A 37th-floor luxury condo in the heart of Toronto’s entertainment district that sold for a $320,000 loss is an example of a condo market that hasn’t been this tough in decades, realtors and observers say.
The three-bedroom unit, on King Street near the site of the Toronto International Film Festival and across from Roy Thompson Hall, faced an uphill battle to be sold this week at $1.23 million – and that was after several previous attempts failed, said the listing realtor, Rebecca Romeo.
“We’re in a buyer’s market all right,” Romeo said in an interview, pointing out that many other agents in the same building faced the same headwinds, as realtors felt pressure to up their game to make any sale at all.
Her client, she said, was happy with the deal even though it was about 21 per cent less than the $1.55 million he paid for it in 2021, as it allowed him to finally move his equity elsewhere, she said.
“The client wanted to change that chapter of his life and move on. He was happy with the sale price,” she said.
The glut of condos for sale in the Greater Toronto Area has plenty of other owners unable to sell as a combination of factors allow buyers to be choosier, even though the longer-term impact could be bad for affordability, says a recent report on GTA Condo Investment called “Challenging Times,” by Urbanation and CIBC.
While the low-rise market appears to be “in reasonable shape,” the condo market “is clearly in recessionary territory with conditions deteriorating to levels not seen in decades,” wrote CIBC’s Benjamin Tal and Urbanation’s Shaun Hildebrand.
Prices are too high for buyers to jump in thanks to higher interest rates, but sellers don’t want to lower the prices because of high development costs and are choosing to offer incentives to compete instead, they write, saying that new condo sales are at their lowest level since the late 1990s.
“The math doesn’t make economic sense from both the demand side (investors) and the supply side (developers), leaving the market at a standstill,” they write.
A situation realtors are seeing on the ground, said Ralph Fox of Fox Marin and Associates, though he cautioned that any single property could be held up as an example of the phenomenon.
“Properties are sitting on the market longer. Months of inventory are starting to build up on the condo side,” he said.
But he said while many owners of pre-sale condos are investors, plenty are not in a position where they are forced to sell.
“They’re holding on,” he said, adding that would be his advice to anyone considering a sale in this market. “If you have a hard-earned asset in Toronto, hold on, hold on, hold on. Rates are going to come down,” he said.
One factor in the glut is that the builders of newer condos were marketing to investors, rather than to the end user of the building
“We’re getting a lot of product at a bad time…some of the people are unfortunately taking losses in the next few months,” said Pouyan Safapour of Devron Developments.
But he said the slow market has also had a knock-on effect on the ability of new condo projects to get started, which means the number of builds is dropping. That means in a few years the number of units coming onto the market won’t keep up with population, he said.
“That’s going to be really bad for affordability. There’s going to be a sharp increase in prices for condos of all types,” he said.
Over in the low-rise market, there is lower supply and so buyers are still competing for properties, said Toronto realtor Teuta Guci.
She pointed to a Leslieville detached home that she listed for $1.728 million, and as three buyers bid for it, the final sale price was $2.12 million.
“The buyers, they are still holding and cautious, waiting for the cut to the interest rate. However they should jump now because while they are waiting, the prices will go up,” she said.