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9 Comments

Soon Toronto will have more condos than people

Condo city (Image: picturenarrative from the Torontolife.com Flickr pool)

New research by Bank of America Merrill Lynch suggests Toronto is building too many condos for its own good, and the booming market could bust soon. “We think investors are underestimating the wall of inventory about to come on the market in the next 12 to 24 months,” write economists Ryan Bohren and Sheryl King in the report. Indeed, last month Toronto had a third more high-rises under construction than Mexico City or New York—both of which have well over three times T.O.’s population. John Pasalis, president of Realosophy Realty, wrote on his company blog that the most important condition for a bubble is in place: blind, aggressive investors. He believes expensive condos (outside of Yorkville) are most vulnerable to a lack of demand, as shown by the poor resale figures at Festival Tower and the Ritz-Carlton. Not all signs point to disaster, however: according to sources quoted in the National Post, the rental vacancy rate in Toronto was just 1.6 percent in April (versus the national rate of 2.5), and the current building blitz could be compensating for a drop in small-scale construction. Whatever the result, the cityscape is about to get a lot taller. Read the entire story [National Post] »

  • Brian

    There is also a lot of immigration to Toronto and lets not forget the fact that condos may draw renters from the 905 area looking to get closer to the city.

  • VadiM

    Indeed- a lot of immigration that is wealthy. Toronto is a growing city as oppose to such cities as New York and others that are at capacity.

    I believe that Toronto will grow exponentially for the next 10-15 years. Eventually it has a potential to almost doubling the population.

    There might be minor fluctuations, but overall the market will remain strong.

  • Raymond

    We just SO want to believe the worst in everything. The simple fact of the matter is that there’s been no rental property construction in Toronto in the past decade. There are bidding war on rental flats. The city can absorb 30,000 new apartments every year. So why don’t we just stop calling them condos and instead call them apartments? Instead of big rental buildings owned by one owner – they’re big apartment buildings where the units are owned individually and rented out.

  • Reality Check

    “I believe that Toronto will grow exponentially for the next 10-15 years.”

    ‘Exponentially’ would be a scary thought, since 2.5M^2 = 6250 Trillion (6.25 Quadrillion).

    The immigration argument is flawed, unless there is evidence that those 30,000 new immigrants/year all live in all of the 1-bdrm condos downtown.

  • VadiM

    @Reality Check by exponentially i didn’t mean the mathematical sense of the word but meaning “very rapid”.

    Not sure about all one bedrooms downtown Toronto, what I do believe is that Toronto has a way to go in growth. What we are witnessing right now is just a beginning. How about a population of 4M? How many apartments need to be built to accommodate such growth?

  • m

    condo market is going to crash. properties are currently over-valued and artificially inflated by international investors.

  • Ivan

    Soon we are going to see a big boom in the Condo market in Toronto !! trust me . Don’t buy now !!!! Poor single women who botgh those shoe boxes in Downe towne with 600$ maitanace fees ??!! Oy vey !! Stupid.

  • delboytrotter

    Who wants an over priced shoe box? I see prices coming down substantially – and/or apartments being cannibalised to create larger more liveable spaces. Canada still has its AAA rating but you know its only a matter of time before this is corrected and the interest rates shoot up again. I have been looking at Craigslist for around 2 months now and poxy apartments are just not moving.

  • Abcde

    Toronto absolutely needs condos downtown! Currently, the vast majority of people who work downtown commute from distant parts of the city, creating disgusting unnecessary traffic and perpetuating dependence on fossil fuels. Finally the city will put an end to this madness, by making room for more people to live downtown. Supply and demand will cause condo prices to drop in a few years, making them affordable for a lot more people.

    As for condos in the more remote parts of town, it’s not such a good idea but it can be mitigated by re-zoning to allow for stores and offices in the same part of town (right beside the condos).

 

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