According to stats released by the CMHC yesterday, new condo starts equaled 158,500 across the country, the highest the number has been since September 2007 and it’s the second-highest number of record for condos. While the number is high, it shouldn’t really be all that surprising to anyone after Toronto’s and Vancouver’s condo markets have been under scrutiny for so long. But while some continue to warn about an extremely risky condo market, others are saying that the fears are overblown and that not all data is being considered.
One of the first to speak up in this round of condo talks was Montreal developer Michael Dickey, who says that he sees the problems. “I’d be worried if I was in Vancouver and Toronto,” he said, “In Toronto you’re getting an oversupply.” An oversupply that means banks are not looking as kindly on Toronto mortgages for condos – especially for developers who want to add onto the already condo-laden landscape.
Mr. Dickey certainly isn’t the first one to weigh in on the issue, and he most likely won’t be the last, either. But some are getting frustrated by all the condo bubble speak, and say that if one is too look at all the statistics, they’d see that Canada’s condo market is at normal levels.
One of those people is Joe Vaccaro, president of Toronto’s Building Industry and Land Development Association. “The statistics are a lagging indicator to those sales of previous years,” he said, saying that people who bought condos two years ago are just now moving into them, while some haven’t made the move yet into their purchased condo – hence the reason for so many empty condos on the market. He continued on to say, “Household formations are different today. You’ve got baby boomers down-sizing, born-again singles, young couples who want an affordable first home, and 100,000 new people coming into the Greater Toronto Area every year.”
However, Bank of Montreal analyst Robert Kavcic doesn’t agree. He said that the new information released by CMHC closes out “any doubts that Canada’s housing market, at least in certain sectors and cities, is at risk of overheating. It’s starting to look like condo construction is running a bit ahead of household formation. It seems the level of building is definitely in overheating territory relative to underlying fundamentals.”
But while the new stats may have added fuel to an already large fire, there’s one area in which they shed some light and clamped down any case for argument – and that’s the case of foreign investors.
Recently, so many have called on the federal government again to make changes to mortgages in Ottawa, and restrict the occurrence of foreign investing that’s happening and, many think, is creating our bubble.
But that’s just not so.
The stats also showed that the minority of condos purchased over the first quarter were from local buyers.
