Toronto Condo Market Is In 'High Risk Zone' of Overbuilding

Royal Bank of Canada, the country's largest bank stated that the level of new condo units coming online along with existing ones that are yet to sell have the market in 'high risk' territory.

According to a report released last Friday, economists Craig Wright and Robert Hogue wave a red flag about activity in the condo market in many cities. However, Toronto was found to be especially problematic.

There were nearly six new condo units under construction throughout the country for every 1,000 people during the first quarter of the year. According to the bank, this level is considered a high risk zone.

In Toronto, condo construction now makes up one-third of all types of new home construction.

Up until now, there is still strong demand for housing in the downtown core in Toronto and the new units have been taken over. However, if this scenario does change in the future, the high volume of new condo units will create problems in the entire market.

The quantity of unsold but completed condo units dropped from a 22-year high of 0.58 units per 1,000 population in May 2015 to 0.28 units in April 2016 in Toronto.

RBC analyzed segments of the housing market throughout the country and overall found little concern. However, the condo market was singled out for being a potential danger in every major city the bank looked at, particularly in the four largest housing markets of Vancouver, Toronto, Montreal and Calgary.

Reference: CBC News

http://www.cbc.ca/…/bu…/toronto-condo-construction-1.3602950