It’s hard to believe, given the stats that we just put up regarding the severe drop in home sales in the GTA. But the argument that condo sales are going to continue to explode through 2013 is just the one that Genworth Canada is making.
The fairly bold statement comes after Genworth conducted a study of eight different housing markets in Canada. In all of those markets except for one, they predict a boom to happen in 2013 that will affect condo starts, condo prices, and condo sales. The reason? The influx of people that are flooding to these areas, and that need a home once they get there.
Marcus Arkan, CEO of Syndicate Mortgages, completed his own study of Genworth’s findings and agrees. And the market that he thinks is going to do best? The one in Edmonton.
“Edmonton’s economy is currently one of the strongest in Canada,” he says. “There are clear signs of long-term stability and improvement. It is safe right now to assume that we will see a heated condo market throughout 2013.”
The Genworth report certainly agrees with that. They believe that Edmonton condo prices will see an increase of 3.2 per cent next year. But it’s not just Edmonton. The report also showed that Genworth expects Toronto condo prices to increase 2.5% in 2013. This data is particularly hard for some to swallow simply because Toronto has seen such a significant drop over the past two months, and because of the overstock of condos currently sitting on the Toronto market.
But that overstock might not be as bad as it was once thought. Even just a few weeks ago listening to different reports, it would seem as though the Toronto skyline was full of sad, empty condo units. But that doesn’t seem to be the case any longer.
Urbanation, which had first stated that 80 per cent of the condos on the Toronto market were vacant, has now changed their tune. In their Q2 Outlook, they have now stated that there are only 20 per cent of condos on the market that are empty. And that’s a number that many are much more comfortable with.
The Bank of Canada disagrees with this estimation for Toronto though, and thinks that the city is still going to face a correction of prices. Given that sales dropped by over 60 per cent in August when compared with last year, it certainly seems as though that could still happen.
But back to the Genworth study. This study also pointed to another very overheated market in Canada right now – Vancouver. And the study showed that while other localities might be in for a boom, Vancouver is going to continue to slip. Here condo sales and prices are expected to drop by about 2 per cent.
Mr. Arkan also commented on this saying, “The latest mortgage rules were specifically targeted towards overheated markets which included Vancouver. So, for now this is what was actually intended and expected.”
Except that Mr. Arkan seems to forget that the rules were also targeted towards Toronto – and with Finance Minister Jim Flaherty pointing to Toronto directly, no one can say that the rules weren’t targeted towards the GTA. And looking at the recent numbers for Toronto, it’s hard to foresee a huge condo boom here in the next few months.
What do you think? Are condos going to explode across Canada in 2013? Even in markets such as Toronto? Or have they already done that, and are now likely gearing up for a cool-down? Let us know what you think by commenting in the section below or Liking us on Facebook and getting in on the conversation.
