In the first two months of 2008, the Toronto condominium market has seen nine new high-rise condominium openings, compared with five during the same period last year, according to Urbanation.
“In fact, we are forecasting 19,000 sales in the new condo market,” says Jane Renwick, Urbanation’s editor and executive vice-president.
These CMA results and projections include:
• 2007 was a record-breaking year for the Toronto condo market, and annual unit sales increased by 40 per cent (22,654 new unit sales in 2007 vs. 16,114 in 2006 and 16,224 in 2005).
• 104 new condo projects opened in 2007 vs. 84 in 2005, the previous record.
• 2007 Toronto condo prices rose 11.3 per cent in the new sale market over 2006 prices.
• The expected price increase in the new sale market was partly driven by growth in Toronto’s luxury and “super luxury” condo segment (defined as projects that trade over $600 per square foot), which represented 3,784 new units in 2007 and averaged $844 per square foot.
• “Non-luxury” units in the new sale market, by contrast, in the CMA averaged $360 per square foot once the luxury units were factored out.
• Price increases in the resale market were even more substantial, rising 15.1 per cent — from $278 per square foot in 2006 to $320 per square foot in 2007.
Balancing the 2007 price increases, condo mortgages remained affordable, as interest rates persisted at historically low levels.
Amortization periods also extended to 40 years, generating lower monthly payments or allowing the purchaser of a more expensive unit the same monthly carrying cost of a mortgage based on a 25-year amortization.
Furthermore, the definition of a conventional mortgage changed in 2007 from 25 to 20 per cent down, reducing mortgage insurance requirements at the same time. Unlike the U.S. sub prime market, however, Canadian lenders did not relax their credit evaluation standards, and the Canadian mortgage default rate remained at just 0.25 per cent (one in 400 mortgages).
“The Toronto condo market remains buoyant because of low unemployment, low interest rates, high population growth and positive demographic changes that favour condominium living,” added Renwick. “Urbanation expects the general sales momentum of recent years to hold through 2008, although the sales performance of 2007 will be difficult to duplicate.”