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The 3 Factors Responsible for Downtown Toronto Condo Prices

People often ask me "how is the market?". Apart from the fact that the single housing market is going nuts, the conversation quickly goes to condominiums, downtown Toronto condos that is. There has been an enormous influx of new listings in the 4th quarter of 2020, especially in the downtown core, where we saw over 200% more listings at the end of December compared to the previous year. Not surprisingly, prices had started declining at  that point. In January 2021, condo prices were down 8% compared to January 2020, February has shown them down 6% year over year. But what are the factors behind these figures?

Toronto Skyline
1. Students & other Renters
When looking at rental condos, students form a solid piece of the pie. The number of international students in Toronto is massively down, while domestic students have opted to live outside the city, mostly with parents, where they can quite easily do their learning online.
The story is similar with other renters. With city amenities mostly closed, the appeal of living downtown has drastically diminished. Rents outside the city are lower and a commute is not such a big deal for most, as we work from home anyway. And who knows if we'll ever go back to "normal" work-at-the-office hours.
Needless to say, vacancy in the downtown core is going up, rents moving downward (roughly down 20% as of now), leading investors to pull out of the market.

2. The Rural Appeal
Who wants to be stuck in a downtown condo during a lockdown?! Most entertainment venues are shut down, and there is simply nothing to do. Singles and families alike have turned their backs to the city to live in the suburbs or even in rural communities. Nature has regained broad appeal, being able to go outside for a walk is valued much more these days. Being trapped in a high-rise not so much. On top of that, with working at home, there is an increased need for space, something that condos often can't provide. Selling their apartment in the city has enabled many to purchase a single family property somewhere else.

3. The Air BnB Dilemma
For obvious reasons, short term rentals have been suffering. International travel is almost non-existent due to Covid and domestic travel is at least severely reduced. Nobody wants to visit a city where everything is closed, and there's hardly any business travel either. With such reduced demand for short term rentals, some property owners have tried to convert their apartments to long-term rentals. With rents spiraling downward, that didn't provide the desired results, so basically such properties were losing money and soon put up for sale.

Who doesn't like a story with a happy ending?! We're not quite there yet but experts point out that the Toronto condo market has already seen its low point and is now trending upward. With immigration slowly picking up this might well be true. New Canadians moving to Ontario and Toronto are expected to spark demand for condos once more.