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The number of active condominium listings increased by 70 percent, reaching a one-month record of 10,688.
Published on July 10, 2024 • 3 minutes reading time
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According to the Toronto Regional Real Estate Board (TRREB), condo sales in Toronto fell 28 percent in June compared to a year ago, while the number of new condos listed increased 16 percent. Photo by Cole Burston/Bloomberg
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Amid a raging housing crisis, Toronto's real estate market is suddenly flooded with a record number of homes that no one wants to buy. The city's condo market is seeing a surge in supply but a critical shortage of multi-bedroom units, leaving a significant portion of buyers – families – underserved.
According to the Toronto Regional Real Estate Board (TRREB), condo sales in Toronto fell 28 per cent year-over-year in June, while the number of new condo listings rose 16 per cent. The number of active condo listings increased 70 per cent, reaching a single-month record of 10,688. Particularly notable was the increase in listings for units in the 500-599 square foot range, which increased 50 per cent year-over-year.
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This recent data highlights a paradox in urban planning and the disconnect between developers and the market. A survey by Toronto-based Devron Developments found that nearly half (47 percent) of Greater Toronto Area (GTA) residents view condos as a viable long-term housing solution, and more than half (53 percent) of current condo owners are willing to purchase a larger unit for longer-term living. Despite this apparent willingness for larger living spaces, developers continue to flood the market with smaller units.
Pouyan Safapour, president of Devron, explained that the divide between developers and the “end users” – those who ultimately live in the completed units – begins at the pre-construction stage.
“There is a misconception that it is difficult to develop and sell products for the end user. If we don't develop and sell for the end user who appreciates and is interested in the features and sizes of the suites, we will sell to investors,” Safapour said. “Investors want something that is smaller and easy to use, and so we as developers fall victim to that mindset.”
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Safapour also noted that in an effort to keep construction costs down, developers are building predominantly smaller units, exacerbating the shortage of family-friendly homes. He believes this approach is also based on a misconception.
“There is a business model that shows that building a building with fewer units by having larger suites actually costs less on average because there are fewer kitchens and laundry rooms and the development costs are much lower,” Safapour said.
He explained that a typical 40-storey building in downtown Toronto could save over $20 million in construction costs by adding larger suites, each measuring around 100 square metres.
Safapour and his team are currently bringing family-friendly, multi-room suites to market with their 39-storey 101 Spadina project at the intersection of Spadina Ave. and Adelaide St. in downtown Toronto, but the broader industry is lagging behind.
In 2020, the City of Toronto released guidelines to address the shortage of family-friendly condominiums, requiring that at least 25 percent of new construction include large units, with 10 percent of three-bedroom units and 15 percent of two-bedroom units. Despite these efforts, developers are falling short of the targets, further exacerbating the housing shortage for families.
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Matti Siemiatycki, a professor of urban planning at the University of Toronto, said the city could do more to promote and support family-oriented housing in Toronto.
“The city can invest in public spaces and facilities within its means and ensure that these investments are timed so that they are available earlier in the completion process,” Siemiatycki said.
He remembers Toronto's famous CityPlace residential district between Bathurst Street and Spadina Avenue, just north of the Gardiner Expressway, where “a whole generation grew up before there was a school and a recreation center.”
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Safapour is convinced that, for the first time in a long time, the wants and needs of end users in the condominium market are not being drowned out by excessive demands from investors.
“What's happening right now is pretty healthy because it's become a buyer's market and consumer preferences are actually being recognized,” Safapour said, “and they're saying, 'We don't just want small units.'”
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