-rise, mid-rise, and high-rise options.
Real estate developers are optimistic about the market’s future, citing Toronto’s resilience and consistent demand for condo units. With reports of slower appreciation rates and fewer unsold units, the market shows signs of stability moving forward.
You can learn more about it here.
Toronto Condo Boom: The Current Trend
The condo market in Toronto has a higher number of first-time buyers as compared to the housing market. These mostly are bachelors and people moving from different countries and states.
However, there might also be individuals and families who are moving for the first time. Also, with lower average costs, the number of younger buyers has definitely increased.
The current trend in the Toronto condo market suggests that there are buyers who do not prefer to purchase a condo and keep it for some 25 years. Instead, people opt to buy new condominiums which provide a great location and stunning facilities. And, people generally end up purchasing a newer property sooner than expected. They do not expect to grow old in a single property.
There is a number of condo projects to be released in the second quarter as demands remain high in the GTA. There have also been reports of slower rates of appreciation compared to the last few years as the pricing of condos change.
FAQs
1. Why are newer Toronto condos selling faster than older ones?
Newer condos (built after 2000) have a turnover rate of 6.62% compared to 3.40% for older buildings. Young professionals prefer modern amenities, updated building standards, and proximity to downtown workplaces. Investors also capitalize on high demand by purchasing pre-construction and selling upon completion.
2. Which Toronto neighborhoods have the highest condo demand?
Liberty Village leads with a 7.99% turnover rate due to excellent downtown access and transit connectivity. Areas with easy access to public transit and downtown core consistently show turnover rates double or triple those of less accessible locations, making accessibility a key premium factor.
3. Are smaller condo buildings as good an investment as larger developments?
Yes, smaller buildings (<200 units) show a 6.12% turnover rate, very close to larger developments at 6.38%. This indicates buyers value intimate communities alongside amenities, making smaller developments attractive for investors seeking faster turnover and potentially quicker returns.
4. How resilient is Toronto's condo market during economic downturns?
Toronto's market has shown remarkable resilience, bouncing back within months rather than years. Even mortgage stress tests had only short-lived effects. The market's stability is driven by population growth (3x faster than Phoenix), tech job creation exceeding Seattle and San Francisco, and consistent urban housing demand.
5. What's driving Toronto's construction boom with over 100 cranes downtown?
As of early 2019, 71,378 units across 242 projects were under construction, reflecting robust demand despite economic challenges. The high construction activity indicates developer confidence, though rising costs mean projects proceed with more caution than in previous years.
6. Who are the primary buyers in Toronto's condo market?
The market has a higher proportion of first-time buyers compared to the housing market, including young professionals, immigrants, and people relocating from other regions. The younger demographic prefers downtown proximity over waterfront locations and tends to sell earlier than retirees.
For news, updates and exclusive access on all new and upcoming condos in Canada, visit Precondo.
References:
- https://www.cbc.ca/news/business/young-and-old-choosing-condos-over-houses-survey-suggests-1.1701631
