Some fear that Toronto’s booming condo market is headed for a crash, but one major developer isn’t worried.
“My prediction, and I’ve been pretty accurate to date, is we are going to have a 30-40% increase in values of the condo market in downtown Toronto over the next three to four years,” Barry Fenton, CEO of Lanterra Developments, told the Business News Network Thursday. Fenton later clarified that he expects that price increase to occur over the next three years, not four, BNN reported.
In November, the average selling price for a condominium in the city of Toronto was $415,316, according to data from the Toronto Real Estate Board. That’s a 5.4% increase from November of 2014. If Fenton’s prediction is correct, that means the average selling price of a condominium in Toronto will be more than $580,000 by the end of 2018, according to BNN. That flies in the face of widely held expectations that the Toronto condo market is due for a correction.
There are 80,000 condo units under development in the city – an unprecedented number, according to BNN. That’s an increase of about 50% over the last four years, and in August the Canada Mortgage and Housing Corporation warned that Toronto was facing a “high risk” of correction due to overbuilding. In November, the Organisation for Economic Co-Operation and Development concurred, saying Toronto was at risk for a “sharp” correction in the housing market.
But Fenton told BNN that despite the record number of condo units under development, he believes that inventory will start to run out in a few months, leading to a demand that outpaces supply.
“There is probably something like five or six months left of inventory and that will be absorbed very, very quickly,” Fenton said. “…It is not the flavour of the month or flavour of the year. For the past 10 years the market has been fantastic and it is only going to continue to grow.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate