July 2016, Bloomberg released a statement saying that Toronto's Condo market is not in a housing bubble. They released this statement along with numerous supporting reasons.
Builders are now only breaking ground once 79% of units have been pre sold, anything less was small buildings are well known builders. This approach “mitigates the risks associated with speculative building,” Dana Senagama, a CMHC market analyst had stated. “A tight resale condo market and strong rental demand have helped to absorb some of the completed and unsold units.”
The Bank of Canada had stated that a rapid increase to property costs will be unaffordable and unable for Canadians to afford. According to CREA (Canadian Real Estate Association), Townhouses and Detached houses have increased 51% in the last 5 years, whereas Condos have increased by 24% to an average price of $352,000.
Although builders and developers may be tightening their own regulations, does this truly save the condo market itself?
With an increasing real estate market, will these exponential prices be able to remain and stay stable if something were to happen to interest rates? Dozens of Condos have applications sitting at City hall waiting for approval with hundreds and hundreds of Units waiting to be developed. What happens when the Condos begin to to surpass affordability and first time buyers can't even afford them?
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