From record-breaking sales numbers to rising home prices, the Canadian housing market has been on a rollercoaster ride for the past 18 months. While single-family homes have drawn much attention, the condominium segment has also staged an impressive comeback.
Major Canadian condo markets, like those in Vancouver and Toronto, have experienced their fair share of challenges since the onset of the COVID-19 pandemic. An abundance of supply and dwindling buyer interest in downtown condos were common issues during the height of the pandemic last year, coupled with closed building amenities and new hurdles with conducting in-person showings. In the latter months of 2020, however, the condo market began to turn a corner and started on a path to recovery, which has continued into 2021.
John Pasalis, the founder and broker of record of the Toronto-based Realosophy Realty Inc., and Steve Saretsky, a Vancouver real estate blogger and sales representative with Oakwyn Realty Ltd., tell us more about the current condo market climate.
Where is the condo market today?
After a turbulent 2020, Pasalis and Saretsky said the condo market picked up again in the back-half of the year and continued to gain strength towards the market peak in March 2021.
Compared to last year’s sluggish activity, condo sales in major urban areas are showing double-digit growth on a year-over-year basis—June’s numbers from the Toronto Regional Real Estate Board (TRREB) indicated a 57% increase in annual condo sales within the Greater Toronto Area (GTA). During the same period, a 60.5% year-over-year increase in apartment sales was reported by the Real Estate Board of Greater Vancouver (REBGV). Similarly, condo sales in the Montreal Metropolitan Area climbed 3% annually in June, while sales in nearby Ottawa jumped 13% compared to June 2020, according to the Ottawa Real Estate Board.
Based on data from the Canadian Real Estate Association (CREA), March 2021 marked the height of all national property sales for the year so far, with 76,259 recorded residential transactions. Although the condo market is still strong and is characteristic of a seller’s market, both Pasalis and Saretsky noted conditions have started to cool from March’s record-breaking performance.
For instance, in its latest National Statistics report, CREA explained the aggregate composite MLS® Home Price Index (MLS® HPI) has been decelerating on a monthly basis since March for single family homes, but is now also affecting apartment and townhome properties across the country.
“The condo market definitely took a hit in 2020 [and] rebounded quite quickly in the first quarter of this year, but has since started to cool back down a little bit again, and it’s cooling down partly because prices really accelerated quite quickly in the first couple months of this year as people jumped back into the condo market,” said Pasalis.
Pasalis added part of this cooldown can be attributed to the normal seasonal slowdown that has long been observed during the summer months as buyers hit ‘pause’ on their home search and take off on vacation.
What are the current condo market trends?
If you’re a condo buyer or seller, there are a few things you should keep in mind in terms of market supply, unit preferences and purchaser profiles.
Pasalis observed the inventory of new condo listings is greater than the low-rise segment, which is keeping conditions balanced. In Vancouver, Saretsky noted there’s not a whole lot of incentive for single-family home sellers to list as priorities around ample living space and working from home permanently remain a factor. However, Saretsky also explained a lot of new construction condo projects that started during Vancouver’s 2015 to 2017 housing boom are now coming to completion, adding supply to the market.
Since the beginning of the year, average condo prices have remained relatively stable, said Pasalis. TRREB reported the price of a condo in the GTA rose 8.3% year-over-year in June to $683,479. Similarly, the value of an apartment in Metro Vancouver jumped 8.9% annually during the same month, and 0.1% from May to June 2021, to $737,600. Annual condo price increases were also observed during June for Ottawa and the Montreal Metropolitan Area, at 21% and 20%, respectively.
“We’re going to continue to see probably a year-over-year positive increase because we’re comparing ourselves to sort of last year’s lows, but overall, average and median condo prices have been pretty steady over the past five or six months or so,” said Pasalis. “I don’t think we’re going to see any rapid acceleration as we move into the rest of the year.”
When it comes to the types of buyers who are active in the condo market right now, Saretsky says the presence of condo investors has been less pronounced since the beginning of the pandemic. These days, the majority of condo purchasers tend to be younger buyers and end-users.
“First-time home buyers [have been] seeing what’s happening in the housing market and are wanting to get in,” said Saretsky. “[It’s] sort [of] that fear of being priced out a little bit.”
Although activity has eased during the summer months, Saretsky and Pasalis explain the condo segment is in seller’s market territory. Pandemic-induced concerns around condo living, such as density in high-rise buildings, are slowly fading out as vaccine and reopening rollouts continue, Pasalis said. However, Saretsky pointed out units with private outdoor space are still fetching substantial premiums and drawing a lot of attention from buyers as a result of the pandemic.
“Those really nice properties are still going to get multiple offers, and certainly roughly half of condos are still selling for over the asking price, so still a seller’s market,” said Pasalis.
Saretsky added that while the market is more balanced, there are sensitive price points and preferential differences between Vancouver’s downtown core and its outer areas.
“[For a] one-bedroom in the city here under $700,000, [it’s] going to be multiple offers most of the time,” he said.
“That’s just enough of an affordability thing, and if you start getting over that $700,000 range, then people will start to say, ‘Hey, listen, if we’re going to spend $750,000 on a one-bedroom, maybe I should just go out to the suburbs and get a two-bedroom for the same price,’” said Saretsky.
Where is the condo market heading?
As the summer plays out and eventually winds down, the fall condo market will soon be upon us.
Pasalis predicts the condo market will remain as-is for the duration of August, with September being a potential turning point as buyers enter the fall market.
“I think the trends we’re seeing now of sort of a calming market are probably going to continue into the fall market, and I think the fall is just going to be the one where it’s going to be harder to predict depending on how many buyers jump back into the market, how many sellers are listing,” he said.
Saretsky noted there’s been a tightening in the rental market—after a period of pandemic-related rent declines in downtown areas, rental prices are starting to stabilize along with unit vacancy rates.
“That certainly bodes well for the condo market,” said Saretsky. “My trajectory for the condo market [is] that I think it’s going to be a fairly stable fall.”