Even with home sales being up (sometimes drastically) for the past several months, and even in some of Canada’s hottest markets, experts are telling the Canadian people not to worry about all those condos filling our skies. Although Genworth Canada and the Conference Board of Canada both say that sales may drop slightly this year, there will be no major crash, and there’s no real cause for concern.
“Whether it’s first-time homebuyers entering home ownership, empty-nesters looking to downsize, or professionals seeking a shorter commute, condos appear to remain a popular option for urban Canadians,” says Brian Hurley, CEO of Genworth Canada in a recent report.
Mario Lefebvre, director for the Conference Board of Canada, also points towards the aging population and how they will start filling up condos, even if some of these choose to stay in their family homes they’ve worked so hard for. He also has some interesting thoughts on the household debt many of us are currently carrying.
“Our economy has been reasonably firm,” he says. “It’s not breaking records but it’s doing well. The U.S. economy is finally showing signs of life. Population keeps on growing in Canada – it’s also aging and that’s good for the condominium market. As people age, they tend to sell their 2,000 square foot single homes and move into condominiums and that is certainly going to happen in Canada.”
And the case for buying condos only grows when you look at how affordable they are compared with their single-detached counterparts. RBC just estimated that while a two-storey home will take up about 48.4 per cent of a person’s gross income, condos take nearly half that at just 27.9 per cent.
And as for that household debt?
“We’ve just been through an incredible period of low interest rates. We’ve had below three per cent for a five-year mortgage. People have locked in, which means that, right now, the level is debt is high, but people are paying away at a rapid pace because when you have a mortgage at 2.99 interest rate, you pay a large chunk of capital and very little interest.”
Of course any market is a local market, so it may depend on where you’re looking as to just how well the condo market will be doing. Robin Wiebe, a senior economist at the conference board, believes that Vancouver condos will remain strong due to the downward trend they’ve been on, and the fact that it’s once again turning into a buyer’s market. Toronto and Montreal, he believes, will remain slow for the remainder of this year and most of next, due to the fact that there’s currently so much oversupply on the market. But even here he doesn’t see a major crash or collapse coming.
“Markets in Toronto and Montreal are cooling, but we think they will avoid major downturns, partly because on the demand side, demographic requirements remain decent,” he says.
