Unsold condos pile up in Toronto, hit 21-year high
As far as statistical outliers on charts go, the Bank of Montreal produced a dandy on Tuesday that should get some attention from condo market watchers in Toronto (see below).
According to BMO economist Sal Guatieri, there were 10,368 condominiums completed by builders last month in Toronto – a record high. That’s a “whopping” eight times more than the average for the past decade, with only two other months coming even close to that total, in the spring of 2011 and summer of 2012. And even then, not that close.
The BMO economist chalked last month’s record completions up to “construction delays” that had builders playing “catch up” to finish units that were sold in 2011 – a record year for sales, Guatieri noted.
The burst in completed units in Toronto comes as other Canadian cities confront mounting inventories of unsold condominiums. Centres like Winnipeg, Montreal and Moncton are grappling with surpluses, a report from the Globe and Mail said Tuesday.
In Saskatchewan, the number of unsold housing units in Regina and Saskatoon hit a 30-year high, according to the report, citing the Canadian Mortgage and Housing Corp. The majority of them condos.
In Quebec, Montreal had a backlog of nearly 3,000 unsold condos last year.
In November, CMHC’s chief economist warned condo builders in certain big cities they need to sell more existing units before planning new ones. Specifically, Toronto and Montreal were singled out.
“The number of units under construction is elevated in these centres,” the CMHC said. “This could develop into overbuilding if these units are completed but not sold.”
In Toronto where demand remains strong, most of the newly completed units have already been sold, Guatieri said, but the burst in completions has left 1,602 units on the market — a 21-year high.
“This will slow the increase in new condo prices,” the BMO economist predicted.
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