According to Benjamin Tal, deputy chief economist of CIBC, the condo market in Toronto is poised to have a major comeback and spike in sales.
During an interview with Miles Nadal, founder and executive chair at Peerage Capital, Tal discussed that he believes the Canadian economy is expected to recover and boom simply by the fact that households are still sitting on excess cash due to teh COVID-19 pandemic.
Even though home sales fell 8.4% month-over-month in June, Tal noted that this is due to two things, specifically “In the low-rise segment of the market, we have reached what I call a resistance level. Prices have risen way too quickly and people simply can’t afford it,” said Tal. “The other issue is that people are blinded by low-interest rates and there’s a sense of urgency to get into the market. So, if you wanted to buy something a year from now, you’re buying it now. So, you have a situation in which we’re borrowing activity from the future, and to an extent, the future has arrived and that’s why were seeing the market slow down — and that’s a very healthy environment.”
“Cites will be back, and that’s why I believe the condo space will do extremely well,” said Tal. “As cities open up, you will see the condo space take over and improve relative to low-rise.”
In June, The average price for a home in Canada reached $679,051, representing a 25.9% year-over-year increase from $539,182. Vancouver has the highest price at $1,199,984 for the average home, while the Greater Toronto Area (GTA) is currently sitting at $1,089,560.
There will be a wave of new rental properties coming up as there is an significant issue for Canadian homebuyers as affordability is a major concern.
“We have an affordability crisis in Toronto and Vancouver and we need a solution,” said Tal. “The new wave of renters will be families with kids. They want to deal with a company, not a landlord, and we need more purpose built in Toronto and Vancouver.”