Toronto has so many condos up for sale that it’s becoming a buyer’s market

Toronto is not known as a kind place for aspiring homeowners to settle down, with soaring prices, bidding wars, investor prevalence and a general sense of urgency defining the last decade or so.

Although the landscape has changed drastically this year, prices, for the most part, have remained steadfastly unaffordable. But, there are other factors that are pushing the region into what experts consider a buyer’s market, offering some semblance of hope.

In its latest overview, RE/MAX says the GTA’s condo segment in particular is now “heading into clear buyer’s territory,” with the number of sales transactions dipping so intensely and remaining at unprecedentedly low levels for such a long period that those shopping for a place of their own may find themselves with more of an upper hand than they expected.

“The fall market may represent the perfect storm for first-time buyers,” the firm wrote on Wednesday, pointing to lower interest rates that allow more breathing room for financing and the sheer number of condos sitting on the market — an amount that now represents six months of inventory, though RE/MAX’s figures differ from other stats.

Along with the fact that there is ample available supply — even in the midst of so many new builds being put on pause — listings are lasting for longer, putting sellers in a bit more of a desperate place with so few people biting. Condo sales fell to a 27-year-low in the first half of the year, with the tides only just starting to reverse now with lower interest rates.

And, as these lower rates afford more financial breathing room, condo prices have fallen (albeit marginally) to better reflect the lower level of demand as of late, making for even more favourable conditions for buyers. RE/MAX says that condo values have declined by two per cent overall when compared to last year, now sitting at $732,648.

While a handful of neighbourhoods have seen double-digit sales growth for condos thus far this year — Yonge-Eglinton, Forest Hill, Lawrence Park, High Park, South Parkdale and Roncesvalles among them — this is the complete opposite of the general trend in the region as investors have backed away from the market, which is overpriced, unstable and less lucrative than it once was.

“Investor activity has stalled in most markets. The slowdown has been most notable in Greater Toronto, where up to 30 per cent of investors have experienced negative cashflow on rental properties… [but] investor confidence is expected to recover in the months ahead, as interest rates fall and return on investment improves,” the brokerage continues.

“In many markets, end users are in the driver’s seat right now. While investors are an important part of the purchaser pool, this point in time is a unique opportunity for aspiring condominium buyers who, for a short window of time, will likely see less competition from investors and a better supply of product.”

Some would argue that stakeholders like RE/MAX have an obvious motivation to paint the market in a certain light to encourage more activity, so such advice and forecasts should be taken with a grain of salt.