More Canadians have
How
and this could open the door for some young homebuyers to get a foothold in
.
A growing number of people — 35 percent in November, up from 30 percent in March — say condos used to be a good investment but are no longer, according to a survey conducted by Leger for Rates.ca Group Ltd., a financial product comparison site, while 56 percent said they
for any reason.
The survey of about 1,600 adults also found that 38 percent of men thought apartments were a bad investment, compared with 32 percent of women.
It has been in dire straits for several years as rising interest rates increased construction and ownership costs and a glut of apartments and projects pushed prices down.
Toronto finds itself in the midst of a downturn in the condominium market.
Selling an apartment in a condominium
The Greater Toronto and Hamilton area fell to its lowest level in the third quarter since the same period in 1990, according to a recent report from Urbanation Inc., a real estate consultant. Year-on-year, third-quarter sales were down 54 percent this year and fell 92 percent below the 10-year moving average.
“With the new condominium market on track for its worst sales year in three and a half decades, project cancellations have skyrocketed,” Sean Hildebrand, president of Urbanation, said in the report.
Despite project cancellations, the number of unsold completed properties rose 142 percent to a record high, and the oversupply led to lower sales prices.
Average asking prices fell 3.5 percent per square foot (PSF) from last year and 9.6 percent from two years ago, according to Urbanation.
Prices for developer-owned apartments averaged $1,199 per square foot in the third quarter, compared with $867 for resale apartments.
Investor profitability in the condominium market has also evaporated, according to
Canada Mortgage and Housing Corporation report earlier this year.
However, Léger's research showed that there are pockets of optimism. Nearly four in 10 people under 35 said they were considering buying an apartment, compared with 27 percent of those over 35 and 31 percent overall.
“The apartment market has changed, and with it, those driving demand have changed,” Victor Tran
Mortgage and real estate expert, broker and agent, according to a press release.
Tran, who is also a broker and real estate agent, said he's seeing more interest from
when buying an apartment.
“With more inventory, fewer bidding wars and sellers being more willing to negotiate, younger buyers now have options they simply didn't have a few years ago,” he said.
But according to the latest report from the Royal Bank of Canada, condos may make more sense for first-time homebuyers.
affordability of home ownership
index in October, with homeownership costs as a percentage of median household income at 36.2 percent for a multifamily apartment, compared with 60 percent for a single-family home.
RBC, however, said the window to improve affordability may be closing given the worsening labor market.
Urbanization also expects affordability to change, but over a longer time frame, as the surplus of apartments will eventually be absorbed due to the cancellation of a large number of projects.
“The condominium market is clearly depressed as it undergoes a difficult correction from the outsized growth that occurred during the COVID-19 pandemic,” Hildebrand said. “However, the lack of activity occurring today will likely lead to a lack of supply in a couple of years, which will help restart the market engine.”
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