Even though the Toronto condo market has really only been slightly overheated for a year or so, it seems like it’s been forever that people have been panicking over the amount of condos going up, the increasing sale prices, and the amount of people continuing to take on Toronto mortgages. But now, all that unrest may soon be at its end, as recent stats show that condominium sales within the city are down 20.2 per cent compared with last year; and that because of this, sale prices are now starting to come down.
According to the Building Industry and Land Development Association 7,047 high-rises were purchased over the first four months of 2012. This is down quite drastically from the 8,833 that were purchased in 2011. In April of 2012 the average price of a condominium was also $431,800 which may seem high to some, but is still down 3.5 per cent from the year prior.
However, even with the dropping stats, there’s no reason for panic. The stats shouldn’t be analyzed as showing a severe drop in Toronto’s housing market – simply a leveling off period so that it doesn’t get farther into the bubble that could have potentially burst should it have continued along the same path.
“We try to use a five-year average,” said Bryan Tuckey, chief executive of the BILD, when speaking of how the association makes their comparisons. “it’s very positive in that it’s balancing the market. You look at trends and forecasts and actual sales, it’s very seldom a straight line but these results are balanced to the way things have been going the past four or five years.”
Urbanation Inc., another company that keeps track and analyzes condominium sales, echoed Tuckey’s thoughts. He says that builders and developers now have their expectations set far too high, because 2011 was such “a banner year,” as Mr. Tuckey from BILD put it.
Ben Meyers, executive vice-president of Urbanation had the same thoughts when talking about builders saying, “The new standard is a lot different than the past standard. In 2007-2008, if somebody sold 30 per cent of their units in the first three months after launch they would be happy. Now it’s more like 50 per cent to 60 per cent.”
And even those who aren’t directly in the building industry, such as Toronto mortgage brokers, also see what may appear at first to be a “drastic” decline. As Vince Gaetano put it, it’s mostly due to the stricter mortgage rules that are now in place, and the fact that “the negative press doesn’t help.”
