GTA Market Meltdown

Author

Urban 411
October 24, 2024

Today, we're covering

👀 Everything You Need to Know About the Latest BOC Move

🏗️ 33 Condo Projects Cancelled or On Hold in GTA

😬 Real Estate Demand in Toronto & Vancouver at All-Time Low

📉 New Condo Sales Plummet 81% in GTA

☢️ Hidden Danger! Radon Exposure Soars in Canadian Homes

🤔 WTF of The Week

Read Time: 4 minutes

👀 Everything You Need to Know About the Latest BOC Move

  • Rate Cut: Bank of Canada cut its policy rate by 50 basis points to 3.75%, marking the fourth consecutive rate reduction since June.

  • Inflation: Inflation is down to 1.6%, meeting the central bank's target of 2%.

  • Real Estate Forecast: Experts expect an early 2025 spring market surge due to increased buyer activity as borrowing costs drop.

  • Fixed Mortgage Rates: Expected to remain around 3.5%-4% despite the cuts, due to bond market conditions.

  • Variable Mortgage Holders: For every 25 bps cut, variable-rate mortgage holders could save $15 per $100,000 in mortgage debt.

  • GDP Impact: The Bank of Canada forecasts real GDP to rise by 2.1% in 2025, with housing contributing 0.5 percentage points, close to the demand seen in the 2021 boom.

🏗️ 33 Condo Projects Cancelled or On Hold in GTA

  • 33 new condo projects in the Greater Toronto and Hamilton Area have been converted to rental, put on hold, canceled, or placed under receivership since 2022

  • These changes affect 6,796 condo units that would have been added to the market

  • In Q3 2024, three projects (1,111 units) were converted to rental, and eight projects (2,231 units) were put on hold, canceled, or placed into receivership

Why it Matters: Experts warn of a potential sharp decline in completions by 2027 and 2028. The slowdown in the new condo sector could lead to increased sales prices, rent growth, and negative impacts on job growth and Ontario's economy

😬 Toronto and Vancouver Experience Weakest

  • Toronto and Vancouver, previously the hottest markets, now have the weakest demand, with Sales-to-New Listings Ratios (SNLR) of 27.6% and 30.3%, respectively.

  • 19 out of 26 major markets saw increases in SNLR, while 7 experienced significant drops that impacted national data.

  • Government employment hubs like Quebec City, Sudbury, and Gatineau saw the most notable SNLR increases, possibly due to return-to-office mandates.

  • Despite weak demand in Toronto, sellers opt to default on mortgages rather than reduce prices, suggesting many are over-leveraged and unable to absorb small losses.

  • This fall season is unusual, as only buyers are pulling back while sellers continue to enter the market, contrary to typical seasonal trends.

Why This Matters: This shift is influential, as 19 other major markets saw increased SNLR, and government employment hubs like Quebec City and Sudbury significantly increased. This unusual market trend, with sellers defaulting rather than lowering prices, may lead to market instability and changes in government policies or interventions.

📉 New Condo Sales Plummet 81% in GTA

  • Sales of new condominiums in Mississauga, Hamilton, and southern Ontario have dropped 81% in Q3 2023 compared to Q3 2022.

  • Only 567 condo sales in the Greater Toronto Hamilton Area (GTHA) in Q3, the lowest since 1995.

  • Year-to-date sales are down 63% compared to 2022 and 84% below 2021.

  • Unsold new condominium units in development decreased 4.4% quarter-over-quarter to 23,918 units.

Why This Matters: Productivity growth is directly linked to improving living standards. With declining productivity growth, Canadians may face stagnant wages, reduced purchasing power, and decreased access to public services.

😷 Radon Gas Exposure More Than Doubles in Canadian Homes

  • Radon is a colorless, odorless radioactive gas that forms from the breakdown of radioactive metals in soil and is the second leading cause of cancer.

  • 17.8% of Canadian homes (10.3 million) contain dangerous levels of radon gas, more than double the 7% found in 2012

  • The 2024 study included 75,000 readings across Canada, five times more than the 2012 study.

  • Experts recommend installing radon detectors and working with professionals to lower high levels.

Why This Matters: This is a significant increase from 2012, and the problem is worsened by modern energy-efficient homes that trap more of the gas inside. With 10.3 million homes affected, this public health crisis requires immediate attention through testing and mitigation and is a challenge for the construction industry to develop new building standards.

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🤔 WTF of The Week

Someone bought a Toronto condo for $1.57M in 2018, and now, six years later, they’re selling it for $1.27M—a $300K loss!

Yep, that’s a 19.1% loss, landing at a cool $1.27M. Now, brace yourself for this: the monthly maintenance fees are a jaw-dropping $2,751! (For a building that's barely 10 years old.) This gem also has zero balconies and was formerly the ‘Trump Hotel.’ Just imagine those fees when it’s 30 years old—seriously, WTF!

Shared by Reddit user u/cxz098