Largest Condo Market in North America

Like many major metropolitan markets in the United States, Toronto, Canada is thriving with urban development and vertical construction.  Rising costs have priced many first time home buyers right our of the market.  Buyers with dreams of purchasing a $450,000 detached home are now revising their visions and looking up.  When I say “looking up” of course I mean vertical living with high-rise condos.  Home buyers can find more reasonable prices with condos, generally, and can have a chance to break into the market. 

Many young couples and families are having to be more realistic about their new condo or home purchases so they are not drowning in mortgage payments while trying to raise a family.  Mortgage payments and housing expenses typically should comprise only about 20% to 30% of your monthly expenses.  In many major markets like we see in the States, it can be as much as 50% or more!

This new trend or urban living has been spurred by many things.  Obviously home costs have pushed more people into the condo market.  City planners and developers have also been focusing on infill development and redevelopment of blighted city areas to improve the landscape and appeal of cities. 

Toronto, for example, has 249 projects currently being marketed or in the construction stage, representing 58,000 units, making the city the largest condo site in North America.  All of this new construction will mean that condos will advance to about 50% of the market share for housing.  

Overall condo sales in the Toronto area are up 14% so far in 2007 as compared to 2006.  Does all this sounds familiar to anyone?  Let us keep in mind that ALL real estate markets are cyclical, not just in the US!  It will be interesting to see how the prices and absorption rates fare over the next few years in Toronto.  We can compare this to many of our markets in the US such as Miami, San Diego, LA, etc.  Is Toronto headed towards over building?  That remains to be seen.  One important factor is the economic conditions that are supporting this growth.  And of course with new homes and condos come new shopping centers, grocery stores, retail, and general infrastructure to support the new residential growth.

So far retailers in Toronto have been among the first to respond by adding thirteen new grocery stores in the central business district and major anchor tenants such as Best Buy.  He interesting thing about this market is that condo sales are about to actually surpass the single family home sales.  That is not something to ignore!  High rise market share for new condos has moved from 27 per cent in the early 2001, to one third of the market in 2004, to more than 40 per cent in 2006 and a projected 50 per cent-plus this year.

Obviously, first time home buyers are feeling like they are making a bit of a sacrifice because the units are smaller than a single family home might be.  However, what they are sacrificing in space is made up for by location and amenities.