Industry Set to Deliver Post-1990 Record Number of Units during Fourth Quarter
TORONTO, Nov. 15, 2023 /PRNewswire-PRWeb/ — Zonda Urban today released its Q3-2023 Greater Toronto and Hamilton Area (GTHA) multi-family market survey results. Q3-2023 represented a contrast between demand for product types amid slow market conditions. Overall, new multi-family sales rose 7% year-over-year to 2,730; however, condominium apartment sales declined 23% from a year ago to 1,886 units, as the sale of new townhouse units rose 426% to 894, marking two consecutive quarters of annual growth in demand for at-grade units. Multi-family sales at an annualized pace of 15,971 are down 44% from last year.
Slower absorptions at new projects launched in the second quarter induced developers to use the characteristically quiet summer months to deliberate bringing forward a planned slate of fall new openings. Eight condominium apartment projects opened for sales during Q3-2023 with 2,396 units with 38% sold. Total sales from new openings in the third quarter declined 49% relative to Q3-2022. New apartment launches sold at an average of $1,228 psf, unchanged from second quarter openings and well below the $1,300+ psf averaged for new openings during the prior 18 months as the industry chose to bring more affordable product and locations to the market. Despite challenging conditions, 18 new apartment projects with 6,556 had launched sales as of early November, an increase over Q4-2022.
Townhouse product continued to be a bright spot for the GTHA new multi-family market during Q3-2023. The nineteen new projects and phases that launched during Q3-2023 were 62% sold of a total 626 units, accounting for 70% of all townhouse sales. Strong demand for launches was found across the GTHA in the north Oshawa, Pickering, and Oakville market areas. The average new townhouse sold for $1.167 million, or $652 psf during Q3-2023.
“The renewed enthusiasm that emerged in the early spring for condominium apartments largely dissipated by the summer months”, said Pauline Lierman, Zonda Urban’s vice president, market research. “With late spring launches seeing at best tepid demand, expectations are being refocused towards a longer absorption period by the industry. This includes having a fresh look at incentives—are these the best offerings to attract buyers? We are seeing deposit structures reach unprecedented lengths. Pre-occupancy deposit structures have extended to an average 701 days for fourth quarter openings, compared to 548 days a year prior for Q3-2022 openings. Inevitably, however, marketing of projects that are not able ignite early demand will likely be put on pause, which we are already seeing amongst the fourth quarter openings.”
The uncertain market environment comes at a time when the industry is set to deliver post-1990 record levels of units in buildings reaching occupancy. A projected 9,890 condominium apartment units in 38 buildings are in the process of or expected to begin occupancy by the end of the fourth quarter bringing 2023 completions to a 30+ year high at around 27,000 units. Adding to this, approximately 5,543 new purpose-built rental apartment units will be completed in the GTHA this year, also a multi-decade high.
The Q3-2023 Zonda Urban GTHA multi-family take report will be released shortly with further insight into the market.
Zonda Urban provides insight on multi-family and rental housing activity in the Greater Toronto and Hamilton, Ottawa, Vancouver, Victoria, Calgary, Kelowna and Edmonton markets, utilizing primary sourced data from developers, their representatives and brokerages. Coming soon: London, Winnipeg, Halifax, St. Catherines-Niagara, and Kitchener-Waterloo.
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Zonda provides data-driven housing market solutions to the homebuilding industry. From builders to building product manufacturers, mortgage clients, and multifamily executives, we work hand-in-hand with our customers to streamline access to housing data to empower smarter decisions. As a leading brand in residential construction, our mission is to advance the home building industry, because we believe better homes mean better lives and stronger communities. Together, we are building the future of housing.
Pauline Lierman, Zonda, 416-546-8562, [email protected]