Last Updated on October 24, 2023 by Corben Grant
Amidst the soaring average home price in Toronto, the traditional popularity of detached homes has been challenged by affordability woes and supply issues. As a result of that price growth, and as a result of the huge demand and many new developments in Toronto, the condo market has been doing pretty well as of late.
Condos in the city are available in large numbers, have many different options for features, and are located all over. For people looking to invest in Toronto real estate, or those looking for a place to live in the city for less money, the condo market offers a much more affordable option than other segments. For investors looking to buy in this segment, it’s important to know what the outlook for the market is so they can make sure to get the best return on their investment. Let’s take a look at the current price trends in the Toronto condo market and what investors need to know.
Current price trends in the Toronto condo market
In the last year, the market for condos in Toronto has seen great growth. In 2020, the market slowed as uncertainty spread due to the pandemic and resulting lockdowns.
According to Ryan Coyle, a Toronto condo investor and founder of Connect.ca: “At the beginning of the pandemic there was a mass exodus from Toronto. So one of the hottest segments in Canadian real estate became the coldest pretty much overnight, which was something we’ve never really seen before. People couldn’t enjoy what the city had to offer and they didn’t have to work there. So why pay high rents?”
However, in the present day, the market has steadily regained its momentum. Now, due to high demand, condo apartments are experiencing similar housing supply issues as other segments in the real estate market and is decidedly a seller’s market.
“Toronto condos started looking appealing again, and investors were the first buyers in to jump back in and say “there’s a real opportunity here”. Now prices have gone up again,” said Coyle.
Prices for condos increasing slower than other segments
As a result, prices for condos in Toronto have been continuously increasing for many months. The average price for a condo apartment in Toronto in Q3 of 2021 was $726,099, and $689,831 in the GTA, according to the Toronto Regional Real Estate Board. That’s about an 8.9% increase from the same period last year. Though considerably less than the year-over-year increases of other market segments in the Toronto housing market, it’s still substantial and above the rate of inflation.
Another result has been continuously falling stock. According to the Canadian Real Estate Association, the median number of days for a condo to remain on the market in Q4 was only 8 days and stock was as low as 0.4 months.
Indications show that the condo market will only continue to increase in value as it has for a long time now. The question is whether or not the current rate will continue, or whether the growth in home prices will decelerate in the coming years. Currently, this is a contentious point and various real estate professionals have offered market forecasts that predict differing amounts of price slowing or growth.
“We did see about 16% growth in the condo market last year I predicted, and I’m very confident this year we’re gonna see 20% in Toronto condos, which is a very high number,” said Coyle. “I think within the next 12 months when the doors to Toronto open and people start coming back into the city, we have a huge supply issue. That segment of the Canadian real estate market will once again be the hottest because people will be working downtown people want to enjoy the lifestyle.”
Are Toronto condos overvalued?
The price of condos in the city has grown so much that the price of a condo is now similar to that of detached home prices from 10 or 12 years ago. However, overvaluation is largely subjective and depends on how much you want to pay and get in return from your investment. Compared to condos in other cities in the province, Toronto may just be overvalued, and Toronto as a whole has been said to be . It really depends on how much value you place on location, as having a desirable spot in the city of Toronto is obviously one of the biggest benefits of this market.
Condo prices across Toronto
Though condos can be found across the city of Toronto, not all areas will be the same price-wise. Generally, Central Toronto has displayed the highest prices while the east and west sides had moderately lower prices. The areas with the most expensive condos, on average, were around the Bridal Path, Rosedale-Moore Park, and the Annex, all reporting prices . Unsurprisingly, these are also some of the areas showing the highest prices in other segments of the market as well.
The areas with the lowest priced condos include areas such as Black Creek, Humbermede, and West Hill. Most other areas in the GTA reported lower condo prices than in the city of Toronto proper, though their condo markets also display far less volume of sales.
What factors influence the price of a condo?
So what exactly makes one condo more expensive than another? Well, like any piece of real estate, appraisals are complex and can include a number of different factors that affect the price of a condo. However, there are some common factors that affect the prices most heavily. These include:
Location
Location is not simply the fact alone that makes a condo more expensive. Rather, locations each have their own individual draws that make properties in that area more or less desirable, and therefore, fetch different prices. For example, areas like downtown Toronto have very high property and development costs and must charge more for the units built in these areas. They are also centrally located near some of the most amenities, transportation, entertainment, and shopping options.
Building
The building itself will play a big role in the price of a condo. For example, some condos are built and designed with the luxury market in mind. This means the builder will probably use higher quality building materials and higher standards of workmanship. Other buildings are targeted as affordable housing and will try to save money on any unnecessarily expensive features that a building can have. There is also the matter of the building’s age. Generally, newer and more modern buildings are more desirable and will fetch a higher price, while older and less comfortable buildings may go for less.
Size
In the city, space comes with a heavy premium. Condos are already known for being smaller than most other homes and developers want to get the most out of their limited space in the city. Naturally, if you want a condo with more bedrooms or living areas, you are going to pay the price for this luxury. This is why bachelor and one-bedroom condos are the cheapest while those with more than 2 bedrooms will cost the most. You may often see condo prices expressed in a price per square foot figure. This allows you to easily compare how much the space you are getting will cost you. Two condos at the same price point may not be the same size if one has a higher price per square foot.
How to find the right condo for you
Choosing the right condo can be a daunting task with so many different options available. The upside of all the options on the market is that there will be something for anyone in the city of Toronto – if they are willing to .
The first thing you want to consider when looking to buy a condo, is whether or not a condo is right for you at all. A condo is great for someone who lives alone, with another roommate, or partner, as the small size will generally not be great for large families. It is also great for people who like to do everything in the city. If you want to be close to where the action is, a condo apartment will be great for you. Finally, condos are ideal for those who want to live in the city without paying high Toronto house prices.
>
If you’re the kind of person who likes to spend time at home, you may benefit from a larger space somewhere farther away. The same is true for growing families who may find much more benefit with more space to grow. This is why the cities on the edges of the GTA are so popular for families with parents who want to work in the city while also having plenty of safe space for their children to grow, play, and go to school.
As an investor, you can make money pretty much anywhere in Toronto with the way the market is right now. Where you should buy will depend largely on your price point. If you are able to, pre-construction condos can offer some of the best value for your money and return on investment, though they often sell just as fast as resale condos. Condos are great if you have less money to invest, however, other segments such as detached homes have seen much greater price appreciation and may be a better investment if you can afford it.
Conclusion
Overall, the condo market in Toronto is as hot as you would expect or one of Canada’s largest real estate markets. It has its own unique features that may make it appealing to investors and buyers who are priced out or otherwise not interested in other market segments. Currently, it seems that price trends will continue to increase, making Toronto condos a sound investment for those looking for somewhere to put their money.
If you are interested in investing in Toronto condos and want expert investor advice, exclusive access to new developments, and more, visit Connect.ca today.
Corben joined CREW as a relative newcomer to the field of real estate and has since immersed himself and learned from the experts about everything there is to know on the topic. As a writer with CREW, Corben produces informative guides that answer the questions you need to know and reports on real estate and investment news developments across Canada. Corben lives in Guelph, Ontario with his partner and their two cats. Outside of work, he loves to cook, play music, and work on all kinds of creative projects. You can contact Corben at corben@crewmedia.ca or find him on Linkedin at https://www.linkedin.com/in/corbengrant/.
