Is Toronto Building Too Many Condominiums?

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Are we building too many condominiums and will that have any negative impact on Price or Rental Rates in the future?

There are a couple of assumptions here that need to be addressed:

a) Demand (people moving into condominiums) remains constant while supply (the amount of condominiums we are building) is increasing. If there are more condominiums entering the market but assuming demand stays the same then yes, absolutely prices and rents would decrease.

However, the question that NEEDS to be asked is whether or not the increase in demand is equal to or greater than the increase in supply (sorry to get all Econ 101 on you).

What we know:

  • Our population growth is primarily driven by immigration with the net change in population in the GTA approximately 100,000. According to Real Net, this means we need approximately 40,000 new homes per year to satisfy this growth.
  • An increasing trend of jobs going BACK to the City (a lot of major companies left for the suburbs but there has been a recent surge back into the City including Coca Cola, Apple, Google among many others).
  • Buyers are more and more willing to pay premiums for CONVENIENCE. This means people want to live near transit, groceries, work, play (hint: WalkScore has become a very powerful tool to determine this).
  • Due to the Green Belt policy implemented in 2007, developers are forced to build “up” (high rises) rather than building “out” (low rises).
  • There has been a decrease in low-rise development and a subsequent increase in high rise development over the last 5-10 years.

We do not have a crystal ball and cannot predict the future, however, the trends highlight that there is an increasing demand for condominium style living in Downtown Toronto.

Roy Bhandari