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GTA Condo Sales in Q1 2012: Buyers’ Wait-and-See Attitude

[Originally published on Moneyville.ca on April 18, 2012: Click Here]

Toronto condo price hits average of $360,892

By Susan Pigg | Wed Apr 18 2012

The record condo construction of 2011 is finally being felt across the GTA, with listings up 14 per cent in the first quarter of 2012.

Last year’s record pace of condo construction is starting to be felt across the GTA, with listings up 14 per cent in the first quarter of 2012.

Sales, on the other hand, were up by just 2 per cent over the same period as condo buyers appear to be taking more of a wait-and-see attitude, hopeful that an increase in supply could start pushing prices down, some realtors say.

The average selling price of a GTA condo was up 3.7 per cent in the first quarter of 2012 — $334,952 compared to $322,857 year over year, according to statistics from the Toronto Real Estate Board (TREB.)

But prices downtown, where the vast majority of construction and sales occurred, hit $360,892 in the first three months of 2012, up from $348,779 a year ago.

That’s a far cry from the 10 per cent price jump seen in house prices during the same period, largely because of an unusual shortage of inventory that has been fuelling bidding wars and driving up prices.

Things are much different in the condo sector where downtown realtors say they are seeing fewer bidding wars for condos as more supply comes on the market, with the exception of a few high-demand areas where inventory remains low, such as the St. Lawrence Market area.

In fact, investors trying to sell their units in newer, higher-priced condo towers seem to be having a more difficult time just since January, said realtor Andrew la Fleur who specializes in the downtown condo market.

“I think the greatest fear underlying this whole condo boom is affordability. If units get too expensive, people will just stop buying them — no matter how beautiful they are or what an investor paid for them three years ago,” says la Fleur.

Since March of 2011, the so-called sales to listings ratio — a key real estate barometer for determining whether it’s a seller’s or buyer’s market – has gone from 49 per cent to 40 per cent. Thirty percent is considered a buyer’s market.

While there is still lots of demand for downtown condos where you don’t need a car, buyers seem less willing to get involved in bidding wars, says realtor Mark Savel.

“There are some buyers who think that with the amount that’s being built right now, there will be more supply than demand. But I tell them a lot of those units have been sold already — it’s not like developers are just putting up vacant units.

“I’m still seeing a lot of demand for downtown so I tell them I think the market will remain pretty balanced.”

Meanwhile Wednesday, a condo poll by TD Canada Trust found that 81 per cent of condo buyers in Toronto worry about being able to afford their mortgage payments.

Yet they are more willing than any other Canadian condo dwellers to pay the highest monthly maintenance fees — 17 per cent said they’d pay more than $600 per month, compared to 10 per cent nationally — for the convenience of living near transit and other amenities.

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