After much speculation about the Toronto real estate market's ability to absorb the influx of condos, the current state indicates a significant oversupply. The Greater Toronto Area (GTA) is facing an unprecedented backlog of nearly 40,000 condo units, with many listings experiencing minimal showings. Factors contributing to this slump include high borrowing costs and a tightening market, leading to confusion and anxiety among investors and potential buyers.
According to Shaun Hildebrand from Urbanation, the condo market is undergoing its most challenging period in decades, with new condo sales down over 80% annually, marking a 30-year low. Investors, who own about 50% of existing condos, are struggling with cash flow due to high mortgage rates, leading many to consider selling. While there are hopes for improvement by spring 2025, the current market remains saturated, with prices still elevated despite increased demand.
October saw a slight increase in transactions, but a significant drop in interest rates is necessary to encourage buyers. Jason Mercer from TRREB anticipates that as rates decrease, demand will rise, leading to the absorption of the excess inventory. This situation has given buyers more power, allowing them to take their time in selecting properties, which is not favorable for sellers.
Realtors are advised to ensure that listings are well-presented and appropriately priced to attract buyers. Christopher Bibby from ReMax Hallmark suggests that if sellers were more flexible with their pricing, the market would see more activity. Agents need to be proactive in showcasing properties, as the traditional methods of marketing no longer suffice in this competitive environment.
For investors, the resale market currently offers better value than pre-construction options. There has been a notable decline in demand for micro condos, prompting a potential shift toward larger units that cater to lifestyle needs. End-user buyers are now opting for non-tenanted properties, as they seek to avoid complications associated with tenants, allowing them to find condos that better meet their preferences in terms of features and location.
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