Watch: It’s been several years and the condo building boom isn’t slowing down, but the sales are. Robert Malcolm reports.
Scores of cranes remain perched atop unfinished residential towers across Toronto’s gleaming skyline, but condominium sales are coming down.
The country’s largest and most active real estate market – and source of concern for the Bank of Canada and others because of an investor-led condo boom – sold 3,903 new high-rise units this spring.
That’s an 18 per cent decline compared to a year earlier, according to Urbanation, which tracks the industry.
The number of so-called active units meanwhile ticked up to 92,398 a fifth of which are unsold. Active units include condos that are awaiting or are under construction, and those ready to be occupied.
That glut has developers racing to cut would-be buyers better deals, said Shaun Hildebrande, senior vice-president at Urbanation.
Those deals combined with interest rates still hovering near record lows are expected to entice more buyers back to the market for the balance of the year, according to the research firm.
“Pricing at new projects has become more competitive, which will continue to attract more attention from buyers,” Hildebrande said by phone.
Having new buyers snap up that excess inventory may ease fears of a potentially sharp correction to come in the market place – something the Bank of Canada expressed concerns about earlier in the summer.
“If the upcoming supply of units is not absorbed by demand as they are completed over the next 12 to 30 months, the supply-demand discrepancy would become more apparent, increasing the risk of an abrupt correction in prices and residential construction activity,” the central bank said in a mid-June report.
The report warned that a plunge in condo prices could “spread” to other areas of the economy.
Still, the bank cautioned that that scenario is not what it is predicting. In fact, it still expects the correction in the housing market to go smoothly.