Toronto’s Downtown Condo Market Bounces Back to Pre-Pandemic Levels

After months of lagging sales, Toronto’s downtown condo market bounced back in Q1-2021, after nearly 3,000 condo units sold, thanks to low borrowing costs, renewed optimism in the market, and rising suburban home prices, according to Urbanation’s Q1-2021 Condominium Market Survey.

Released Monday, the survey said 2,886 new condominium units sold in the former City of Toronto in Q1-2021, which was more than 2.5 times higher than the quarterly average between Q2- and Q4-2020 and above the pre-pandemic level of 2,829 sales in Q1-2020.

During this quarter, 5,385 new condo units sold in the Greater Toronto Area (GTA), coming within close range (-4%) of pre-pandemic sales of 5,593 units in Q1-2020 and surpassing the 10-year average of 4,924 sales.

Though, the 2020 theme of 905 region market dominance shifted during the first quarter, as momentum swung back to downtown Toronto.

Shaun Hildebrand, President of Urbanation, says, “The downtown Toronto condo market turned the corner in the first quarter of the year on low borrowing costs and renewed optimism regarding the outlook, but also partly due to chain reaction after suburban home prices soared 30% over the past year and put the spotlight back on urban properties.”

According to the survey, a 76% share of new condominiums launched for presale in Q1 were sold by the end of the quarter — the highest level of opening quarter absorption since the market high in 2017.

New units that launched for presale in the GTA during Q1 sold at a record high average sale price of $1,261-psf ($817,000 for 648-sq.ft), up 8.8% from new units launched in Q1-2020 averaging $1,159-psf ($770,00 for 664-sq.ft).

New launch activity was driven by a number of successful new openings in downtown Toronto that sold on average for $1,419-psf ($856,000 for 603-sq.ft) — 5.7% higher than the average in Q1-2020 at $1,343-psf ($798,000 for 594-sq.ft).

During Q1-2021, unsold inventory across the GTA declined 11% year-over-year to 11,956 units — a 10-quarter low. Though, at the end of Q1-2021, average prices for unsold units available across the GTA increased 7.7% from a year ago to a record-high $1,178-psf.

As inventory wound down, developers quickly increased prices at the end of the quarter by an average of $45-psf (+4%) compared to the end of Q4-2020, with several builders raising prices by over $100-psf.

Urbanation says the new condominium market began heating up as the resale market broke new records during the first quarter, with total sales for GTA condominium apartment resales increasing 74% year-over-year in Q1-2021.

In the former City of Toronto, activity was up 104% from its pre-pandemic level in Q1-2020. Resale inventory in the former City of Toronto fell to only one month of supply in the first quarter, representing a “dramatic” decline from the five months of supply recorded two quarters earlier in Q3-2020.

While resale prices in the former City of Toronto during Q1-2021 remained 4.7% lower than last year, they still managed to surge 6% from the previous quarter in Q4-2020 to reach an average of $1,018-psf ($750,000 for 736-sq.ft).

In terms of future supply, Urbanation says the total inventory of condo units under construction across the GTA reached a record 83,497 units in Q1-2021, up 10% from 76,145 units in Q1-2020.

However, the downtown condo market represented the lowest share of GTA construction activity underway on record at 44% (36,997 units), while the 905 regions of the GTA represented a record high share at 32% (19,497 units).