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Half of spring condo launches delayed until fall

May 07, 2020

Photo: James Bombales

Sean MacKay - Livabl.com

The crowded sales centres that have become emblematic of Toronto’s decade-long new condo boom have joined the long list of scenes we will miss this spring. But could they return by the fall?

Real estate research firm Urbanation released Monday the results of an industry survey conducted through the last two weeks of April. The firm received responses from about 100 development industry professionals about their expectations for the market amid the massive disruption brought on by the COVID-19 pandemic.

Urbanation called the survey results “cautiously optimistic” with industry representatives stating that over half of the Toronto condo launches that were planned for the spring would be pushed forward to fall 2020.

The year started on a strong note, with 4,623 new condo units launched in the first quarter, according to Urbanation data also released earlier this week. The total is two and a half times higher than the same period a year ago, with almost all of the launches occurring in February before panic over the pandemic settled in. New condo sales matched the unit launches’ performance with 5,626 units sold through the first quarter, making Q1-2020 the second-best on record.

“Similar to the Q1 and Q2 periods of 2009 following the onset of the Great Recession, new launches are expected to become very limited over the next six months, which should help keep absorption levels high and inventories low,” wrote Urbanation in a media release accompanying the data.

With launches paused for several months and new condo inventories already lower than the 10-year average, industry representatives seem to have good reason to be optimistic about the fall.

That said, there will likely be a few hurdles left to overcome even if condo launches have an opportunity to get back on track later this year. While it’s easy to see pent up buyer demand leading to a relatively busy fall homebuying season, it’s much harder to imagine sales centres accommodating large numbers of prospective purchasers anytime this year. In response, the industry’s local tech and marketing leaders are developing tools and playbooks to help both buyers and homebuilders’ sales teams get comfortable in a digital-first environment.

Another concern weighing on industry professionals’ minds is pricing. Urbanation’s survey results showed that nearly half of respondents believed prices would remain steady for condos launched later this year relative to prices for units launched in the period immediately before the pandemic.

“This was closely followed by a 40% share expecting a slight decline in pricing with a large increase in incentives and a low-to-moderate pace of absorption. Few expected a large decline in prices but even fewer expected a rise in prices, illustrating that developers will likely take a cautious approach to reintroducing projects to the market this year,” Urbanation said in its media release.

This article was originally published on Livabl.com


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