New Condominium Apartment and Townhouses Sales Fell 60% in Past Two Years

TORONTO, Feb. 1, 2024 /PRNewswire-PRWeb/ -- Zonda Urban today released its annual 2023 and Q4-2023 Greater Toronto and Hamilton Area (GTHA) multi-family market survey results.

Two consecutive years of double-digit annual declines in the number of new multi-family housing sales in the GTHA resulted in 14,947 apartments and townhouses being sold during 2023. Annual sales volume fell 36% from a year earlier, following a 29% annual decline from 2021. Condominium apartment sales felt the brunt of the ongoing downturn, falling 44% year-over-year to 11,629 sales, representing the slowest pace in over twenty years. Demand for townhouses marked a high point for 2023 with annual volume rebounding 38% to 3,255.

The weak market during the latter half of 2023 for condominium apartments with just 6,181 units sold during the summer and fall months began to bear consequences for the industry. More than 1,400 units were removed from the market in projects being temporarily shelved for retooling or canceled outright during the fourth quarter, marking a multi-year quarter high. A further 1,105 units in projects Zonda Urban has been tracking are also in receivership pending cancellation.    

"Notwithstanding when the market seemed to have recharged, and several successful launches during the first half of the year, overall, the 2023 market struggled to regain the momentum last seen in early 2022," says Pauline Lierman, Zonda Urban's vice president, market research. "The slack in demand was heavily borne by condominium apartment projects. Developers pulled back—nearly 7,000 fewer apartment units were launched onto the market in 2023 than a year ago, yet despite this conservative approach, and hefty incentive packages, the average absorption rate for new condominium apartment launches in their first quarter was just 38%, compared to a more normal 63% absorption for 2022 launches and a strong 75% first-quarter absorption rate for 2021 openings. For townhouses, the repricing first seen in late 2022 yielded results, with the average townhouse project launched in 2023 selling 45% of their units at opening."

Flexibility emerged as a key consideration in the incentive packages being offered on new projects, with developers advancing elongated or reduced deposit structures, and in select cases in-house mortgage offers. However, pricing remains the main factor, with 45% of the sales in the 19 new condominium apartment projects launched during Q4-2023 selling for under $1,200 per square foot (PSF). Of the 6,819 apartment units brought to the market in the fourth quarter, 26% sold at an average of $1,334 PSF, or $816,101. Sixteen townhouse projects were launched with 37% of released lots sold at an average $708 PSF, or $973,959.

The development industry is in the process of delivering a record number of completed apartment projects for 2023 in the GTHA. Completions in apartment buildings that have reached occupancy totaled an annual 33,027, split between 27,297 condominium units and a three-decade high of 5,730 purpose-built rental units. While Zonda Urban anticipates 2024 will see apartment completions near match 2023 levels, the long-term outlook is a sharp drop-off after 2025. Annual condominium apartment starts fell 54% year-over-year to 14,040 units in 2023 with only 1,973 units commencing construction during the fourth quarter.

The Q4-2023 Zonda Urban GTHA multi-family take report will be released shortly with further insight into the market.

Methodology
Zonda Urban provides insight on multi-family and rental housing activity in the Greater Toronto and Hamilton, Ottawa, Vancouver, Victoria, Calgary, Kelowna, Nanaimo, 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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About Zonda
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.

Media Contact

Valerie Sheets, Zonda, 949-294-9557, vsheets@zondahome.com, https://zondaurban.com

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SOURCE Zonda