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Condo Market still Hot

Jan 11, 2018

Booming Condo Sector

Detached houses were the weakest segment of the real estate market by the end of 2017. Sales fell almost 14% compared to a year earlier. The government intervention has facilitated a sharp correction after the boom in early 2017. With short supply and strong demand the condominium sector has boomed. It led to bidding wars in key neighbourhoods and prices rose to an average of $503,968 in December. Real estate agent, John Pasalis said this was spurred by buyers trying to lock in deals before new mortgage stress-testing rules took effect on January 1st, 2018.
Realtor Tom Storey from Royal LePage said he saw many bidding wars for condominiums in central Toronto because there is little inventory available and strong demand from buyers who cannot afford detached houses. He said there are 1 ½ months of inventory for condominiums and 3.2 months for detached houses. This means buyers loooking for a detached home have much more supply available which could make it a good time to trade up from a condo.

Declining Prices

TREB said the average house price for all homes in 2017 gained 12.7% compared to 2016 mainly due to a boom during the first 4 months.
Prices began falling in May sfter the new measures from the government were implemented.
Even the hot condo sector saw the volume of sales decline but was attributed to a lack of supply not lack of demand
Mr. Pasalis add that he doesn’t think anyone expects low-rise houses to go up very much at all so that means condo prices can’t keep going up.
At some point people will be looking at houses and it is cheaper than buying a condo. Mr. Storey,however, thinks the condo boom is far from over because the price gap is still too large and are the only affordable option for many buyers.