New condo sales in the Greater Toronto Area set a new record and rose by 30% last quarter over Q3-2019, with 6,370 units purchased, according to an Urbanation report.
The third quarter record was driven by sales surging 106% to 3,834 units in the 905 region, although it was offset by City of Toronto sales dropping 16% to 2,536 units. Moreover, the Q3-2020 sales feat was undermined by year-to-date sales decreasing by 22% to 13,454 units, which is also 13% below the 10-year average of 15,451 units, because COVID-19-related lockdowns through Q2-2020 quashed market activity.
The Urbanation report revealed that pre-sale condo units launched in the third quarter increased by 162% to 6,694 units from 2,556 units in Q3-2019.
“As the resale market was reporting a sharp recovery in sales during the summer, developers ushered in new projects, which were very well received in the market. A 74% share of new units launched in Q3 were sold by the end of the quarter, increasing from the 63% share of new launches sold in Q3-2019 and the highest absorption rate for new launches since Q4-2017,” said the report.
“A 74% share of new units launched in Q3 were sold by the end of the quarter, increasing from the 63% share of new launches sold in Q3-2019 and the highest absorption rate for new launches since Q4-2017.”
While the COVID-19 pandemic is to blame for Q2-2020 sales numbers plummeting, it was also the impetus for historically low interest rates, which have essentially allowed homebuyers to buy more home for less money. According to Simeon Papailias, co-founder and managing partner of REC Canada, domestic investors have, in fact, kept the market afloat.
“We have many investors being multi-transactional right now,” he said. “Investors know that [the market decline] is artificial and that as soon as this health crisis is resolved, the housing market will be in the same predicament as before, which was that supply couldn’t keep up with demand.”
There were 17,596 new condo units that reached completion through the first three quarters of 2020—rising by 47% from the same nine-month period last year—including 6,816 in Q3. There were also 78,156 condo units under construction last quarter and another 5,411 slated for completion before the end of the year, which will set an annual record with 23,007 completions.
There are 22,434 new condos slated for completion next year, 70% of which will be the City of Toronto.
“The units coming to market now were not bought at today’s prices,” said Papailias. “People paid $400,000 or $450,000 for one-bedroom-plus-dens three years ago, and now they’re worth $600,000-700,000, but the mortgage is only going to be $1,800 a month, and rents downtown still cash flow.”
The Urbanation report also showed that there were 12,962 unsold condo units in the GTA last quarter, declining by 4% year-over-year, that averaged $1,106 per square foot, which is a 7% increase from Q3-2019.
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