Top Five Canadian Condo Markets
Toronto, Vancouver, Montreal, Calgary, and Edmonton: these are the Canadian cities enjoying high numbers of new condo starts along with strong sales of existing units. What’s true across the country is that condominium sales and starts are fuelled by the desire for affordable alternatives to single-family, detached housing, especially for first-time buyers. Although experts are saying the market is moving toward more balance, in most centres it will remain a seller’s market overall. Here (in alphabetical order) are snapshots of each market:
Realtor Ken MacAulay describes the condo market in his city as "vibrant." Canada Mortgage and Housing Corporation (CMHC) reports that condo prices have risen sharply in Calgary this year, projecting that the average price of resale condominiums "will have risen by 41% to just under $260,000 by the end of 2006." The agency forecasts that prices will continue to climb in 2007, with the average condominium price expected to reach $287,000. This will contribute to the inventory of condo units, leading to an expected decrease of about 7% in multifamily starts. MacAulay points out, "The city is still growing and needs a lot more people to take up the jobs that are still being advertised more and more each day."
Like Calgary, this city is reaping the benefits of Alberta’s robust economy. CMHC reports that multiple unit starts remain strong in Edmonton: apartment condo starts were up by 19% from January to August, 2006. CMHC forecasts that "New condos priced under $140,000 have become scarce in 2006 and will largely disappear next year." The same report predicts that "soaring construction costs" will make units over $250,000 a much larger part of the market.
The resale market is also vigorous: CMHC reports a 30% increase in the sales of existing units from January to August 2006, compared to the same period in 2005, "despite a 7% drop in new listings and the resulting 23% rise in average resale price." The agency expects prices to moderate slightly in 2007 as supply increases, but Edmonton will remain a seller’s market.
Condo starts are down 20% from 2005 in the country’s third-largest condo market. A CMHC report indicates that construc tion-wise, Montreal is going through a market adjustment that is expected to continue for a few more months.
Sales of existing units in Montreal continue to be strong. The Greater Montreal Real Estate Board (GMREB) reports a 4% increase in condominium sales since the beginning of 2006, and a 3% increase in condo sales for October 2006 compared to October 2005. GMREB also reports a 2% increase in the average value of resale condos during the month of October 2006, and a 4% increase for the whole year. CMHC forecasts that "this market segment will post the best sales performances, with gains of 5% in 2006 and 4% in 2007."
In October 2006, the Toronto Real Estate Board reported strong continued condo resale activity, although indications are that the market is becoming more balanced. Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre: "Even though in Ontario as a whole, we think the overall housing market has matured and is moving off its peak, we know that the move off the peak’s going to be very, very slow for condo sales because there are just so many sales out there and it does take a while for those sales to translate into construction." Jason Mercer, CMHC’s Senior Market Analyst for the Greater Toronto Area, says "the big story about condominium apartments is construction." He states that 2005 saw record levels of condominium construction in the Toronto area, adding that "this year is going to be a close call, but [the GTA will be] at or near record levels for condo construction this year as well."
According to Toronto realtor Julie Kinnear, "Loft-style properties, low-rise buildings, and factory conversions" are all moving well, as is "unique architecture or something with a story behind it." She says the hot neighbourhoods are the Distillery District, King West, Leslieville, Bloor West and High Park lofts. Kinnear adds that she still sees multiple offers for "the very best buildings and suites."
This market faces numerous supply-side constraints, which places limits on the number of possible housing starts. Apartment and townhouse condominium developments face shortages of materials and skilled labour created by competition with major projects like the 2010 Olympics. Despite this, CMHC says that in 2006, multiple-unit starts will reach an eleven-year high, and are expected to decrease only slightly in 2007.
The Real Estate Board of Greater Vancouver expects the number of condo apartment sales to decline by 7% this year, to 16,000 units, and for that level to hold in 2007. CMHC reports that the "average price of an apartment condominium in the Vancouver CMA [Census Metropolitan Area] is forecast to rise 7% to $385,000 next year."