Why is the condo market so hot?

Across Toronto if you have been a buyer or investor looking for a condo in 2018, you surely have noticed that the condo market has been on fire.

Multiple offers sometimes hitting double digits in quantity, properties being sold within hours of hitting the market, and even some of the ugly duckling units being snapped up by desperate buyers. (NOTE: you should never resort to desperation when purchasing real estate of any sort!)

What gives? Why is the condo market so frenzied? Well for starters, believe or not, there is actually a fairly low amount of inventory available.

In the second quarter of 2018, condo sales are off about 16% from Q2 2017. New listings are off roughly the same percent though, and existing inventory of condos for sale have increased moderately at 2.5%. Most of this is likely due to the strong price gains in the lower side (entry level and investor condo units) of the market.

The overall picture is pointing to a moderation on the condo side, but only slightly. We are going from a super strong sellers market to a strong sellers market. Slightly noticeable difference. The surge in rental prices has also played into the increase in this price point.

A little surprising is the increase in demand for rental units in the $3000-$6000 range. In these price points you can own a pretty nice tw0-bedroom condo in the city. Yes prices have increased in this segment as well, but are we starting to buy into the ideal of Toronto becoming a city of renters?

It’s too early to say but for now, if you have already been a condo owner and have recently cashed out, you’ve done quite well. Of course those choosing to hold on are fairing just fine, but what the future holds on the price and demand side still remain to be seen. We have a glut of new condo development in the pipeline that will be coming into the market over the next 3-5 years.

What will these mean for condo values as well as rental prices? Of course we will have to wait and see.

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