There may be some dark economic clouds south of the border and these could cast a deeper chill over Canada but the betting is the Greater Toronto Area residential condominium market will weather the storm.
There may be some dark economic clouds south of the border and these could cast a deeper chill over Canada, but the betting is the Greater Toronto Area residential condominium market will weather the storm.
And that’s good news for the high rise sector, which has seen strong demand over the last few years, driven by the surge in condominium sales.
Rosemary Sparks, senior director of planning and development at the Construction Sector Council, says it’s too soon for the impact of the recession and credit meltdown to show up in the numbers, but early information suggests the condo market in Toronto is really returning to a level of normalcy.
“There’s a slowdown, not a meltdown generally,” she says.
While the U.S. credit crunch has dramatically slashed housing starts to less than half of what they were two years ago, Canada’s housing starts have slowed slightly but remain consistent.
High rise condominiums continue to make up about half of all new home sales in the GTA, which means the sales pipeline stays full and starts will stay strong in the high-rise sector, says Stephen Dupuis Chief Executive Officer of Building Industry and Land Development Association (BILD).
He said more new condos sold in the Greater Toronto Area in July than in any month so far this year, with 10,723 in total for the year sold through the end of July — 75 per cent of them high rise condos.
While that’s a step off the torrid pace set in 2007, says Jeanhy Shim, of Thinkbuild Consulting, a condo market research firm, last year was exceptional.
This year’s projected sales of 38,000 new homes will be about 15 per cent down from 2007. With about 25,000 units in the pipeline, high-rise formers and concrete crews will stay busy for the next couple of years at least.
“Even if we didn’t sell another condo, we’d still be building heavily into 2009 and 2010,” said Dupuis.
The fact that three-quarter of new home sales are condos, is yet another benchmark in a market that still defies the naysayers who claim Toronto has overbuilt high rises, she said.
Both Canadian Mortgage and Housing Corp. and ScotiaBank’s outlook on the GTA condo market — the majority of which is high- rise units — is for a soft landing and continued stability.
Dupuis says one of the key underpinnings of the condo market is that high rises are the only affordable solution for first-time buyers.
“These sales aren’t all people who want condos because they love the lifestyle,” he says. “It’s what they can afford.”
Dupuis says provincial land use policies have made available land for development a scarce resource in and around the GTA and that too is driving prices.
Laborers International Union of North America Local 183 president Jaime Melo, who is also the high- rise forming co-ordinator for the massive union, says from his perspective, it’s all systems go.
“We’re still having trouble finding guys to fill the demand — it’s been crazy,” he says. “It is slowing down a bit to normal levels now, though.”
There are concerns about some smaller projects being cancelled because the developers aren’t as established and the banks are reluctant to lend to anyone other than the well established major developers.
Still, he says, with the amount of sales in the pipeline, the contractors his members work for are telling him there’s still going to be millions of gallons of concrete poured for towers downtown through 2009 and 2010.
But if there is a slowdown, it could hit by next summer because those projects currently pouring were approved long before the credit crunch.
“In a way it may be a return to normal levels and that may be a good things because we’ve been struggling to find manpower,” he says.