One thousand dollars. That’s the new cost, on average, per square foot for a new build condo in the heart of Canada’s largest city. It’s a shocking 30 per cent increase, per square foot, year-over-year in Toronto. A price point which is here to stay, according to Urbanation, the company that compiled the third quarter report.
“I think we’ve evolved in the downtown market into a large world class demand city.”
Director of Market Research for Urbanation, Pauline Lierman says the spike in prices for new condos is in part because available inventory is down year-over-year nearly 40 per cent. There is roughly 12,000 new units set to hit the market before the end of the year and that could help stabilize the cost per square foot elsewhere in the GTA which has also seen massive increases for new build condos.
“If you wanted to buy in Vaughan or in Milton you’re anywhere from six to seven hundred dollars per square foot. A year, to a year and a half ago that was one hundred and fifty to two hundred dollars cheaper.”
The average price for a resale condo in Toronto is $823 per square foot. In midtown the price of a new build is also reaching new heights according to Lierman.
“10 years ago I remember sitting around talking about the numbers and saying ‘wow could Bloor Yorkville get five hundred dollars per square foot?’ We’re now seeing projects in Bloor Yorkville go for 1,400 to 1,800 per square foot. That’s you’re premier high luxury area.”
An new eight hundred square foot condo purchased at an average of $1,000 per square foot would come with a monthly mortgage payment around $3,300 on a fixed three year term. That has some real estate insiders, like Realosophy President John Pasalis, concerned about what condo rental prices could look like in 3 to 5 years when these buildings are finally built and hit the market.
“An average 800 square foot condo is going to have to rent for around $4,000 a month just for that investor to break even.”
Pasalis believes it’s possible the market cools down and these units become bad investments but as it stands today, he believes this is a troubling trend for those trying to live and work in the big smoke.
“It makes living in downtown unaffordable. To afford that you need to be making one hundred and fifty thousand dollars before taxes, which a lot of people aren’t making.”
Currently, condos in Toronto make up about one third of the city’s entire rental market.