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Wednesday, 05 December 2012 18:00

T.O. defends condo market against BoC report

Written by  Vernon Clement Jones
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Who's afraid of the big bad condo market? Not T.O.

Analysts are already be pooh-poohing the Central Bank's warning about a potential collapse of that real estate segment if developers don't slacken the pace of construction.

"Even if demand fell 50 per cent in the condo rental market," said Ben Myers, VP of condo market research firm Urbanation, "we'd still be in a balanced market."

The comments come on the heels of a fresh warning from the Bank of Canada, now pointing to condo development in the GTA that continues at the same frenetic pace as last summer, that despite a 20 per cent drop in sales over the last several months.

The market is also grappling with a significant spike in unsold inventory as a growing number of buyers find themselves shut out by tighter mortgage rules.

That backdrop makes the number of cranes on the Toronto landscape a cause for concern, said the Bank Thursday.

“The total number of housing units under construction has been increasing and is now well above its historic average relative to the population,” writes the Bank of Canada in its Financial System Review. “This development is entirely accounted for by multiple-unit dwellings (which include condominium units), especially in major metropolitan areas.”

Still, Myers and other analysts appear less concerned, pointing to continuing strenght in the condo rental market, especially for one-bedroom units. That popularity extends to homebuyers, increasingly keen, because of tighter mortgage rules, for smaller, cheaper units.

Others point to immigration as another reason those construction site cranes could, and indeed should, continue to dot the Toronto skyline.

Last modified on Monday, 10 December 2012 10:13

3 comments

  • kevin killackey Thursday, 31 January 2013 15:13 posted by kevin killackey

    Based on what numbers does 50% reduction in rental demand = crash? Urbanation bases their statments on stats in the market. What do you base your doomsday statements on?

  • Henry Lee Tuesday, 11 December 2012 21:25 posted by Henry Lee

    Analysts from Bank of Canada should just pack and go home, as they are totally imcompatant in their analysis. The only thing I can say is put money where your mouth is.

  • Joe Tuesday, 11 December 2012 15:14 posted by Joe

    Looks like urbanation is drinking the same kool aid as the rest of the condo pumpers. 50% demand drop = major condo crash.

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