TORONTO, Aug. 16 (Reuters) – Condominium markets in some of Canada’s largest cities have rebounded strongly this year, and agents and analysts say the market could once again return to scorching pre-pandemic conditions as as rental demand increases and stocks evaporate.
The condominium market, which had been hot for years, cooled rapidly last year during the pandemic as investors fled, scared of the exodus of tenants from cities to live with families or find cheaper places somewhere else.
Demand for short-term rentals has dried up and first-time buyers have flocked to the suburbs and small towns to work from home.
This year, the rental market is rebounding on the prospect of a return of white-collar workers and students to offices and universities and a strong rebound in immigration to offset declines caused by the pandemic. Young buyers are also returning to condos after prices for larger homes rose during the pandemic.
“Market confidence has rebounded very quickly,” particularly in downtown Toronto, said Shaun Hildebrand, president of Toronto real estate research firm Urbanation.
In the second quarter, the downtown market had the highest proportion of condominium resales in the Greater Toronto Area in a decade, which “reflects a renewed level of confidence, not only in the condominium market in general. , but more particularly in the city center market ”. said Hildebrand.
Approximately 12,700 condos sold in the Greater Toronto Area from January through April, surpassing the 10,300 transactions before the previous market peak in 2017. And although they fell after a peak in March, they remained 15% above the market’s previous peak. pre-pandemic levels.
In Vancouver, where condominium sales peaked in March 2016 at over 2,250, they jumped to nearly 2,700 in March. Sales in July, although down from March, were 36% above pre-pandemic levels.
Prices retreated from March highs, largely due to continued lockdowns in some regions and seasonal trends, raising fears in some quarters that the market has peaked. But real estate agents said a tight rental market should boost investor demand, giving the market another head start.
“We’ve seen a lot more investors slowly pull back” this year as vaccinations and economic reopenings boost confidence, said Steve Saretsky of Vancouver-based Oakwyn Realty.
“As people see stability, it will attract more investors over time,” he said.
Nasma Ali, founder of One Group Toronto Real Estate, said a lease announcement she had in April generated little interest in the first two weeks.
“The third week we started having tons of screenings,” she said.
Then, she said, around mid-July, with the progress of vaccinations, the end of closures and a return to offices and in-person learning planned, the rental market heated up again. , with multiple offers and landlords achieving rents above asking rates.
The surge in demand quickly absorbed the glut of rental properties from last year. Rental supplies in Toronto fell to half a month in inventory from about three months in November, said Realosophy Realty president John Pasalis.
He said demand could rise further, as people who have moved to the outer suburbs have doubts when called back to downtown offices.
“Even with a (working) hybrid model, it will be difficult for a lot of people who have bought two hours in the city,” he said. “I wouldn’t be surprised if some people say ‘I made a mistake’ and want to move back to town.”
The decrease in the available supply further stimulates the condominium sales market. Construction of about 1,143 apartments and condos began in the Greater Toronto Area in June, more than a third less than a year ago and almost half the level of two years ago.
And although current condo construction hit a record 86,149 units in the second quarter, about 92% of those were already pre-sold. Falling demand last year, combined with a shortage of land in the city center, has hampered the launch of new projects, Hildebrand said.
“The developers are somewhat reactionary,” he said. “Now that the demand for downtown condos has returned, we will see more condos launch. “
Reporting by Nichola Saminather Editing by Denny Thomas and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.