10 Shocking Condo Stats That Will Blow Your Mind!

Early February is usually when all of the big data miners come up with their year-end review of the previous year’s market since all of the stats are available and reported, including TREB (Toronto Real Estate Board). So we’re going to break down some major numbers in the Condo market today.

“Numbers don’t lie” – I don’t know how much you believe in this old adage, but I would prescribe this slightly modified version of it instead: “Numbers don’t lie, but it’s up to the eyes of the beholder to interpret them the way they want”.

So what I’m going to do in this week’s insight article is provide you with some stats and my initial thoughts on the stats. How you personally want to interpret it will be completely up to you.

All of these stats come from Urbanation. They are the industry’s most trusted source for condo data as they actually include sales of pre-construction condos which TREB cannot track. Urbanation also consults for many major developers in the city so you know their data is relied upon quite heavily in the GTA condo market.

Without further adieu, let’s begin.

1) 32,000 pre-construction condos were sold in 2017, which is up approximately 20% from 27,000 in 2016.

Okay, this was jaw-dropping. The number of unit sales was supposedly down approximately 9.6% in the resale market according to TREB, but were up 20% in the pre-construction – umm… WOW! I knew the demand was significant but a 30% swing in these resale versus pre-construction numbers – that’s HUGE!

2) 35,000 pre-construction units were available for sale in 2017, and 32,000 of that was absorbed.

That’s also nuts – that’s an absorption rate of approximately 90%, meaning that for every 10 new-build condos on the market, 9 out of 10 are bought. More condo units were sold in the pre-construction market than the resale market!

3) Pre-construction condo prices saw a 20% increase in price from January to the end of December 2017.

I’m not surprised here. At the start of the 2017, I was still seeing Downtown Toronto condos at $900 per square foot. It’s well over $1,000 per square foot now. Congrats to everybody who picked up a unit in 2017!

4) 500 unit complexes are being approved at a higher rate now such as Icona, Transit City, Time & Space, and M City.

Years ago, we would never get these super projects with over 500 units. Present day, master-planned condo communities have become the norm. With some of these projects having over 2,000 units, this tells me that the demand for pre-construction is huge and has so much more room for growth. One of the super projects mentioned above sold out in only 2 days!

5) 38% of the pre-construction market is now in the 905 area code.

This didn’t surprise me as it’s getting increasingly tough to afford a downtown condo at +$1,000 per square foot. As a result, investors and first-time home buyers are seeking their next property in the 905. Don’t sleep on Downtown Mississauga, Downtown Vaughan and Downtown Markham.

6) Although the projected number of occupied units was 20,000, only 13,000 units were occupied in 2017 as 7,000 units simply didn’t finish on time.

This is an interesting statistic. Apparently, each year around 7,000 units that were projected to be occupied don’t make it due to construction delays from material and weather. 13,000 units occupied out of 20,000 definitely leads us to a huge supply problem. Supply is just not keeping up with the demands, which results in pretty big price jumps in the rental and resale markets.

7) Only 2% of the occupied units get listed on the resale market, which is down from 7%.

This means that approximately 98% of the supply goes into the rental market and the rental market is still crazy right now. I’ll say it again here – there is a HUGE supply issue in the condo market. This explains why rents are constantly increasing and properties being rented out in only 1-2 days with bidding wars.

8) We’re expecting 22,000 units to occupy in 2018.

So 22,000 units to occupy less the usual delay of 7,000 units and we’re at 15,000 units to occupy in 2018. With approximately 130,000 (potentially more thanks to Trudeau) people immigrating to the city, that’s hardly enough supply this year.

9) Projects on average are taking 12 more months to complete than 10 years ago.

Not surprised with this as the projects are getting bigger now and the Ontario Municipal Board (OMB) is more stringent on approvals.

10) Tenants are staying on average 6 months more.

Also not surprised here. There has been a decrease in the lateral movement from years ago due to rent control and tougher lender situations. This explains the extremely tight 1% vacancy rate in Toronto.

Final Thoughts – So that wraps up the 10 surprising condo statistics that will blow your mind. Hope your mind was blown, as mine was! With the city growing as fast as it is (130,000+ people per year), we simply aren’t building fast enough to keep up with this type of demand and population growth. Even with the projected number of completed units expected to increase over the next 5 years, by my math, that’s still not enough to slow the demand.

There will be a breaking point in the Downtown core when it becomes even more unaffordable. Perhaps this breaking point will be when the market reaches $1,400 per square foot (translation: $700K for a 500 square feet 1-bedroom condo). High rise intensification is the name of the game according to the OMB’s new rules so I wouldn’t be surprised in the next 10 years when we run out of build-able condo space in the Downtown core.

Until Next Time, Happy Real Estate-ing

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