Realtors Report Drastic Oversupply Of High End Toronto Condos

By: Daniel Rattanamahattana on August 6, 2013

Reports over the last several years single out Toronto’s condos as one of the riskiest sectors of the national housing market.  Local realtors believe the oversupply and “shadow inventory” of Toronto’s $1 million plus condos indicate there is an oversupply that market demand is unable to match, as few people can afford a mortgage for these units.

As of the end of June, realtors stated that it would take up to 20 months to sell the available number of $1 million condos on the Multiple Listing Services index.  Toronto realtor Andrew LaFleur found 145 condos worth $1 million or more on MLS in the first six months of the year, yet only 42 units actually sold. 

LaFleur also believes the current MLS listings fail to take into account the high-end units in Trump Tower and other newly developed hotels, or the number of penthouse suites in newer condo towers built near the Toronto waterfront.  He estimates that there are four times as many $1 million condos as there are more affordable condos, and investors are unlikely to see any returns for as much as a decade.

Shaun Hildebrand is Senior Vice President of Urbanation, a condo research firm who agrees with LaFleur that Toronto is oversaturated with luxury condos.

When you look at the numbers and relate them to the rest of the market, it would suggest that there is a glut, a drastic oversupply.”

Both men are concerned that the oversupply and lack of yields will turn investors away from the condo market.  As investments decline, the value of high-end condos diminishes, and that diminishing value could cascade through the rest of the condo market and the housing sector as a whole.