Why Condo Prices are Rising Today

20 October 2010

The Bank of Canada and most experts are blaming low mortgage interest rates for the stampede to the market by buyers which has seen condo (and most Toronto area markets) experience prices rising by more than 1% per month. However the real culprit is not low interest rates but a lack of listings! While the listing inventory is significantly lower than a year ago, it is also much lower than the record breaking (sales and price appreciation) market of 2007. Remember what the  economists were telling us four years ago about condo construction? We are building too many units and there will be a glut. Today, with even more completed buildings and units in the market, the actual number of condo listings available to buy is less than in 2007!! How is that possible? Everyone thought that buyers of these new condos were just there to 'flip'. And yes that is happening. But many of these buyers are 'investors' who intend to hold on to these properties and rent them out. But the real trend that the experts missed was that buyers of these condos don't just work in '416'. The number of young people who work in '905' but prefer to live downtown is staggering and us older folks missed reading the preferences of Generation Y!