Posthaste: The underdog of the pandemic housing market is quietly making a comeback

Good Morning!

The housing market, battered by fleeing the city at the start of the pandemic, is showing signs of recovery, and that could be a good thing for Canadian housing construction overall.

In yesterday’s latest data, condominium prices were up 10.6% year over year – the sharpest increase since 2018, says TD economist Rishi Sondhi.

“Although condominiums are being overshadowed by the overheated single-family home market, they are making a comeback,” said Sondhi. Benchmark prices have risen month-to-month for almost a full year, with the gains over the past three months being the strongest since the housing boom in 2017.

“Should condominium sales consume an increasing share of the market in the future (as we expected), average house prices would be put under pressure from these cheaper units,” he said.

Properly, an online real estate brokerage firm, recently researched how property prices have moved in the Greater Toronto Area since that last peak and found that of all apartment types, condominiums have increased the most.

Condominium prices in the GTA have increased 44% since 2017, while semi-detached houses have increased 27% and single-family homes have increased 21%, according to Properly.

“Last year, condominium sales were hardest hit by the pandemic. With sales now back to pre-pandemic levels, it is easier for condominium owners to know that their investments have appreciated significantly over time, ”said Anshul Ruparell, Co-Founder and CEO of Properly. “Going forward, condominium sales are projected to continue solid growth as pandemic restrictions ease.”

In the first quarter of this year, GTA condominium sales were within 4% of pre-pandemic sales as attention shifted back to downtown Toronto to the 905 region outside of the city, Urbanation Inc. says in its housing market study. The number of condominiums sold in the city of Toronto itself exceeded sales in the first quarter of 2020.

“The downtown Toronto condominium market turned around in the first quarter of the year due to lower borrowing costs and renewed optimism about the outlook, but also in part due to a chain reaction after suburban home prices rose 30% over the past year and put the limelight back in the spotlight on urban lots, ”said Urbanation President Shaun Hildebrand.

Overall, the data shows that Canada’s housing market is cooling off from the breakneck pace set at the beginning of the year. Home sales in Canada were down 7.4% in May versus April.

Each province saw a decline, the steepest in Manitoba (-10.6%) and the Atlantic provinces (18.5%). Sales decreased 1.6% in Quebec and 7.4% in Ontario.

Even so, sales remain “very strong,” said Sondhi. In fact, May sales were nearly 20% above their highs seen in early 2016, the peak of the last real estate cycle.

Here’s why some cooling down might be welcome.

A study by Bloomberg Economics found Canada to be one of the foamy real estate markets in the world, second only to New Zealand.

The higher the value on Bloomberg’s “Bubble Rank”, the greater the risk of correction, and prices for Canada and many OECD countries are now higher than they were before the 2008 financial crisis, Bloomberg said.


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