What fall market means for the construction market
Photo: James Bombales
With school back in session and outside temperatures noticeably dropping, the anticipated fall real estate market is speeding towards us.
The fall housing market in 2020 was characterized as a continuation of the summertime hot streak — sales records were broken across the Greater Toronto Area in September and October as the region logged well over 10,000 resale transactions in each month last year, according to the Toronto Regional Real Estate Board. In the new construction segment, single-family home sales soared 168 percent over 2019 levels and recorded the best September for sales since 2003.
Although new home buyers were feeling uncertain in fall 2020 as a second lockdown loomed, this year signals a return to somewhat normal conditions.
“This year there is more of what we are used to, with a slight slowdown in July and August, we anticipate a flurry of activity coming out of Labour Day weekend,” said Mark Cohen, managing partner of TCS Marketing Systems.
“While the market slowed down in the late summer, prices still continued to rise. Our team is preparing for three fall launches, including East Pointe Condominiums, and expect demand to pick up in September.”
Although the province is officially experiencing a fourth wave of COVID-19, the real estate industry has become much better at adapting to this changing environment alongside any closures or restrictions, explains Glen Buttigieg, vice president of sales at TCS Marketing Systems. The new construction segment has gone through its fair share of project delays and virtual launches, which have become commonplace at this point.
“Now, the industry is equipped and I expect that we will see a higher-than-normal project launch volume even with this fourth wave underway,” said Buttigieg.
Condo and single-family homes were on two different paths throughout 2020. Larger detached properties soared in popularity as buyers sought out larger living spaces after enduring multiple rounds of lockdown and moved closer to suburbia. This fall, Buttigieg points out that rental prices have been going up in downtown Toronto, which is signaling that people are returning to the city.
When analyzing developer and buyer activity, Buttigieg explained that there is a strong demand for mid-rise housing product that is situated within close proximity to downtown. Although this property type isn’t necessarily the most cost effective for developers to build, Buttigieg said that buyers are gravitating to these mid-rise projects for their ample flex space, outdoor amenities and the feeling of being in a smaller community.
“I think by spring, based on the way prices are trending, we will see stronger demand for the traditional high-rise tower units, but for now it’s the townhomes and mid-rise [housing types] that are dominating the demand,” he said.
Downtown post-secondary campuses are gradually reopening this fall, along with some office spaces. Cohen explains that Toronto’s city core will continue to be king among investors thanks to the plentiful downtown amenities that make renting in these locations attractive.
“Investors will continue to gravitate towards the most rentable product and that is near schools, hospitals and city centres,” said Cohen. “Transport access is a big driver for investors as well as projects that offer unique amenities or savings like passive house technology.”
The supply and demand dilemma the GTA new construction segment has seen in recent months will likely continue to play out.
In it’s latest market report, the Building Industry and Land Development Association released another month of falling inventory numbers, with 9,483 condo apartments and 1,598 single-family homes available in pre-construction, construction and newly-finished stages of development. Prices have continued to rise at the rate that they have as a result of demand outpacing available supply, said Cohen.
“Though we are seeing a plethora of project launches, the process of bringing new product to market is still strained which in turn means we are still a ways away from balancing the market,” he said.
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