Market Update for Sept 18th
New condominium sales were hit even harder, with the number of pre-sale condominiums in the second quarter dropping 85 percent to 1,176 units, from 11,415 units a year earlier, according to market research firm Urbanation. Despite the declining demand for pre-sale condos, the construction of new condominiums remained unaffected. Urbanation reported a record 78,212 condominiums were under construction in the second quarter, suggesting the lockdown did not impact the construction industry.
The pandemic has also hit the rental housing stock, causing rents to decline and vacancy rates to rise. TRREB reported that rents have declined by 5% in the second quarter compared to the year before. The decline was more noticeable in centrally located waterfront communities in Toronto. During the same period, condo rental listings jumped by 42%. The drop in immigration as a result of the pandemic, combined with university and college students staying with their parents because of online course offerings, has further hurt the demand for condominiums.
The current economic and demographic realities certainly do not favour condominiums, but these developments are mostly temporary. Household debt levels are apparently in decline and interest rates are, and will likely remain, low. Hopefully, with a vaccine in hand next year, immigration will resume again. To be sure, COVID-19 is just one of a series of short-term hits on the condo market that has taken some of the shine off the towers, but some argue the long-term demographic trends and economic recovery in 2021 will likely see condo sales and prices soaring again.