Condominium prices, rents and sales have taken a substantial hit from COVID-19, much more so than other housing types, leading many to wonder if condos will recover from the pandemic. For the moment, the news isn’t good. For example, second-quarter condominium sales in the GTA were 51% lower than the year before, according to the Toronto Regional Real Estate Board (TRREB). New condo listings slipped by 22 % compared to the same quarter in 2019. Nevertheless, average condo prices modestly increased year over year, up 8.7% in August compared to the same time last year.
New condominium sales were hit even harder, with the number of pre-sale condominiums in the second quarter dropping 85 per cent to 1,176 units, from 11,415 units a year earlier, according to market research firm Urbanation. Despite the declining demand for pre-sale condos, construction of new condominiums remained unaffected. Urbanation reported a record 78,212 condominiums were under construction in the second quarter, suggesting the lockdown did not impact the construction industry.
The pandemic has also hit the rental housing stock, causing rents to decline and vacancy rates to rise. TRREB reported that rents have declined by 5% in the second quarter compared to the year before. The decline was more noticeable in centrally located waterfront communities in Toronto. During the same period, condo rental listings jumped by 42%. The drop in immigration as a result of the pandemic, combined with university and college students staying with their parents because of online course offerings have further hurt the demand for condominiums.
The current economic and demographic realities certainly do not favour condominiums, but these developments are mostly temporary. Household debt levels are apparently in decline and interest rates are, and will likely remain, low. Hopefully with a vaccine in hand next year, immigration will resume again. To be sure, COVID-19 is just one of a series of short-term hits on the condo market that has taken some of the shine off the towers, but some argue the long-term demographic trends and economic recovery in 2021 will likely see condo sales and prices soaring again.
