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Affordability shifts demand for condominiums into high gear in 2021
TORONTO and KELOWNA, BC, Oct. 19, 2021 /CNW/ -- Staggering gains in detached housing values have sent condominium sales soaring throughout the first eight months of 2021 in major Canadian centres, according to a report released today by RE/MAX Canada.
The RE/MAX Canada 2021 Condominium Report, which examines trends and developments in five major Canadian centres and more than 100 sub-markets, found that buyers turned to condominiums in 2021, as freehold housing values escalated beyond their reach. The strongest gains in sales were made in the West, where Greater Vancouver and Calgary saw condominium sales rise 87 and 83 per cent respectively between January 1 and August 31 of 2021, compared to the same period in 2020, which experienced a notable downturn in condo sales. The Greater Toronto Area (GTA) led the East in terms of percentage increases in condo sales at 71 per cent, followed by Halifax-Dartmouth at 36 per cent and Ottawa at 29 per cent. The greatest upswing in pricing occurred in the East, with both Halifax-Dartmouth and Ottawa posting double-digit price gains of 30.0 per cent and 18.0 per cent respectively. More moderate appreciation was reported in Greater Toronto (seven per cent), Vancouver (6.7 per cent) and Calgary (three per cent).
"Affordability, coupled with availability, set the stage for the exceptional rebound in condominium sales across the country in 2021," says Christopher Alexander, Senior Vice President, RE/MAX Canada. "Double-digit acceleration in detached housing values revived slumping condominium sales early in the year, with demand shifting into high gear as supply dwindled and prices accelerated. Younger buyers have been behind the push for condominiums to date, with most looking to lock in low interest rates and buy before prices climb beyond their means."
Growth in condominium market share occurred in all but one market surveyed in 2021, according to the RE/MAX Canada 2021 Condominium Report. The greatest concentration of condo sales was reported in Greater Vancouver, where they represented nearly half (48.2 per cent) of total residential sales in 2021, up from 46 per cent one year ago. Condominium apartments and townhomes in the GTA followed with a 34.5 per cent share of the overall market, up from 30.8 per cent one year earlier. Almost one in four properties sold in Ottawa between January 1 and August 31, 2021 was a condominium, compared to the same period in 2020 (24.3 per cent versus 23.3 per cent). Meanwhile in Halifax-Dartmouth, the condominium segment represented 17.3 per cent of total residential sales, up from 15 per cent one year earlier. While overall condominium sales climbed in Calgary year-over-year, market share declined by just under one per cent in 2021, to 14.2 per cent.
"Homebuying activity in the condominium segment has surged in Calgary in 2021, driven in large part by their affordable price point," says Elton Ash, Executive Vice President at RE/MAX Canada. "Supply has declined from almost eight months to just under five year-over-year, although inventory levels are still 16 per cent ahead of 2020 levels. Once excess product is absorbed – and that is occurring at a steady pace throughout the city – condominium values are likely to experience further appreciation, especially as the average price for detached housing in the city continues to climb."
While strong demand has contributed to a significant uptick in condominium apartment sales in the Greater Vancouver Area, more moderate gains have been reported in terms of values in 2021. According to the Real Estate Board of Greater Vancouver, the average price of a condominium apartment hovered at $740,221 in August of 2021, an increase of 6.7 per cent over the August 2020 average of $693,691. By comparison, the average price of a detached home rose just close to 21 per cent in August 2021, with values approaching $2 million. More than 15,000 condominium apartments changed hands between January 1 and August 31, up 87.2 per cent over the 8,047 units sold during the same period in 2020. Areas such as the Sunshine Coast and Whistler saw the greatest upswing in year-over-year sales, with percentage increases rising 140 per cent and more in excess of 2020 levels. Burnaby, West Vancouver/Howe Sound, and Delta-South also posted strong gains in condominium apartment sales, with increases north of 100 per cent. With affordability looming large in Greater Vancouver, condominium apartments often represent the first step to homeownership. Forty-eight per cent of home sales on the Real Estate Board of Greater Vancouver involved a condominium apartment in 2021. Many purchasers are first-time buyers, hoping to break into Vancouver's heated housing market. Most are budget-conscious, seeking resale product with a minimum of one bedroom plus den, and ideally located near the Skytrain. Hip areas such as False Creek, Coal Harbour and Yaletown are also popular, drawing younger buyers attracted to the area's trendy shops, restaurants, and proximity to the walking and cycling paths. Inventory levels have slowly declined in recent months, with condominium apartment listings in August down 27 per cent from one year ago. Dwindling supply is expected to place upward pressure on values in the months ahead, prompting more multiple offers on well-priced units. To date, that phenomenon has been largely limited to the single-detached and townhouse markets. For the most part, domestic buyers have been driving homebuying activity in the Vancouver housing market to date. However, with immigration expected to ramp up with the relaxation of Canada's borders, there could be further pressure on housing sales and values in Greater Vancouver down the road.
City of Calgary
Condominium apartment sales have soared in Calgary year-to-date as buyers seek to achieve home ownership while interest rates remain low. In the first eight months of the year, almost 2,800 apartment units have changed hands in the city, an increase of 82.6 per cent over the 1,522 units sold during the same period in 2020. Average price has climbed close to three per cent year-to-date, rising from $255,852 in 2020 to $263,480 in 2021. The lion's share of activity has occurred at the most affordable price points in 2021, with three out of four sales taking place in the $150,000 to $349,999 price range. Condo inventory levels, which are up 16 per cent over last year, are adequate at present, with a wide range of product available across the board. Newer condominium apartment product offering the latest finishes such as granite/quartz countertops in kitchens and bathrooms, hardwood flooring and stainless-steel appliances remain most popular with today's buyers. Purchasers willing to consider older condominium stock can realize home ownership at a significantly lower price point. While few and far between, there are some areas of the city where demand for condominium product currently exceeds supply. Well-established neighbourhoods close to the inner core, such as Hillhurst and Bridgeland, top the list, offering buyers an easy commute to the core. Condo sales are up almost 39 per cent to date in Hillhurst, with unit sales rising from 18 (2020) to 25 (2021), with average price up over last year's levels, in large part due to two sales over the $1-million price point this year. Some buyers are choosing condominium apartments on the city's outer perimeters, in residential neighbourhoods such as Sage Hill, Nolan Hill Heights and McKenzie Towne. Sales have doubled year-over-year in McKenzie Towne (27 units in 2020 versus 54 in 2021), with average price climbing eight per cent to $219,400. The luxury segment is also showing signs of life, with sales of condominium apartments over $750,000 on the upswing in Calgary. Thirty-five apartments were sold over $750,000 between January 1 and August 31 of 2021, up from 14 unit sales during the same period in 2020. Eau Claire has been one of the more popular neighbourhoods for luxury condo sales this year, with five out of 40 condominiums in the area selling for over $900,000. Affluent buyers have returned to the condominium market, with many hoping to realize home ownership before values climb. Investment is happening as well in Calgary, with interprovincial buyers from Ontario and B.C. leading the charge. Given the current economic outlook, there is reason for cautious optimism moving forward. Recovery in the oil and gas industry is underway as global demand climbs. RBC's provincial outlook for Alberta reports that capital spending is also expected to increase, growing by an estimated five per cent this year. Unemployment levels have been trending downward. Alberta is forecast to lead the country in terms of economic strength in 2021, with GDP growth climbing 5.9 per cent and another 4.9 per cent by year-end 2022. With solid economic fundamentals underpinning the city's residential real estate market, housing sales are likely to continue climbing at a healthy pace throughout the remainder of the year.
Greater Toronto Area
After bearing the brunt of the impact of the pandemic on the GTA housing market, condominium sales and prices have roared back to life in both the city and suburbs in 2021. Year-to-date sales of condominium apartments and townhomes (January 1 to August 31) have climbed 71 per cent year-over year, to 30,383 units in the GTA, up from 17,760 during the same period in 2020. Average price has experienced a modest increase, with values for apartments and townhomes rising seven per cent to $688,138 year-over-year. Affordability has been a major driver in this segment of the market, with condominium apartments and townhomes in the 905-area code experiencing a notable upswing in activity. The strongest sales activity was reported in York Region and Peel in 2021, where sales rose 121.8 per cent and 66.3 per cent respectively. Buyers, many from the 416, have been behind the push for condominium product in areas north, east and west of Toronto proper. Sales in the centre of the city have also climbed as purchasers return to the core, rising 81.3 per cent in the first eight months of 2021 to 11,518, up from just 6,354 units during the same period one year earlier. The city's east and west ends have also reported solid growth, with sales of condominiums up 63.5 per cent and 46.2 per cent respectively.
Prices have risen as well, with the eastern district reporting double-digit increases ranging from 14.8 to 17.6 per cent (in E11, E10, E06, E04, and E07). Price appreciation in the 905 topped 30 per cent in Oshawa (32.9 per cent), Whitby (32.1 per cent) and Clarington (30.7 per cent), and passed the 20-per-cent threshold in King (27.3 per cent), Newmarket (23.8 per cent) and Oakville (21.7 per cent). The oversupply of condominiums that existed in early 2021 has been absorbed, with tight inventory levels now starting to place upward pressure on condominium values. Between January 1 and August 31 of this year, 72.1 per cent of all sales occurred below $1 million, yet demand at this price point is currently exceeding supply. A continuation of these conditions would place serious upward pressure on values, especially if buyers try to secure home ownership in advance of interest rate hikes that are expected in 2022. At the other end of the spectrum, luxury condominium sales continue to rattle and hum. Sales over $2 million have risen 71 per cent year-over-year, with 195 units sold in the first eight months of 2021 (including two units priced over $10 million), up from 114 units during the same period in 2020. Almost 90 per cent of luxury sales occurred in Toronto proper, with the most expensive properties typically selling in the exclusive downtown core. Condominiums now represent 34.5 per cent of total residential sales logged by the Toronto Regional Real Estate Board, up from 30.8 per cent one year ago. Share of market is expected to climb for condominiums in the next six to 12 months, as values for single-detached homes – which are up 25 per cent to date – make condominium ownership the next best option.
Condominium sales are firing on all cylinders as strong demand and tight inventory levels characterize current market conditions in Ottawa. The rapid escalation of freehold property values over the past year – up almost 28 per cent – has been a major factor in the increasing number of buyers considering the condominium lifestyle. More than 3,500 condominium apartments and townhomes changed hands between January 1 and August 31 of this year, with sales up almost 29 per cent over the same period in 2020. Average price has followed in lockstep, rising almost 18 per cent over last year and hovering at $420,000 year-to-date. Centretown remains the most sought-after condo hot spot, representing approximately 11 per cent of total sales in Ottawa, yet average price remains relatively stable, rising just two per cent to $462,398 in 2021. Investors and students are behind the push for condominiums, especially those in close proximity to the University of Ottawa and Carlton University. With classes back in session, students have returned to Sandy Hill, Lowertown and the Market Area, and investors are cashing in on the trend. Multiple offers are occurring on two-bedroom flats in key buildings with desirable amenities and lower condominium fees, with most located in Centretown, the Glebe and Westboro. Condominium product in the Glebe is especially popular, with units snapped up quickly. Sales in the area have more than doubled year-over-year, with average price climbing 28 per cent to $779,007. Old Ottawa East, a hidden gem undergoing gentrification, has also attracted a growing number of empty nesters. Although just 24 condominiums have been sold to date, the new Greystone Village development currently underway is expected to breathe new life into the riverfront community. Empty-nesters and retirees are taking advantage of rapidly escalating freehold values to downsize to condominiums located in Ottawa's walkable neighbourhoods, close to shops, restaurants, and the Rideau Canal. Younger buyers are considering condominiums as their first step to home ownership. Condominiums now represent just under 25 per cent of total sales in Ottawa and the surrounding areas. Inventory levels have been slow to improve, which has placed greater upward pressure on condominium values. Several new condominiums that were under construction and expected to bring more units to market have converted to rental units. Luxury condominiums priced over $900,000 are particularly scarce, with demand exceeding supply in that segment of the market. With interest rates expected to remain stable for at least the next six to 12 months, home-buying activity will likely continue at a healthy pace well into 2022.
Halifax-Dartmouth and Surrounding Area
In-migration from outside the province has bolstered home-buying activity across the board and contributed to a serious uptick in average price in Halifax-Dartmouth and the surrounding areas. Condominium sales increased almost 36 per cent between January 1 and August 31, rising from 716 units in 2020 to 973 units in 2021. Average price has climbed close to 30 per cent year-to-date, now hovering at $398,632. Lack of inventory remains a significant challenge in Halifax-Dartmouth and the surrounding area, with condo supply down and days on market at just 1.1 months, and even less in several neighbourhoods – the lowest levels seen in a decade. Supply issues have pushed the sales-to-list price ratio up to 108.4 per cent this year. The strongest sales between January and August of this year were reported in Halifax South, where 212 condominium units changed hands, up 82.8 per cent year-over-year. Values in the area have climbed 36.5 per cent to $524,680, up from $384,349 in 2020. Fairmount, Clayton Park and Rockingham came in a strong second with 136 units sold during the same period, an increase of 28.3 per cent over the same period in 2020. Affordability has been a major driver in Halifax North, where condo sales have soared 232 per cent, rising from 28 units in 2020 to 93 units in the first eight months of 2021. The area, sought-after for its entry-level price point, is exceptionally popular with younger, first-time homebuyers. However, the continuous influx of condo purchasers into the area has driven-up values, now 53 per cent ahead of 2020 figures ($375,824 versus $245,200). In years past, location was an essential component of the condominium purchase, but a recent shift shows that price is now dictating location. Buyers, especially those from out of province, are willing to expand their search perimeter to achieve home ownership on their terms. With at least 70 per cent of new high-rise construction designated as rental, it's unlikely that demand will let up anytime soon. Just 100 to 200 new condominium units are expected to come on-stream in the year ahead, which is likely to place greater pressure on resale condo values. In 2019, Halifax Regional Council passed the Centre Plan, a set of land use documents incentivizing greater density in the city – the results of which are expected to materialize in the coming years. Halifax-Dartmouth and the surrounding area is well-positioned for the future, thanks to policies enacted during COVID-19 that created the "Atlantic Bubble." In-migration and immigration are expected to ramp up in the months ahead. With the Bank of Canada committed to keeping the overnight rate at 0.25 per cent until mid-2022, seller's market conditions are expected to prevail for the foreseeable future.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in more than 110 countries and territories. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.com. For the latest news about RE/MAX, please visit news.remax.com.
Forward looking statements
This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
SOURCE RE/MAX Canada
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