Market Overview
The 6,070 new condominium apartment sales in Q1-2012 were the highest of any first quarter on record for the Toronto CMA, however the average of 18.0 sales per project was lower than Q1-2011 (18.3), Q1-2010 (20.4) and Q1-2002 (23.6). Another record was set in Q1-2012 for active projects (338) and total active universe (84,698 units).
New Condominium Market
A total of 29,059 new condominium units have sold over the past 12 months in the Toronto CMA. Trepidation among players in the industry has never been higher, but neither have sales, with the 6,070 new sales in Q1-2012 setting a new record for the first quarter.
The Resale Condominium Market
Although the resale condominium universe continues to grow each quarter, reaching 219,019 units in Q1-2012, quarterly volume has not grown exponentially with market size. A total 3,888 resale transactions occurred in the first quarter, a 2.5% drop from Q4-2011 (3,987 resales) and 1.6% lower than Q1-2011's 3,952 resales.
Future Condominium Projects
As many as 42 projects and 11,109 units could launch in Q1-2012, with 27 of those projects located in the '416' area. As many as 35,000 units could come to market in 2012, which would represent a high for the Toronto CMA (over last year's total of approximately 28,000).
At some point with us hitting new highs year after year there has to be plateauing or even falling:
the numbers to me say the following: Sales the highest of any first 1/4 on record. But too many projects as evidenced by falling % of sales, more new condos coming on line this year.
Resales are plateaued which implies either there is not product or more likely there are not end users moving. Means likely more than ever it investor/speculators driving PRECON.
Also, the rush to market of product with possibly upwards of 35000 new units and Trepidation referred to suggests to me developers are rushing to market as they know the end has been reached. (The last kick at the cat as it were... no disrespect to my feline friends.) There may be another couple of percentage points to be had but those buying this year and last year are late to the party in my opinion and will not make any money. Whether they lose money remains to be seen. I believe they will.
Furthermore info:
TORONTO – May 07, 2012: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, today released its Q1-2012 market overview.
The new condominium apartment market in the Toronto CMA saw 6,070 sales in Q1-2012, the highest of any first quarter on record. The 338 active projects and 84,698 active units were also record highs. The average of 18.0 sales per project, however, was lower than in Q1-2011 (18.3) and Q1-2010 (20.4)
“Despite the record sales in Q1-2012, Toronto CMA brokers and developers still report anxiety about the future health of the condo market,†says Ben Myers, Urbanation Executive Vice President and Editor. “The probability of a market crash or major price correction is very small, but the prevalence of media coverage for this outcome remains high.â€
Despite this, investors and end-users continue to buy. The average sold price index increased to $519 psf in the Toronto CMA, an increase of 2.0 per cent quarterly and 8.1 per cent annually. The average unsold unit is being offered at $566 psf in the CMA. Urbanation estimates that the average price in the new market is $393,000 with an average size of 757 sf.
The resale market was weaker, with resale index pricing decreasing quarterly for the first time since the recession-impacted Q1-2009, falling from $400 psf in Q4-2011, to $396 psf in Q1-2012. That drop represents a 1.0 per cent quarterly decline, although annual growth remained positive at 3.7 per cent. The average resale price also dropped 1.0 per cent quarterly, from $361,000 to $358,000, although it rose 3.8 per cent year over year.
While resale pricing data seems to indicate the market is slowing, there were, in fact, just 64 fewer re-sales in the first quarter, compared to a year earlier (3,888 vs. 3,952), while the average days on the market remained unchanged at 30. In addition, fewer units have sold in newly registered buildings; these new units typically pull the resale average up. Less resale listings in newly registered buildings suggests a larger share of long-term investors, as opposed to speculative ‘flippers’.
In its Q4-2011 release, Urbanation identified unsold supply as one of several potential factors that could potentially derail the Toronto condominium market. There were 15,554 unsold units at the end of Q1-2012, an increase of 4 per cent quarterly and 27 per cent annually.
But as financial institutions, especially those that are Canadian based, move to tighten lending, resulting project cancellations may mitigate the level of unsold inventory.
The market will be further tested in Q2-2012, however, with the potential for as many as 40 new project launches with more than 11,000 new units that could come to market. If the absorption rates for new and existing projects remain constant at 55 per cent and 20 per cent in the second quarter, unsold inventory in the market will still rise to over 17,000 units, nearing the market high of 17,600 from Q4-2008.
“With the market being much larger now, the question is: Is this higher level of unsold inventory the new reality?†asks Myers. “Or is it a sign that the market has reached its peak? We’ll have to see.â€
http://urbanationinc.blogspot.ca/2012/05/record-quarter-for-toronto-condo-sales.html?spref=tw