Housing reporter Diana Zlomislic discusses Toronto's slumping condo market, highlighting challenges like high vacancy rates, market saturation, and changing buyer preferences. The analysis compares the current market state to a previous hot market period, showcasing longer selling times and occasional price drops. The trend of smaller investor condos sparks debate, emphasizing the need for larger, affordable housing options. Challenges in the pre-construction market, such as diminishing sales and creative sales tactics, are explored with a focus on potential market recovery post-pandemic.
High number of unsold condos in Toronto causing extended sales wait times due to lack of demand.
Developers facing challenges selling pre-construction condos, resorting to incentives with uncertain market recovery.
Deep dives
Toronto Condo Market Oversaturation
With over 8,000 unsold condos in Toronto, the housing market is facing a surplus, leading to extended wait times of three and a half to four months for sales to occur. The market is skewed towards investor-owned units, with many condos remaining vacant without attracting buyers. Factors such as high mortgage rates, buyer hesitation, and a shifting work landscape away from offices in Toronto contribute to the lack of demand and stagnant pricing.
Challenges in Pre-Construction Condo Market
Developers are struggling to sell new pre-construction condos, experiencing a severe decline of 74% compared to the 10-year average. Buyers are reluctant to enter the market due to uncertainties, resulting in developers resorting to creative incentives to attract buyers without much success. The market slowdown impacts buyers' qualification for mortgages, leading to challenges in acquiring new properties.
Future Predictions for Toronto Housing Market
Industry experts predict a potential shift in the Toronto housing market dynamics, waiting to see the impacts of falling interest rates and changing buyer preferences post-pandemic. While some believe in a market recovery driven by historical cycles, uncertainties loom over the possibility of a market downturn. The equity erosion in investor-owned condos raises concerns about a potential future crisis if the market conditions persist without significant improvement by early 2025.
There's a record number of Toronto condominiums on the market right now, and despite record immigration, and an ever-worsening housing crisis, nobody seems to want to buy them.
So how hard is it to offload a condo in one of North America's hottest property markets? What happened to all of the motivated buyers? And what does the trend say more broadly about the state of Canadian real estate?
GUEST: Diana Zlomislic, Housing reporter for The Toronto Star
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