Condominium price increases outpace Toronto house market

Royal LePage study predicts cooling in 2001
Tony Wong
BUSINESS REPORTER

If you own a condominium in the GTA, then be happy.

Be very happy.

According to a study released by Royal LePage Real Estate Services Ltd. yesterday, average condominium prices increased by 8.4 per cent in the fourth quarter of 2000 from a year earlier.

The average price of a standard two-storey home in the GTA, meanwhile, increased by only 5.1 per cent over the same period.

While both figures show a healthy increase in equity for homeowners, the comeback of the condominium has been the story of 2000.

``Torontonians have really embraced a condominium lifestyle,'' said Royal LePage vice-president Gino Romanese in an interview yesterday.

Many still remember the early 1990s, when condominium prices rose to unsustainable heights and then promptly imploded. It seemed like you couldn't give away a condo back then.

But over the last five years, condominiums have increasingly become the dwelling of choice, particularly for first-time home buyers looking for a space in downtown Toronto.

``Not only are younger buyers looking to condominiums, but older buyers, who want to downsize, have also affected the condo market,'' said Romanese.

 Demand is expected to slow this year

``The common denominator is that both want a kind of maintenance-free lifestyle, and many want to be in an urban location or neighbourhood.''

Condominium prices increased by 37.7 per cent over the last five years in the 15 Toronto markets examined in the Royal LePage report, rising from an average $104,667 to $144,144. That compares to a 30.9 per cent increase from $204,000 to $267,083 for a standard two-storey home during the same period.

(Royal LePage defines a standard two-storey home as having three bedrooms, a detached garage and approximately 1,500 square feet of space. A standard condominium apartment is about 900 square feet and has appliances, a small balcony and one underground parking space.)

The most substantial hike in condo prices in the Greater Toronto area over the last five years was in the Don Mills East area, where prices rose an incredible 86.6 per cent.

That means a condo that cost a mere $75,000 in 1995 would cost you about $140,000 today.

Scarborough also saw a steep increase. Condominium prices have risen 83.7 per cent in the last five years from $94,000 to $116,000.

Other areas that saw growth over the past five years include Riverdale/Cabbagetown, where prices rose 48.4 per cent, and a $128,000 condo now goes for about $190,000. Mississauga saw a 59.1 per cent increase. There, a $93,000 condo now costs about $148,000.

While most neighbourhoods were included in the survey, some areas that have few condominiums, such as High Park, were not included.

Royal LePage said it expects condominium prices to continue to outpace house prices this year. Both condominium and house prices are projected to increase by a more reasonable 3 per cent this year.

``We will have a situation where there is more product on the market, while at the same time demand is expected to cool slightly, so prices won't have that upward pressure,'' said Romanese.

One issue could be the cooling down of the U.S. economy, which might affect consumer confidence in Canada, he said.

``Our economy is still going strong, but people have to be confident before purchasing something like a house. The consensus is that we still have enough wind in our sails to have a very good year,'' said Romanese.

New home builders, meanwhile, have got their hands full just trying to find workers for the new year.

In a poll recently released by the Ontario Home Builders' Association, 59 per cent of builders said they were having trouble finding skilled labour. Half of builders polled said they had hired additional permanent staff in 2000.

Jan. 3, 2001. Toronto Star - Tony Wong, BUSINESS REPORTER