Condo prices in Toronto have finally stopped climbing.
After months of weakness in sales numbers, prices are now coming down in what some observers are calling the most overbuilt condo market in North America.
The Toronto Real Estate Board (TREB) reported Tuesday that condo sales fell 20.5 per cent, year on year, compared to the first half of October, 2011. And prices have halted their long-running upward momentum; the average condo in the Toronto area sold for $332,969, down about $1,200 from the same period last year.
Sales in the broader housing market held up somewhat better, with volumes falling about 10.5 per cent, but prices were still climbing in this market, up 6 per cent year-on-year.
TREB cautiously suggested the city’s condo market is facing an oversupply even as demand falls.
“With more listings to choose from and fewer sales, condo buyers have not been as aggressive with regard to offers, and sellers have had to price their units competitively,” Jason Mercer, senior manager of market analysis at TERB, said in a statement.
“The result was little upward pressure on the average selling price compared to last year. Given the supply of listings currently in the market place, the average rate of price growth for condo apartments should continue to lag price growth for low-rise home types over the next year.”
Oversupply in the condo market has become a concern for many market observers, who point out Toronto is building more condos than any other city in North America, New York included.
A potential bust-out of the housing market is raising concerns about the health of Canada’s economy going forward. The country now relies more heavily on construction employment than it has in at least four decades.
And while TREB attributes the housing slowdown to new, tighter mortgage rules put in place by the federal government this past summer, many market observers say Canadians’ debt loads are reaching a breaking point regardless of the rules, and consumers simply can’t afford to take on more debt.
A Statistics Canada revision of household debt data going back two decades found that Canadians are carrying about 10 per cent more debt, relative to income, than previously estimated. By the new estimates, the average debt-to-income ratio in Canada is now 163.4 per cent — higher than the approximate 160-per-cent level U.S. households had before the American housing bubble burst.
Faced with years of shrinking house prices and mortgage defaults, U.S. households have seen their debt-to-income ratio shrink to around 140 per cent.
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