Lindsay Charlton
The average cost of Toronto condos continue to rise despite the city’s recent plunge in housing prices.
For many, condos are a great investment option for those looking to purchase real estate in the city. However, even though the costs of houses are going down, the price of condos are on a steady increase.
“The condo market has actually kind of bucked the trend that we’ve seen over the last year or so, in the sense that we’re still reporting year over year growth in average condo prices,” said Jason Mercer, a market analyst at the Toronto Real Estate Board.
While condos continue to be a steady investment option for some, they can remain relatively unaffordable for many.
“If you think about a condo apartment in the city of Toronto, the average price in March was $590,000, Mercer said. “So if someone had a 20 per cent down payment they’d be looking at $400,000 and change for their mortgage that they’d be taking on.
“Give or take, you’re looking at about $2500 a month for mortgage principal and interest,” he said.
There has certainly been a definite dip in the average price for low rise and detached home types in the last year, it doesn’t necessarily mean that people should be turning toward purchasing detached housing, Mercer said. Even with the dip, the pricing may still be out of reach for many and condos remain the more affordable option.
“For a detached home for example, prices are down relative to the peak that we hit in March and April of last year, he said.
“But if you’re comparing in the city of Toronto for example, in March you’re talking about an average detached home price of just shy of 1.3 million dollars verses the average Toronto condo price of $590,000,” Mercer said. “So if you’re a first time buyer looking to get into the market place, I would argue that a lot of first time buyers are pointed at that condo market.”
Toronto has never been a stranger to high housing prices, and as a result many people are leaving the city and have been in recent years looking to purchase in neighbouring cities instead attempting to buy in the city.
“It’s not just over the last year that people have been purchasing in other centres within the Greater Golden Horseshoe, Mercer said.
“I think it’s fair to argue that people are looking outside of the GTA proper because of home prices as well. If you’re looking at a detached home and you don’t necessarily mind a commute, it makes sense for people to be looking at different centres.”
Like any market, there is going to be some give and take, Mercer said.
“If I want a detached home maybe I need to reassess the location, or if I want location I might have to reassess the type of home I’m buying or some combination there,” he said.
With many in Toronto turning to rentals because of the high cost of condos and the state of the housing market, it can create some stiff competition and make finding a place difficult for renters too, said Mercer.
“There’s certainly a lot of competition between would-be renters and if you think about the provisions in the fair housing plan announced this year that there’s now a ceiling on rents, I think it’s going to only get tougher because you’re going to have fewer investors willing to lock up their capital in purchasing a rental accommodation,” he said.