Construction intentions for new condos in Toronto fell off a cliff in August, data showed earlier this week.
That was followed a day later by additional data showing the number of “starts,” or actual shovels hitting the ground to begin construction on tower units, has similarly deflated to a four and-a-half-year low.
The pair of reports, from Statistics Canada and the CMHC, respectively, have left experts to wonder whether the bulk of Toronto’s condo boom is behind us.
“It certainly looks that way,” Robert Kavcic, an economist at Bank of Montreal, said in a note on Thursday.
Indeed, the number of condo starts in Canada’s biggest city – and lightning rod for doomsayers about Canada’s lofty real estate market – has dropped to a paltry 16,500 annualized.
That compares to the heady peak of 40,000 starts that were underway in the early fall of 2012, shortly after Ottawa moved to clamp down on mortgage lending rules, a sign of its own concerns about a bubble.Click here to view data »
And despite the doomsayers, the Toronto market may in fact be headed for a soft landing.
Across the board, the number of new homes being built, from condos to semidetached to detached, is trending lower. “Adding it all up, new starts in Toronto now appear to be running below demographic demand,” or what the market can comfortably handle, according to Kavcic.
“So any concerns about excess supply in the city could be balancing out as we speak.”
‘Any concerns about excess supply in the city could be balancing out as we speak’
Meanwhile, condo sales continue to be robust, up about 20 per cent last month compared to September of 2013, according Toronto’s real estate board.
Still, there’s remains plenty of high-rise building taking place in the city, Bank of Montreal and others note.
Emporis GmbH, an industry researcher from Europe, noted recently that Toronto still has about 130 condo towers of various sizes going up around the city and surrounding suburbs.
That figure is up from the start of the year, and is the most of any North American city. Those new towers are accommodating 56,000 sold and unsold units, Bank of Montreal estimates.
That amount of supply remains high even in the face of what appears to be sufficient demand, experts say.
Bank of Montreal’s Kavcic cautioned would-be buyers may want to tread carefully over the next several months.
“We could see a dose of supply hit the resale market in the year ahead,” the economist said.
Here’s Kavcic’s quarter-by-quarter chart showing annualized starts for detached, multi-unit (condos) and overall, dating back to the 1990s.
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