Condos: Pulling the Canadian Market Up

The landscape of the Canadian Housing Industry has changed dramatically over the past several years- physically and intrinsically.

Land becomes a premium, particularly in larger metropolitan centres, lifestyle and housing priorities adjust, Baby Boomers seek en masse to downsize- often uptown, and all these factors come together to create an explosion in the condo market, as developers seek to move their projects upwards, rather than sprawling out.

And as demand increases, the laws of economic say that so must supply. Condominium development has seen a healthy uptick over the last several years.

In a recent study by RE/MAX, outlining the sheer dollar impact that new construction and renovation has had, both on the dramatically doubling of property prices in the country over the last decade, and also in terms of driving revenues towards the new construction and renovations industries, they suggest that condominiums have emerged as an attractive option for several new groups, as attitudes and desires towards housing shift.

“The past decade has also marked the rise of the condominium—moreover, its undeniable acceptance as an attractive option as opposed to a secondary compromise,” said Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Toronto, for example, has become the largest condominium market in North America. Yet, it isn’t just gaining traction in large centres like Toronto, Ottawa and Vancouver, but also in smaller cities such as Kelowna, London and Halifax—to name a few.

In addition to seeing a surge in new development, there is a healthy resale market as well. RE/MAX’s study found that in British Colombia and Alberta, condominiums re sales accounted for between 25% and 50% of the total sales over the decade.

Why Condominiums?

It is difficult to characterize a condo purchaser, simply because the demographic is sprawling, including First Time Homebuyers, Baby Boomers, property investors, young professionals and even young families electing condo living over traditional single family home suburbia. Many developments are constructed with these markets in mind, and have the amenities to draw them in.

But as Andrew Bodnar, Real Estate Sales Person, RE/MAX Condo Plus says, having such a wide market is not without its’ difficulties. “Condo developers and their team of architects and designers have their own challenges to create buildings and living spaces that match the diverse needs of the residents they’re trying to attract. This is why you’ll often see more boutique style condo residences with less than 200 suites which allows the building to be part of the neighbourhood instead of towering over it and offer greater customization of features and finishing’s to meet their target residents needs”

Many major centres- in particular Toronto and Vancouver are the settling grounds for immigrants coming into the country- which are increasing at a rapid pace, according to recent statistics. In these centres, there is a shortage in supply of good rental stock, which is why so many property investors in these centres are snapping these properties up.

Young professionals are choosing to live closer to their workplaces, but are eager to jump into the home ownership pool. The typical first time homebuyer has changed as well, with many single people electing home ownership with their own resources, rather than waiting to be part of a couple to buy, as had been traditionally done, with condo living likely their most affordable option.

There has been a shift in attitude from the Baby Boomer generation too. While it is not surprising that many entering retirement prefer to downsize to properties that require less upkeep and maintenance, what is also notable with this group is the way in which they are vacating the suburbs in droves and heading back into town to replant their roots.

So then, as urban sprawl in many centres has reached the width of its wing span, seemingly the most attractive alternative for many members of these groups is to return to the centre of the action.

Furthermore,  the upsurge in this market is not limited to a corner of the country either- rather it has become a widespread phenomenon throughout the country, suggesting that there are deeper, underlying market, population and demographic fundamentals at play on a national level.

Heather Wright Property Wire Canada