This is a guest post by Penelope Graham from Zoocasa.
It certainly paid to be a Toronto condo owner last year; despite slower overall sales and price growth compared to 2016, the multi-family housing segment experienced sky-high returns – and demand will continue into the new year, as experts have dubbed 2018 the “year of the condo”.
A Strong End to the 2017 Market
End-of year data show condo owners enjoyed double-digit appreciation; the Toronto Real Estate Board reports unit values increased 23 per cent over the course of 2017 to an average of $512,478 while Royal LePage’s quarterly House Price Survey finds that in the period between October and December alone, prices climbed 19.5 per cent.
Pricier Homes Pushed Further Out of Reach
Affordability remains the strongest impetus behind condominium popularity, as buyers find themselves squeezed by a number of budget-slashing factors. New regulations that went into effect on January 1st could chop buying power for new mortgage applicants by as much as 20 per cent, while pending Bank of Canada rate hikes will usher in a higher interest rate environment for all consumers.
And, as the GTA detached segment has softened considerably in the months following the implementation of the Ontario Fair Housing Plan, at an average price of $1,098,951, they remain firmly out of reach for those earning the city’s median household income of $78,280. Assuming good credit, a 20-per-cent down payment and 30-year amortization, a household earning that amount would qualify for a mortgage of $602,008 – literally hundreds of thousands of dollars short of achieving the detached dream. Condos, on the other hand, remain within the realm of affordability for buyers intent on claiming a piece of the Toronto real estate market.
Middle-market homes, such as semi-detached houses and townhouses for sale in Toronto, rose 16.2 and 16.5 per cent last year respectively, to $782,756 and $643,330.
“It is interesting to note that home price growth in the second half of 2017 differed substantially depending on market segment,” said Jason Mercer, TREB’s director of market analysis. “The detached market segment – the most expensive on average – experienced the slowest pace of growth as many buyers looked to less expensive options. Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions.”
The Top 10 Appreciating Condos in Toronto in 2017
However, the age-old mantra of real estate – location, location, location – still applies to which condos saw the greatest appreciation last year. According to data analyzed by Zoocasa, the greatest price growth in Toronto was seen south of Queen Street, with nine out of 10 units increasing more than 30 per cent per square foot. For example, those who purchased a unit in the area in 2016 for $400,000 would see, on average, an equity boost of $120,000 today.
Check out the top 10 appreciation condos in Toronto in the infographic below: