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The Star: Condos outsell Houses in the GTA

If people with large houses start converting them into two or three condos each ( there are plenty of such older properties in downtown neighbourhoods for instance ), that will further skew things towards the condo side of the equation.
 
Mongo said:
That's 7-8,000 new households PER YEAR, against a total of 20,000 new condos over the next three years or so. The numbers actually make perfect sense, considering how relatively few tract houses are being built in Toronto.
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Firstly, that's 8000 of all households; condos are not going to be in demand for 4+ or even 3+ households unless the government begins to subsidize costs of larger units--which is very unlikely.

And that's to say nothing of the assumption that all of those households will buy or can afford to buy. That's impossible and doesn't mesh with the current # of renters in the City. So, yes, I do believe your constant boom scenario is somewhat unrealistic.
 
"From now on, most new residences in Toronto will be multi-unit condos or apartments -- meaning that the current rate of new condo starts can be maintained or exceeded indefinitely without leading to a crash. This is a good thing."


Actually the construction and real estate cycles seem to oscillate between demand pushing construction and supply pulling volumes. I think we have entered a phase where a strong demand push has converted into a supply pull. This would suggest in my opinion that while the demand my be strong enough to avert a crash it likely will not avoid a significant slowdown period. Keep in mind that while population growth is great for long-term price appreciations it actually has little influence on the length and depth of market corrections in the short term. History backs up this theory, population growth can be consistently strong in a city and this does nothing to change the behaviour of the housing market or differentiate it from cities with stagnant populations.
 
salvius said:
And that's to say nothing of the assumption that all of those households will buy or can afford to buy. That's impossible and doesn't mesh with the current # of renters in the City. So, yes, I do believe your constant boom scenario is somewhat unrealistic.
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For every renter, there's an owner. 8,000 new households = (more than) 8,000 new residences, each of which has an owner -- either the occupant or a landlord. ('more than' because of old housing stock being demolished) Given the relatively low increases in single-residence buildings in Toronto, the rest must by definition be multi-residence buildings, each of which is owned by somebody. Q.E.D.
 
Mongo said:
How many new houses are built each year in Manhattan? From now on, most new residences in Toronto will be multi-unit condos or apartments
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scarberiankhatru said:
Condos only "won" because the 416 is now essentially out of greenfields to build upon.
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The article refers to the Toronto area, not the city of Toronto. The numbers are for the entire GTA.
 
Mongo said:
That's 7-8,000 new households PER YEAR, against a total of 20,000 new condos over the next three years or so. The numbers actually make perfect sense, considering how relatively few tract houses are being built in Toronto.
Click to expand...

Mongo,

One of us is misinterpreting the data. AFAIK, there were about 15,000+ new condo sales in 2006 and 22,000+ new condo sales in 2007. The data that you've quoted suggests demand for 8000 new households per year. So, every year there appears to double+ the amount of new condo development than new household formation. I don't know whether the 8000 figure includes children/relatives moving out of their parents houses, but let's assume that demand is offset by mortalities for the moment. (please correct if I am mistaken)

So, every year this city appears to be building an extra 10,000+ new housing units. Every year! Keep in mind again that this number excludes single family housing development (of which there certainly is plenty, though the amount is falling) and also that Toronto exceeds every single market in North America in this area.

Please tell me how you believe this incredible, unprecedented amount of new condo construction cannot be driven by an enormous amount of specuvestor buying? I am anxious to hear your thoughts.
 
We know that 100,000 immigrants are moving to the GTA every year. It would be enough for 10% of these to be singles looking for 1br condos in the city, to provide the demand for the construction. Now, it doesn't matter whether these are immigrants themselves, or people moving from the suburbs, being replaced by said immigrants. From anecdotal evidence, I know people whose children moved downtown from the suburbs, followed by themselves, all into condos, selling the house to fairly recent immigrants.

Anyhow, there are many mechanisms in play (people moving to T.O. from other parts of Canada as well), but it seems to me that the vast majority of people living in condos in Toronto are owners, and are usually young.

Not sure why this is a mystery to you. If Toronto is adding 10,000 units per year, that's room for approx 15,000 new people in the city per year, which can only capture a small portion of the region's population growth.

It is arguably a modest amount, frankly, since we are building way too much greenfield suburban type stuff to accomodate most of the growth (see Brampton).
 
BobBob said:
We know that 100,000 immigrants are moving to the GTA every year. It would be enough for 10% of these to be singles looking for 1br condos in the city, to provide the demand for the construction. Now, it doesn't matter whether these are immigrants themselves, or people moving from the suburbs, being replaced by said immigrants. From anecdotal evidence, I know people whose children moved downtown from the suburbs, followed by themselves, all into condos, selling the house to fairly recent immigrants.

Anyhow, there are many mechanisms in play (people moving to T.O. from other parts of Canada as well), but it seems to me that the vast majority of people living in condos in Toronto are owners, and are usually young.

Not sure why this is a mystery to you. If Toronto is adding 10,000 units per year, that's room for approx 15,000 new people in the city per year, which can only capture a small portion of the region's population growth.

It is arguably a modest amount, frankly, since we are building way too much greenfield suburban type stuff to accomodate most of the growth (see Brampton).
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Way off. First, Toronto added more like 60,000 immigrants in 2007. (I read it somewhere, I believe you can find the stats here http://www.statcan.ca/Daily/English/071219/d071219b.htm) Second, there were 20,000+ new condo sales. Third, of the 60,000 new immigrants that's probably only about 20,000 new households- so each new immigrant bought a 550 sq. ft. condo and none of them a) rented b) bought a home c) moved in with relatives?

I'm not saying that there isn't a significant amount of demand for new housing in Toronto but I AM saying that the amount of new condo sales exponentially outnumbers that demand and my opinion 50%+ of the new condo sales are pure speculative purchases that will eventually contribute to a softening of prices.
 
Hi Investor,

GTA Condo Sales:
2007: 21,000 - 22,000 (forecast - final numbers should be available soon)
2006: 16,214
2005: 16,224
2004: 12,364
2003: 10,802
2002: 15,286

Most in the industry are forecasting numbers to drop down to the norms of the past couple years in the 15K-16K range in 2008.

Single-family sales have been declining the past couple years primarily due to affordability and government restrictions on land supply. The total number of sales mixing both high-rise and low-rise together has been fairly consistent, the high-rise condo side is just taking a larger market share then it has in past years - we were about 50-50 this year, 60-40 last year and the couple years previous condos typically had a 1/3 share of the GTA sales volume.

Edit: Here are the lowrise numbers:
2007 (Jan-Nov) - 20,412
2006 - 22,173
2005 - 24,352
2004 - 27,301
2003 - 31,265
2002 - 38,425
 
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