With the Greater Toronto Area (GTA) condo market now for years in a seemingly-deepening downturn, this lack of effort is starkly at odds with the situation in the rest of Canada. As of March 2023, the median of all sales in the GTA is still $420,000 for a condo unit. This is 5% more than last year. Yet, the average price jumped to $682,000, showing just how difficult affordability is for home shoppers today.
Even with these extraordinary price gains, the GTA condo market will not be having a major comeback anytime soon. As was the trend across the region during the pandemic, soaring demand for pre-construction buying continued into early 2022. This increase resulted in record high numbers of units being started. Now that these units are coming online, the market is facing an oversupply with lackluster demand to match.
In comparison, other cities such as Calgary are experiencing a strong condo market. Thousands of people have moved from Ontario to Calgary, attracted by its relative affordability and more welcoming market conditions. Calgary condo sales in Q1 2023 have been well above long-term seasonal trends. This is a shocking contrast to the desperate market in the Greater Toronto Area (GTA).
In the Greater Toronto Area (GTA), March 2023 condo sales were down about 10% from the same month in 2024. The benchmark price for condo properties in the area was $767,300, a 0.9% decline compared to the same period last year. This decrease highlights the turmoil experienced by buyers as they pinch pennies and try to make head or tails of a difficult housing market.
Randy Ryalls, a Toronto real estate guru and former federal NDP national director expressed alarm over the freefall that the current GTA market is taking.
“The bad news is that there’s no new ones being built,” – Randy Ryalls
This backlog in new construction is further exacerbated by changing buyer preferences. As Brendon Cowans noted,
“So two years or three years from now, when we emerge from this, if that’s what the time frame is, there’s going to be no new product.” – Randy Ryalls
Buyers are just more discerning than ever before. They don’t just want but require features that improve their overall quality of life — a ‘want’ quickly becoming a ‘need’ within today’s booming market.
“They’re like, ‘Well, if I’m going to pay this, I want a bigger place, or I want the balcony to be a wraparound, I want this type of view.’”
There is a growing gap between the GTA and the rest of the Canadian market. Vancouver’s condo market, for example, is not experiencing as drastic a supply-demand discordance as the GTA. The construction landscape in Vancouver is a little more stable thanks to more resilient ownership demand in the past few years.
With soaring prices and stagnant supply buyers in the GTA face Herculian odds. In reaction, a large share of developers have decided to keep properties off of the market. Ryalls remarked,
“The GTA would be probably the worst (condo) market in Canada at this point, given how much investor demand there was, which is now gone, and how much supply is still coming to the market.” – Robert Kavcic
Developers seem hesitant to step into a market marked by waning investor appetite and increasing buyer demands.
It is true that the vast majority of them are holding their inventory in the closet for as long as possible,” Ryalls said.
“So far this year, for sure, there hasn’t been the number of units being released to the marketplace that we probably would have expected.” – Randy Ryalls
Despite a slight easing in interest rates recently, Cowans emphasized that this improvement has not substantially changed market dynamics:
As various Canadian cities adapt to changing economic conditions and demographic shifts, it becomes evident that challenges in the GTA condo market may persist. The easy flipping that investors enjoyed during the flipper paradise years are now having a rude awakening.
More crucially, we need to understand how buyer preferences are evolving. These changes, coupled with market dynamics, will greatly influence what happens next in the region’s remarkable storied history runway.
“Sure, the rates have fallen … but it’s still not night and day difference.” – Brendon Cowans
He also noted other economic factors affecting buyers:
“There’s still a lot of things going on where it’s tough for people to get into the market. The dollar is not as strong; the money that people are making hasn’t increased significantly.” – Brendon Cowans
As various Canadian cities adapt to changing economic conditions and demographic shifts, it becomes evident that challenges in the GTA condo market may persist. Investors who previously relied on flipping properties for quick gains are now facing a tougher environment.
“They wanted to flip that at completion for an equity gain, but they can’t do that anymore … It’s a much tougher environment.”
The situation calls for an examination of how evolving buyer preferences and market forces will shape future developments in the region.
