Condominiums are becoming an increasingly important part of the GTA’s housing market mix as development in the region grows more intense.
For those seeking affordable home ownership, a condo is likely the only viable option, given the skyrocketing prices of detached houses.
That is if they can find a condo to buy.
New condo sales in the first four months of 2016 significantly outpaced supply, with 6,229 sales but only 3,892 new units added, according to Altus Group. This has resulted in a decline in the already limited number of new-condo options. As of the end of April, there were only 17,698 new condos available for sale across all GTA condo projects.
That may sound like a lot of units, but bear in mind only 1,622 of them were actually built and unsold. The bulk of the condos, 9,801 to be precise, were in pre-construction status, meaning three to five years away from delivery. The remaining 6,275 units were unsold and under construction, representing just 12 per cent of the 51,392 units being built in the GTA and slated for delivery in the next three years.
Prices for ground-oriented homes have been increasing at double-digit year-over-year rates, up 11.4 per cent to a record $864,181 in the first four months of 2016, according to Altus Group. Meanwhile, GTA condo prices were up 2.8 per cent year-over-year, to $461,281. On the resale side, detached home prices increased 18.9 per cent, to $986,691, compared to a 5.9 per cent jump in condo prices, to $413,925, according to the Toronto Real Estate Board’s May figures.
And prices will only keep going up, as record land costs and the introduction of new development charges create unprecedented cost pressures for those developing the future supply of new condos, units that won’t be available to consumers for another two years.
For those who do manage to secure a condo, more potential complications loom. Purchasers of units in larger projects can find themselves in interim occupancy for a full year, resulting in the payment of interim occupancy fees (paying rent to stay in their own unit until the building’s registration) that could total more than $10,000 before they’re able to obtain ownership title and begin paying off their mortgages.
And, with projects being designed to minimize capital costs in order to stay competitive on selling prices, building systems will likely require maintenance, repair and replacement earlier than in the past. So condominium fees after the first year of operation are likely to rapidly escalate.
Condos can offer a carefree lifestyle. But that doesn’t mean home-hunters should be carefree when making their condo purchase decisions.
Source: The Star
