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, we’ll explore 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%.
- Condo construction in the GTA is at an all-time high, with over 100 cranes in Downtown Toronto alone.
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
Toronto’s newer condo buildings—those built after 2000—are experiencing a turnover rate of 6.62%, almost double that of older buildings at 3.40%.
This shift reflects a strong preference among buyers, especially young professionals, for modern amenities, updated building standards, and proximity to workplaces in the downtown core.
Investors play a crucial role here, often purchasing units during the pre-construction phase and selling once the development is complete, capitalizing on the high demand for newer buildings.
What This Means for Buyers: If you’re considering investing in Toronto’s condo market, newer buildings in prime areas are more likely to offer both short-term appreciation and rental demand.
Additionally, the youth demographic is spearheading the condo boom in Toronto.
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.
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.
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