RISING HOUSING PRICES IN TORONTO: WHAT SHOULD YOU BUY NOW, HOUSE VS. CONDO?
There are not many cities in the world that can make NYC living look cheap for the middle-income group. Places such as London, Hong Kong,and Sydney are among the top contenders. In recent times, Toronto is climbing up the ladder pretty fast. Many people even from New York went to Toronto to find cheaper housing rates. But that is not the case anymore.
The Soaring Housing Prices
There are not many cities in the world that can make NYC living look cheap for the middle-income group. Places such as London, Hong Kong,and Sydney are among the top contenders. In recent times, Toronto is climbing up the ladder pretty fast. Many people even from New York went to Toronto to find cheaper housing rates. But that is not the case anymore.
In the past five years, the housing prices have soared more than 60% in Toronto. The rates are not as high as Vancouver but Canada’s biggest city, according to Demographia, is ranked 5thwhen it comes to the most unaffordable places to live relative to annual income.
The government has made lending rules even tougher in 2018 and it has reduced the purchasing power of buyers by approximately 20%.Rents also paint a similar picture as they have soared by approximately 11% in 2017 as per the data provided by Urbanation.
The High Demand Of Condos
Due to the climbing housing rates, people were more driven towards focusing on high-density housing projects. This introduced a new trend of increased demand for condos in Toronto and the nearby regions. High-density housing projects turned out to be more feasible for most middle-income groups.
The condo projects are equipped with all the amenities of modern lifestyle and most importantly they are affordable. For this reason, the condo market has seen incredible high demand in the past years.
Detached House Vs. Condo: The Price Difference Is Retreating Fast
The prices of condos are now at an all-time high. In July of 2018, the difference of average price between a detached house and a single or double bedroom condo was about $583,000. It was significantly low as compared to the difference in average prices in April of 2017 which was approximately $762,000.
During this time the real estate market of Toronto was at its peak. It provides us a minute but important point that the price gap has reduced to a great deal. This fall is due to the high demand for condominiums as well as the reducing housing prices.
In 2017, the average cost of a detached house in Toronto city was $1.28 million. On the other hand, the average price of a condo was $464,200. In comparison to these figures, in 2018 the average cost of a detached house was $1.12 million and that of a condo climbed to $530,200.
About seven years ago $530,200 was the average price of a semi-detached house in Toronto. It is just a little low than one attached house in most suburban neighborhoods like Brampton, Pickering, Halton Hills and Newmarket with 1-hour commute to the city.
Future Trends
Condominiums have seen a price surge during 2016 and 2017. During that time Toronto’s real estate was at its peak. But government interventions have restricted housing prices. Foreign buyers have to pay 15% tax and there were tight mortgage criteria as well along with surging interest rates. These interventions successfully slowed down the soaring prices in the market down. But there was no negative impact on condominium sales.
Since the introduction of ‘Fair Housing Plan’ of Ontario, the house prices have dropped by 10% in Toronto. The drop was 20% in the suburbs of the city. On the contrary, the condo prices have increased 14% and have remained immune to any interventions from the government. This is primarily due to the ‘relative affordability’ of condos as compared to houses.
Final Thoughts
According to Jason Mercer, the Director of Market Analysis of TREB, the 2017 bidding wars will make a comeback pretty soon. But at the center will be the single bedroom condos,not houses. The bidding wars are already on their way in some of the suburbs of Toronto pushing 1-bath, 1-bed condo price to a whopping $700,000.
Therefore, this is the best time that you will find to buy a condo due to its relative affordability as compared to a house that will cost you at least $1.12 million. As condos have remained immune to government interventions, in the near future you might end up looking at a double bedroom condo with a price tag of a house in Toronto.
