New Condo Pricing Has Decreased in the GTA
New condo prices have dropped by thousands of dollars.
In the second quarter of this year, prices for new condos in Toronto fell for the first time in 10 years, showing a significant turnaround. Urbanation, the GTA’s authoritative data source for the region’s pre-construction condominium market, reports that the average price of newly launched apartments fell from $1,369 per square meter (psf) to $1,276 per square meter (psf) in Q2 2022 until Q2 2023. I did. This 6.79% year-over-year decrease means that a GTA condo with an average pre-construction price of $1 million in the second quarter of 2022 will sell for about $68,000 less in the second quarter of 2023.
While this may be bad news for some, this new situation could provide many opportunities for investors. While we can’t predict the future with certainty, information gathered by industry experts suggests that while interest rates remain high, these new apartment prices could provide a fertile time for change, and now may be the best time to act.
Investor demand in the GTA is at an all-time low.
The price changes indicate that many buyers of pre-construction apartments have refused to invest.
According to an article in the Toronto Star, the GTA saw its lowest new condo sales in 23 years in July. That’s because interest rates in Canada have remained above record lows in 2020. Today’s investors may not need a mortgage for a few years on a home under construction, but if you’re buying a home, high interest rates are a nightmare. High interest rates erode investor confidence and affect buyer psychology, affecting their views on rising prices.
But it’s all part of a continuous cycle. Pre-construction sales in the GTA dropped significantly in the first months after the pandemic, according to Sean Hildebrand, president of Urbanation. Sales dropped and developers stopped making new releases. But it didn’t last long. Going into 2021, “we’ve seen record new condo sales in the region,” Hildebrand said. And now the market is changing again. “The GTA saw just under 6,800 new condo sales in the second quarter, down nearly 24% year over year,” explains Hildebrand. As the number of new apartments for sale falls, new apartment prices are under upward pressure, but this is not enough to stop the current price decline.
Investors Who Seize the Opportunity Today Can Benefit
According to Brigitte Obregon, real estate agent and founder of GTA-Homes, prices for new apartments may increase in the future, but prices may be low now. Although this is due to limited supply, immigration is expected to remain high in the future. “Supply is tight today and it will be worse tomorrow if current trends continue. Supply is based on sales and sales are based on the same supply,” Obregon said. Private investors are financing pre-construction condominium projects in the GTA. For tall buildings, it can take five to six years to deliver the final product. This means that if sales are weak today, there will be fewer projects completed in 2028 and not enough units to meet demand. In this scenario, prices could rise significantly right now, as we saw in 2020.”
Obregon said the big problem is that if current trends continue, fewer than 10,000 units will be delivered in 2028. Typically, about 20,000 new condos are sold in the GTA each year, of which about 16,000 are typically completed and ready for occupancy. Canada plans to welcome 465,000 immigrants in 2023, another 485,000 in 2024 and 500,000 permanent residents in 2025. All of these people will need housing. Historically, most new immigrants have settled in or near Toronto, and if this pattern continues, the housing supply will become even tighter without a significant influx of new homes into the city.
Great opportunities for new condo prices can be found in downtown Toronto
So what is the main message? Set yourself up for success. Check out the best deals on the market today to get the lowest prices and take advantage of the best deals before the market gets even tougher. This is correct. This is a message we hear all the time in the real estate world. We admit it. But in this case, the numbers paint a picture that cannot be ignored. Canada relies on immigration for continued economic growth and development and is unlikely to close its doors to newcomers anytime soon. You have a great gift. For example, the pre-construction gem Q Tower is located in downtown Toronto, near the Rogers Center and the famous CN Tower. This prime property is currently listed for around $1,600 psf. This is surprising. Investors should be aware that this is well below prices in desirable inner-city areas during the pandemic and is unlikely to remain so. At PARKHOMENKO-Homes, we believe our clients can make the best investment decisions when they have access to key market information.
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