Elliot Kelly is “rent poor,” stuck spending more than he wants to rent a semi-detached home in Toronto’s midtown because he can’t find an affordable three-bedroom condo.
The father of four says his family made the move from the Ajax home they own to shorten commute times and give them more walkability in a community they love. But even if they sold their townhome worth nearly $1 million, they can’t foot the bill.
For many months, Kelly says all the suitable condo listings he’s seen in Toronto’s midtown neighbourhood are more than $200,000 above what the family can afford. As a result, he says the family is “living paycheck to paycheck” paying rent.
“I do not feel hopeful,” said Kelly, who isn’t the only would-be condo buyer deterred by current costs.
New condo sales have dropped 47 per cent year-to-date in 2023 to a 10-year low as high interest rates and high sticker prices price out most people, according to a new report from Urbanation, a research firm specializing in the GTA condo and rental market.
“This is not only a 20-something sort of issue,” said Kelly. “There are lots of folks who want to have the choice to substitute out a backyard and an extra parking spot and to substitute in the convenience of living near transit, reduced time commuting and access to amenities.”
Condo options expected to decrease in months ahead
Troubling market conditions also mean less projects are getting off the ground. Urbanation found that 40 condo projects set to launch in the GTA have been shelved for the time being.
The research firm’s president, Shaun Hildebrand, told CBC Toronto that supply is likely going to look worse in the coming months.
“Since there’s a time lag between new condo pre-sales and construction starts, we’re starting to now see that construction activity is beginning to slow down very significantly,” he said. “This will continue in the coming quarters and ultimately will impede new supply.”
Hildebrand says fewer units being built spells bad news for affordability, given “condos are the most affordable form of home ownership in the GTA by a longshot.”
Fewer new condos will also lead to higher prices, he said.
“If we’re not selling as many new condominiums, we won’t be building as many new condominiums.”
Slower sales and paused projects is not a surprise to those in the industry, according to Ben Myers, president of Bullpen Research and Consulting, which specializes in residential real estate in southern Ontario.
“It’s not ideal, but at some point in time the market was going to experience a slowdown, which it has,” he said.
Myers says some projects that are selling well are listing prices closer to summer 2021 levels, and he recommends anyone who can afford high interest rates and current sale prices buy soon.
However, given new condo prices have been climbing for the better part of three decades, he says the prices are still too much for many to stomach.
“As soon as the interest rates start to go back down, I think we’ll start to see another frenzy of buyers come into the marketplace,” Myers said.
That’s little comfort to Kelly, who thinks he won’t be able to make a move anytime soon.
“I still hold out hope that I might be able to hold on long enough until there’s a place that can come up for sale that my family could afford.”
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