New GTA condos going unsold. Surge sweeps across the area.
In a recent report by real estate consulting firm Urbanation, a staggering 41% year-over-year increase in unsold new condo inventory was revealed for the last quarter. According to Urbanation’s data, new condo sales in the Greater Toronto Area (GTA) have hit their lowest point since 2008, with only 12,716 units sold.
This marks a 41% decline from 2022 and a significant 58% drop from 2021, painting a grim picture for the market’s performance.Urbanation President Shaun Hildebrand acknowledged the challenges faced by the GTA condominium market in 2023, citing it as one of the most difficult years in recent history.
Despite anticipating some improvement in sales due to population growth and potential interest rate reductions, Hildebrand emphasized that the market would continue to grapple with challenges, particularly in coping with a large number of completions this year.
Uncertain Path Ahead
In my assessment of the current state of the GTA condo market, it’s evident that the sharp decline in sales and construction starts in 2023 may lead to severe supply shortages in the coming years. Hildebrand’s insight into the potential challenges arising from a surplus of completed units this year raises concerns about how the market will adapt.
Notably, the drop in new condominium projects’ absorption rates, falling from 82% in 2021 to 48% in 2023, underscores the shifting dynamics in buyer behavior. The decline in sales across both the City of Toronto and the 905 Region signals a broader trend, with the latter accounting for an increased share of new condo sales.
The record-high unsold inventory, coupled with a 41% increase in new inventory, paints a picture of a market struggling to find its equilibrium. Developers resorting to increased incentives, including cash back offers and reduced deposits, reflect the growing pressure to stimulate demand.
As the GTA anticipates a surge in condo completions in 2024, the potential for delays and the sheer volume of units scheduled for occupancy raises questions about the market’s ability to absorb this influx. This data study serves as a cautionary tale, suggesting that Ontario’s housing boom might be facing unexpected headwinds, presenting a challenge for both developers and prospective homeowners alike.
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