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CONDO CORNER: Why Costs are Still Climbing

Blog by Doriana Zohil-Morton, Broker of Record/Owner | May 29th, 2019

The Toronto real estate market is very healthy. The cost of Toronto area re-sale homes has risen consistently for the past 10 years. So… what’s with the price of condos? There are a few factors at play here.

Demand
Detached homes are priced such that first time home buyers are priced right out of that market. Condos are the only option left for those not wanting to leave the city. Real estate investors also like the ease of condominium units. Downsizing empty-nesters/ baby boomers are also looking at condos for the security and minimal maintenance they afford, allowing them to travel more. New Canadians with little Canadian credit, find that condos are a perfect way to get into the Toronto real estate market. Downtown Toronto is also highly desirable for those that want transit, restaurants and shops at their front doors, and don’t want to be commuting each day for hours. That is a lot of people vying for the same thing. This has created a situation where bully offers and bidding wars sometimes take place.

More Expensive Developments
Condo projects continue to grow in height. Condo towers are now 50+ floors. Those construction projects are not cheap. There is also more demand for the luxury market for downsizing retirees who want the opulent features. All those features come at a cost.

Lower Interest Rates
Lower interest rates means buyers can borrow more cheaply. So this opens up the possibility of buying to more people. More people demanding the same thing = higher prices.



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