The Toronto Condo Market is poised to continue to increase in pricing. According to Urbanation, the five year average for increase in pre-construction pricing has been 8.1%, this has been followed by a five year average increase in the resale market of 7.5%. To judge where prices are going in the future we have to look at supply and demand.
Demand of Toronto Condos
On the demand side, condos are attractive on the affordability front. The RBC Affordability Index measures the following:
Median pre-tax household income required to service the cost of amortgage on an existing housing unit at going market prices, including principal and interest, property taxes and utilities; the modified measureused here includes the cost of servicing a mortgage, but excludes property taxes and utilities due to data constraint in the smaller CMAs. This measure is based on a 25% down payment, a 25-year mortgage loan at a five-year fixed rate and is estimated on a quarterly basis. The higher the measure he more difficult it is to afford a house.
From the report we see the following:
- Toronto Detached Homes require $107,100 in household income
- Toronto Standard Two-Storeys require $126,000 in household income
- Toronto Standard Condos require $70,400 in household income
Supply of Toronto Condos
Monde: Built by Great Gulf, has 40 floors and 516 units. Designed by Moshe Safdie with interiors by Cecconi+Simone. Located at the East Bayfront in the Parkside Development. There are no existing condos, so going from 0-$700psf is a big jump. I really like this project.
297 College St: By Tribute communities at College/Spadina (in Computer Alley, next to U of T). 15 Storeys and 234 units. Great for students and will hold a Loblaws, this project is going to be really interesting, I can’t wait to see the pricing do some analysis. Like Monde, walking around College/Spadina you will see very few condos and no new projects.
197 Yonge St: Set to be 60+ Storeys and lots of units, there are very condos around Queen/Yonge. This project is going to be hot one with Asian and Iranian investors and is expected to be $700psf+ in pricing. Yonge St has no condos nearby, so any project will cause a huge jump.