This past week, at a real estate conference hosted by Queen’s University the topic of which was “Seeking Growth, Seeking Yield: Finding the Best Real Estate Investment Opportunities in Canada”, the Toronto condominium market was reviewed.
There was a consensus that the condo market was not a bubble but worries exist.
Lenders talked about future uncertainties, level of household debt and the oversight of the Office of the Superintendent of Financial Services.
Developers talked about tighter financing and affordability. Even though there are no real statistics as to numbers, developers also expressed concerns that investors looking to buy to rent or to “flip” are becoming hesitant as rising interest rates and affordability become an issue.
Real Estate agents worried about a growing gap between prices of new condos and the resale market, and about skittish investors and bad press.
Will there be a “crash” – in my mind unlikely. However, with financing being made more difficult, with buyers becoming hesitant, a significant “cooling off” seems to be beginning.
This means that there is going to be a huge pipeline of supply in those projects now under construction and not sold out, and, a larger influx in projects being launched before interest rates rise or consumer and/or investor confidence retreats.
The strong will weather the storm but the smaller developer could start having problems in this new market and we therefore could be heading into a real oversupply of condominiums.
