Toronto Condo Price Predictions in 2022 - Housing Price Growth During Pandemic
Wednesday Apr 13th, 2022
As Ontario is about to ease the COVID-19 restriction and the public is feeling more at ease about the re-opening, Toronto real estate market has one of the strongest growth in history during the pandemic.
Toronto Real Estate broker, Priscilla Han, has observed that property growth by different property type.
Comparing the Different Property Types During The Pandemic
From the three different property types: single detach homes, freehold town homes, and condo apartments, Priscilla observed that the pandemic started to affect Toronto in February 2020.
Throughout March 2020 there were still healthy growth despite the lockdown came into effect on March 21, 2020. So April is actually the only month that both transaction volume and the sold price plunged.
Priscilla observed that ever since the steep decline for all property type in April 2020, property prices have been steadily rebounding and growing. This growth is due to a combination of factors. One of the factors is the low interest rate, as the government has reduced the interest rate several times in order to boost the economy. Another factor, which is equally important, is the increased number of new immigrants in 2021.
Low Interest Rates and New Comers
In 2021, the entire country welcomed 401,000 new immigrants, a new record for the past 100 years. Over one third to half of these new immigrants settled in the Greater Toronto Area (GTA). These new immigrants represent a huge demand for accommodation, which attracted many local buyers to come to the market. Combining the low interest rates with newcomers needed to either purchase or rent to settle, these two forces together pushed up property prices.
During this pandemic era, the average property price for single detached homes increased by almost 67%, freehold town homes by 48%, and condo apartments grew the least, at 34%.
Why is condo apartment's increase significantly lower than the other two property types?
The Slow Growth for Condo Apartment During the Pandemic
It's actually quite easy to understand the reasoning of this slower growth for condo apartments.
At the beginning of the pandemic, the city of Toronto, especially the downtown area, feels like a ghost town when you were walking or driving through. Companies and schools were shut down, students were taking online courses and many corporations demanded their employees to work from home.
Nobody had the need to stay in Downtown anymore. As a result, many people who previously rented in Downtown, were moving back to their home. Those who previously owned and lived in Downtown, due to the pandemic, wanted to move to low density areas with more space. Some even sold their condos downtown and moved away. Moreover, investors who used to buy and rent out their units to earn money, stopped buying because the rents went down.
When we look at the rental market, you can understand why even investors wanted to sell their condos to a certain point. Even before COVID-19, Toronto rental prices has been in steady decline. The lowest point in the rental chart is at Q1 of 2021. A 2 bedroom plus den apartment in the City of Toronto, showed a 16% decline in rent compared to the beginning of the Pandemic.
The good news for landlord is that the rent had gradually picked up when the Pandemic became more moderated and the condition became milder. But even now, the rental market is still down 4.6% compared to the beginning of the Pandemic when the market was in a normal situation. Because nobody wanted to rent, there was less of a demand for condo apartments from investors or self-residents owners. As a result, prices for condo apartments only rose 34%, the lowest growth when compared with different property types.
Comparing to Real Estate in Markham
What if we compare with other cities? When we look at detached homes, freehold townhouses and condos in nearby Markham, we can see that detached homes went up 67%, very similar to the city of Toronto. Freehold townhouse in Markham performed better than the city of Toronto, as people who used to live in the City of Toronto wanted to move out to the suburbs to enjoy bigger space. Interestingly, condo market in Markham saw continuous and steady growth during the pandemic. The condo market grew 52% compared to the beginning of 2021.
Toronto Condo Apartments Represent a Great Opportunity in 2022
It is safe to conclude that during the Pandemic, Toronto's condo apartment not only grow the least comparing with other property types in Toronto but also compared with other condos in different cities. This indicates an opportunity for condos to pick up, especially when now the demand for accommodation in the City of Toronto is now recovering as the pandemic comes to an end. University students will need to return to school and sit in the classroom to learn just like a normal day. And the big companies welcome their employees back to the downtown office to work. New immigrants continue to arrive and settle - these are all the recovery needs, and they will bring back demand for condos.
Don’t forget, nowadays, detached homes and freehold town homes are at such a higher price point, that condo apartments are the entry level in terms of affordability. This property type is the easiest one for new immigrants and even local buyers to get their first home.
This is my view on the change at the future of condo apartment, what's your view?
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