Affordability shifts demand for condominiums into high gear
in 2021
TORONTO and KELOWNA, BC, Oct. 19,
2021 /CNW/ -- Staggering gains in detached housing
values have sent condominium sales soaring throughout the first
eight months of 2021 in major Canadian centres, according to a
report released today by RE/MAX Canada.
The RE/MAX Canada 2021
Condominium Report, which examines trends and developments in five
major Canadian centres and more than 100 sub-markets, found that
buyers turned to condominiums in 2021, as freehold housing values
escalated beyond their reach. The strongest gains in sales were
made in the West, where Greater
Vancouver and Calgary saw
condominium sales rise 87 and 83 per cent respectively between January 1 and August 31 of 2021, compared
to the same period in 2020, which experienced a notable downturn in
condo sales. The Greater Toronto
Area (GTA) led the East in terms of percentage increases in
condo sales at 71 per cent, followed by Halifax-Dartmouth at 36 per cent and Ottawa at 29 per cent. The greatest upswing in
pricing occurred in the East, with both Halifax-Dartmouth and Ottawa posting double-digit price gains of
30.0 per cent and 18.0 per cent respectively. More moderate
appreciation was reported in Greater
Toronto (seven per cent), Vancouver (6.7 per cent) and Calgary (three per cent).
"Affordability, coupled with availability, set the stage for the
exceptional rebound in condominium sales across the country in
2021," says Christopher Alexander,
Senior Vice President, RE/MAX Canada. "Double-digit acceleration in detached
housing values revived slumping condominium sales early in the
year, with demand shifting into high gear as supply dwindled and
prices accelerated. Younger buyers have been behind the push for
condominiums to date, with most looking to lock in low interest
rates and buy before prices climb beyond their means."
Growth in condominium market share occurred in all but one
market surveyed in 2021, according to the RE/MAX Canada 2021 Condominium Report. The greatest
concentration of condo sales was reported in Greater Vancouver, where they represented
nearly half (48.2 per cent) of total residential sales in 2021, up
from 46 per cent one year ago.
Condominium apartments and townhomes in the GTA followed with a
34.5 per cent share of the overall market, up from 30.8 per
cent one year earlier. Almost one in
four properties sold in Ottawa
between January 1 and August 31, 2021
was a condominium, compared to the same period in 2020 (24.3 per
cent versus 23.3 per cent). Meanwhile in Halifax-Dartmouth, the condominium segment represented
17.3 per cent of total residential sales, up from 15 per
cent one year earlier. While overall
condominium sales climbed in Calgary year-over-year, market share declined
by just under one per cent in 2021, to 14.2 per cent.
"Homebuying activity in the condominium segment has surged in
Calgary in 2021, driven in large
part by their affordable price point," says Elton Ash, Executive Vice President at RE/MAX
Canada. "Supply has declined from
almost eight months to just under five year-over-year, although
inventory levels are still 16 per cent ahead of 2020 levels. Once
excess product is absorbed – and that is occurring at a steady pace
throughout the city – condominium values are likely to experience
further appreciation, especially as the average price for detached
housing in the city continues to climb."
Market-by-Market Overview
Greater Vancouver
While strong demand has contributed to a significant uptick in
condominium apartment sales in the Greater Vancouver Area, more moderate gains
have been reported in terms of values in 2021. According to the
Real Estate Board of Greater
Vancouver, the average price of a condominium apartment
hovered at $740,221 in August of
2021, an increase of 6.7 per cent over the August 2020 average of $693,691. By comparison, the average price of a
detached home rose just close to 21 per cent in August 2021, with values approaching $2 million. More than 15,000 condominium
apartments changed hands between January 1
and August 31, up 87.2 per cent over the 8,047 units sold
during the same period in 2020. Areas such as the Sunshine Coast and Whistler saw the greatest upswing in
year-over-year sales, with percentage increases rising 140 per cent
and more in excess of 2020 levels. Burnaby, West
Vancouver/Howe Sound, and Delta-South also posted strong
gains in condominium apartment sales, with increases north of 100
per cent. With affordability looming large in Greater Vancouver, condominium apartments
often represent the first step to homeownership. Forty-eight per
cent of home sales on the Real Estate Board of Greater Vancouver involved a condominium
apartment in 2021. Many purchasers are first-time buyers, hoping to
break into Vancouver's heated
housing market. Most are budget-conscious, seeking resale product
with a minimum of one bedroom plus den, and ideally located near
the Skytrain. Hip areas such as False Creek, Coal Harbour and Yaletown are also popular,
drawing younger buyers attracted to the area's trendy shops,
restaurants, and proximity to the walking and cycling paths.
Inventory levels have slowly declined in recent months, with
condominium apartment listings in August down 27 per cent from one
year ago. Dwindling supply is expected to place upward pressure on
values in the months ahead, prompting more multiple offers on
well-priced units. To date, that phenomenon has been largely
limited to the single-detached and townhouse markets. For the most
part, domestic buyers have been driving homebuying activity in the
Vancouver housing market to date.
However, with immigration expected to ramp up with the relaxation
of Canada's borders, there could
be further pressure on housing sales and values in Greater Vancouver down the
road.
City of Calgary
Condominium apartment sales have soared in Calgary year-to-date as buyers seek to achieve
home ownership while interest rates remain low. In the first eight
months of the year, almost 2,800 apartment units have changed hands
in the city, an increase of 82.6 per cent over the 1,522 units sold
during the same period in 2020. Average price has climbed close to
three per cent year-to-date, rising from $255,852 in 2020 to $263,480 in 2021. The lion's share of activity
has occurred at the most affordable price points in 2021, with
three out of four sales taking place in the $150,000 to $349,999 price range. Condo inventory levels,
which are up 16 per cent over last year, are adequate at present,
with a wide range of product available across the board. Newer
condominium apartment product offering the latest finishes such as
granite/quartz countertops in kitchens and bathrooms, hardwood
flooring and stainless-steel appliances remain most popular with
today's buyers. Purchasers willing to consider older condominium
stock can realize home ownership at a significantly lower price
point. While few and far between, there are some areas of the city
where demand for condominium product currently exceeds supply.
Well-established neighbourhoods close to the inner core, such as
Hillhurst and Bridgeland, top the list, offering buyers an easy
commute to the core. Condo sales are up almost 39 per cent to date
in Hillhurst, with unit sales rising from 18 (2020) to 25 (2021),
with average price up over last year's levels, in large part due to
two sales over the $1-million price
point this year. Some buyers are choosing condominium apartments on
the city's outer perimeters, in residential neighbourhoods such as
Sage Hill, Nolan Hill Heights and
McKenzie Towne. Sales have doubled
year-over-year in McKenzie Towne (27
units in 2020 versus 54 in 2021), with average price climbing eight
per cent to $219,400. The luxury
segment is also showing signs of life, with sales of condominium
apartments over $750,000 on the
upswing in Calgary. Thirty-five
apartments were sold over $750,000
between January 1 and August 31 of
2021, up from 14 unit sales during the same period in 2020.
Eau Claire has been one of the
more popular neighbourhoods for luxury condo sales this year, with
five out of 40 condominiums in the area selling for over
$900,000. Affluent buyers have
returned to the condominium market, with many hoping to realize
home ownership before values climb. Investment is happening as well
in Calgary, with interprovincial
buyers from Ontario and B.C.
leading the charge. Given the current economic outlook, there is
reason for cautious optimism moving forward. Recovery in the oil
and gas industry is underway as global demand climbs. RBC's
provincial outlook for Alberta
reports that capital spending is also expected to increase, growing
by an estimated five per cent this year. Unemployment levels have
been trending downward. Alberta is
forecast to lead the country in terms of economic strength in 2021,
with GDP growth climbing 5.9 per cent and another 4.9 per cent by
year-end 2022. With solid economic fundamentals underpinning the
city's residential real estate market, housing sales are likely to
continue climbing at a healthy pace throughout the remainder of the
year.
Greater Toronto Area
After bearing the brunt of the impact of the pandemic on the GTA
housing market, condominium sales and prices have roared back to
life in both the city and suburbs in 2021. Year-to-date sales of
condominium apartments and townhomes (January 1 to August 31) have climbed 71 per cent
year-over year, to 30,383 units in the GTA, up from 17,760 during
the same period in 2020. Average price has experienced a modest
increase, with values for apartments and townhomes rising seven per
cent to $688,138 year-over-year.
Affordability has been a major driver in this segment of the
market, with condominium apartments and townhomes in the 905-area
code experiencing a notable upswing in activity. The strongest
sales activity was reported in York Region and Peel in 2021, where
sales rose 121.8 per cent and 66.3 per cent respectively. Buyers,
many from the 416, have been behind the push for condominium
product in areas north, east and west of Toronto proper. Sales in the centre of the
city have also climbed as purchasers return to the core, rising
81.3 per cent in the first eight months of 2021 to 11,518, up from
just 6,354 units during the same period one year earlier. The
city's east and west ends have also reported solid growth, with
sales of condominiums up 63.5 per cent and 46.2 per cent
respectively.
Prices have risen as well, with the eastern district reporting
double-digit increases ranging from 14.8 to 17.6 per cent (in E11,
E10, E06, E04, and E07). Price appreciation in the 905 topped 30
per cent in Oshawa (32.9 per
cent), Whitby (32.1 per cent) and
Clarington (30.7 per cent), and
passed the 20-per-cent threshold in King (27.3 per cent), Newmarket (23.8 per cent) and Oakville (21.7 per cent). The oversupply of
condominiums that existed in early 2021 has been absorbed, with
tight inventory levels now starting to place upward pressure on
condominium values. Between January 1 and
August 31 of this year, 72.1 per cent of all sales occurred
below $1 million, yet demand at this
price point is currently exceeding supply. A continuation of these
conditions would place serious upward pressure on values,
especially if buyers try to secure home ownership in advance of
interest rate hikes that are expected in 2022. At the other end of
the spectrum, luxury condominium sales continue to rattle and hum.
Sales over $2 million have risen 71
per cent year-over-year, with 195 units sold in the first eight
months of 2021 (including two units priced over $10 million), up from 114 units during the same
period in 2020. Almost 90 per cent of luxury sales occurred in
Toronto proper, with the most
expensive properties typically selling in the exclusive downtown
core. Condominiums now represent 34.5 per cent of total residential
sales logged by the Toronto Regional Real Estate Board, up from
30.8 per cent one year ago. Share of
market is expected to climb for condominiums in the next six to 12
months, as values for single-detached homes – which are up 25 per
cent to date – make condominium ownership the next best option.
Ottawa
Condominium sales are firing on all cylinders as strong demand
and tight inventory levels characterize current market conditions
in Ottawa. The rapid escalation of
freehold property values over the past year – up almost 28 per cent
– has been a major factor in the increasing number of buyers
considering the condominium lifestyle. More than 3,500 condominium
apartments and townhomes changed hands between January 1 and August 31 of this year,
with sales up almost 29 per cent over the same period in 2020.
Average price has followed in lockstep, rising almost 18 per cent
over last year and hovering at $420,000 year-to-date. Centretown remains the
most sought-after condo hot spot, representing approximately 11 per
cent of total sales in Ottawa, yet
average price remains relatively stable, rising just two per cent
to $462,398 in 2021. Investors and
students are behind the push for condominiums, especially those in
close proximity to the University of
Ottawa and Carlton University. With classes back in session,
students have returned to Sandy Hill, Lowertown and the Market
Area, and investors are cashing in on the trend. Multiple offers
are occurring on two-bedroom flats in key buildings with desirable
amenities and lower condominium fees, with most located in
Centretown, the Glebe and Westboro. Condominium product in the
Glebe is especially popular, with units snapped up quickly. Sales
in the area have more than doubled year-over-year, with average
price climbing 28 per cent to $779,007. Old Ottawa East, a hidden gem
undergoing gentrification, has also attracted a growing number of
empty nesters. Although just 24 condominiums have been sold to
date, the new Greystone Village development currently underway is
expected to breathe new life into the riverfront community.
Empty-nesters and retirees are taking advantage of rapidly
escalating freehold values to downsize to condominiums located in
Ottawa's walkable neighbourhoods,
close to shops, restaurants, and the Rideau Canal. Younger buyers
are considering condominiums as their first step to home ownership.
Condominiums now represent just under 25 per cent of total sales in
Ottawa and the surrounding areas.
Inventory levels have been slow to improve, which has placed
greater upward pressure on condominium values. Several new
condominiums that were under construction and expected to bring
more units to market have converted to rental units. Luxury
condominiums priced over $900,000 are
particularly scarce, with demand exceeding supply in that segment
of the market. With interest rates expected to remain stable for at
least the next six to 12 months, home-buying activity will likely
continue at a healthy pace well into 2022.
Halifax-Dartmouth and Surrounding Area
In-migration from outside the province has bolstered home-buying
activity across the board and contributed to a serious uptick in
average price in Halifax-Dartmouth and the surrounding areas.
Condominium sales increased almost 36 per cent between January 1 and August 31, rising from 716
units in 2020 to 973 units in 2021. Average price has climbed close
to 30 per cent year-to-date, now hovering at $398,632. Lack of inventory remains a significant
challenge in Halifax-Dartmouth and the surrounding area, with condo
supply down and days on market at just 1.1 months, and even less in
several neighbourhoods – the lowest levels seen in a decade. Supply
issues have pushed the sales-to-list price ratio up to 108.4 per
cent this year. The strongest sales between January and August of
this year were reported in Halifax South, where 212 condominium
units changed hands, up 82.8 per cent year-over-year. Values in the
area have climbed 36.5 per cent to $524,680, up from $384,349 in 2020. Fairmount, Clayton Park and Rockingham came in a strong
second with 136 units sold during the same period, an increase of
28.3 per cent over the same period in 2020. Affordability has been
a major driver in Halifax North, where condo sales have soared 232
per cent, rising from 28 units in 2020 to 93 units in the first
eight months of 2021. The area, sought-after for its entry-level
price point, is exceptionally popular with younger, first-time
homebuyers. However, the continuous influx of condo purchasers into
the area has driven-up values, now 53 per cent ahead of 2020
figures ($375,824 versus $245,200). In years past, location was an
essential component of the condominium purchase, but a recent shift
shows that price is now dictating location. Buyers, especially
those from out of province, are willing to expand their search
perimeter to achieve home ownership on their terms. With at least
70 per cent of new high-rise construction designated as rental,
it's unlikely that demand will let up anytime soon. Just 100 to 200
new condominium units are expected to come on-stream in the year
ahead, which is likely to place greater pressure on resale condo
values. In 2019, Halifax Regional Council passed the Centre Plan, a
set of land use documents incentivizing greater density in the city
– the results of which are expected to materialize in the coming
years. Halifax-Dartmouth and the surrounding area is
well-positioned for the future, thanks to policies enacted during
COVID-19 that created the "Atlantic Bubble." In-migration and
immigration are expected to ramp up in the months ahead. With the
Bank of Canada committed to
keeping the overnight rate at 0.25 per cent until mid-2022,
seller's market conditions are expected to prevail for the
foreseeable future.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC
is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than
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"forward-looking statements" within the meaning of the "safe
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Forward-looking statements are based on information available
at
the time those statements are made and/or management's good
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subject to risks and uncertainties that could cause actual
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uncertainties include (1) the global COVID-19 pandemic, which has
impacted the Company and continues to pose significant and
widespread risks to the Company's business, the Company's ability
to successfully close the anticipated reacquisition and to
integrate the reacquired regions into its business, (3) changes in
the real estate market or interest rates and availability of
financing, (4) changes in business and economic activity in
general, (5) the Company's ability to attract and retain quality
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changes in laws and regulations, (8) the Company's ability to
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(9) the Company's ability to implement its technology initiatives,
and (10) fluctuations in foreign currency exchange rates, and those
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SOURCE RE/MAX Canada