“I believe … the condo spec hustle is over. Those buying condos as investments now are doing so because they believe in Toronto long term growth potential,” Marcel Greaux, a Toronto-based investor, told REP. “They are prepared for an eventual slow down. They are preserving capital.”
And that trend has been noted by CMHC, which argues the Toronto condo market is safeguarded from experiencing a similar bubble burst that occurred in the 1980s.
“The housing bubble that occurred in Toronto in the late 1980s was arguably fuelled by huge speculative investment in the condominium apartment market,” the Crown Corporation said in its latest Housing Market Insight report for the Greater Toronto Area, released Tuesday. “Rapid house price growth in the late 80s transformed real estate investment.”
According to CMHC, developers are employing prudent tactics when construction new buildings: 79% of projects only begin construction after 70% or more of units are sold.
And those projects that go into construction prior to reaching that 70% sales mark are usually smaller developments or additional phases of a larger project.
Further, the vast majority of unsold units are found in two of the GTA’s most popular markets – Toronto and Markham.
“Condo building activity in Toronto seems to be well managed,” Dana Senagama, principal market analyst for GTA at CMHC said. “In spite of this encouraging information, future inventory management remains critical.”
One popular market has been given a vote of confidence by the CMHC, but investors may be looking elsewhere to park their capital.