Is the Greater Toronto and Hamilton Area Multi-Family Market Nearing a Bottom?

GTHA Slowdown Continues as Sales Rebound in Calgary and Vancouver Markets

TORONTO, May 6, 2024 /PRNewswire-PRWeb/ -- Zonda Urban today released its Q1-2024 Greater Toronto and Hamilton Area (GTHA) multi-family market survey results following the release of the Calgary and Vancouver Multi-family results in recent weeks.

The Greater Toronto and Hamilton Area multi-family market posted another double-digit annual decline in sales activity during the first quarter of 2024. GTHA sales volume fell 12% from a year ago to 2,321, marking a multi-year low for the market. The slowdown in demand for new condominium apartments and townhouses in the GTHA runs in contrast to other major Canadian markets, with sales rising on an annual basis by 27% in Vancouver and 4% in Calgary. The latter had its second highest first quarter sales on record as population growth surged, in part spurred by demand from Ontario-based brokers and buyers.

A bright spot in the GTHA market continued to be townhouses, with sales consistently rising year-over-year since hitting lows in 2022. 695 townhouses sold during Q1-2024, representing a 34% annual increase. Twelve new townhouse projects opened in the first quarter selling 60% of the 478 units released with an average selling price of $1,041,000 (1,645 sf average unit size).

Condominium apartment sales in the GTHA dropped 23% year-over-year to 1,626. Weak market conditions saw the industry pull back significantly, with developers launching just three new condominium apartment projects during the first quarter—the lowest number since the 2008 recession and from 30 new openings at market peak in Q1-2022. Price sensitivity and outer 905 Region locations for the limited Q1-2024 new condominium apartment openings met with some success, as 76% of the 455 units brought the market during the quarter sold at a blended sold average $1,071 psf ($856,000 for 794 sf). By comparison, Q1-2023 new condominium apartment launches sold for an average of $1,343 psf ($849,000 for 632 sf).

"The sentiment in the development industry at the moment is when, or has, the market hit a bottom?", says Pauline Lierman, Zonda Urban's vice president, market research. "Investor buyers are on the sidelines, projects are either being reworked with new zoning submissions or being prepped for marketing but remain on-hold, while everyone awaits a return of confidence that hedges on interest rates and economic trends. Early indications are the market could be near a floor—annual sales have continued to decline albeit at a slower pace than the 50 to 60% year-over-year declines observed during 2023 and record unsold inventory levels of condominium apartments have begun to edge down. Moreover, a year of the industry recalibrating towards relatively affordable projects and extensive incentive packages resulted in the average blended price for sold new condominium apartments declining from the last quarter for the first time since Zonda Urban began tracking in the GTHA, to $1,136 psf."

The prolonged slowdown in the market is careening towards long-term repercussions for supply in the GTHA. 2,979 condominium apartment units started construction during Q1-2024, 49% below the 5-year average, as completions surged to 7,351 units in buildings that began occupancy, following a record 9,950 units in Q4-2023. While delivery of new units is anticipated to stay high through 2024 into mid-2025, bringing short-term relief to the rental market, the pace of completions versus new starts could bring down total units under construction by 30% year-over-year by the end of 2024. This will have a massive impact on new supply from 2026 onwards with fewer units under construction. As of Q1-2024, 87,586 new condominium apartment units were under construction, down 17%, or 17,500 units from late 2022.

The Q1-2024 Zonda Urban GTHA multi-family take report will be released shortly with further insight into the market.

Methodology
Zonda Urban provides insight on multi-family and rental housing activity in the Greater Toronto and Hamilton, Ottawa, London, Winnipeg, Halifax, St. Catherines-Niagara, Kitchener-Waterloo, Vancouver, Victoria, Calgary, Kelowna, Nanaimo and Edmonton markets, utilizing primary sourced data from developers, their representatives and brokerages.

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About Zonda
Zonda provides data-driven housing market solutions to the homebuilding industry. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.

Media Contact

Valerie Sheets, Zonda, 949-294-9557, [email protected], https://zondahome.com 

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SOURCE Zonda