A recent plunge in demand is bringing some relief for Toronto condo buyers as inventory levels rise and prices continue to plateau. In the past 60 days, the average cost per square foot (PSF) for a condo in the city is holding steady at $884. But not all segments of the market are seeing prices levelling off.
In fact, Strata.ca data shows that competition remains incredibly fierce for three-bedroom condos.
The average sold price of these coveted units is currently sitting at $905,220. Since March, that’s an increase of 30% or roughly $210,000. The average cost PSF has also grown considerably over that same time period from $576 in March to $621 currently; an increase of nearly 8%.
Strata.ca agent Francisco Hiebert isn’t surprised that three-bedroom units are so popular these days. He says many people who temporarily left Toronto during the pandemic are slowly finding their way back.
“Many workplaces will be doing a hybrid of remote work, plus a few days in the office. So now that people know what their jobs will look like post-pandemic, a lot of them are returning to the city to avoid long commutes.”
Hiebert also believes that as COVID-19 cases continue to drop and Toronto opens up, we’ll see an even larger demand for three-bedroom units in the months ahead.
Back in March, homebuyers were paying 8.4% over the asking price for three-bedroom units. But that sale-to-list price ratio took a tumble, falling to 4.5% in May. This month, that number is holding steady with buyers paying about 4.4% above asking.
Meanwhile, inventory levels continue to trend downward since peaking in April. And that may put added pressure on the supply of three-bedroom units, further inflaming competition. But Osman Omaid, a real estate agent at Strata.ca, says it’s not just buyers who will be feeling the heat.
"When it comes to these rare three-bedroom units, renters also want in. With universities and colleges potentially gearing up for in-person learning, there are tons of students competing for these larger units, too.”
‘The next best thing...’
Throughout the COVID-19 pandemic, we’ve often witnessed a ‘tale of two cities’ when it comes to Toronto and its surrounding regions. But trend lines show that when it comes to three-bedroom units, there’s a mirroring of sorts taking place.
In the GTA, the average sold price for these units is currently $775,500 — up 11% since the March average of $695,600. The cost PSF has also risen with it, indicating that competition isn’t just confined to the City of Toronto.
Strata.ca realtor Sam Massoudi believes the battle for three-bedroom units is being fuelled by the exorbitant cost to purchase a single-family home.
"Since freeholds remain at the heart of a very competitive market, a lot of people who need the three bedrooms are priced out,” he explains.
Left with few alternatives, Massoudi believes homebuyers have no choice but to consider a three-bedroom condo instead.
“All that space can be used for a family with two children...or a family with one child, plus a home office. Aside from freehold houses, this really is the next best thing."
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