The Toronto condo market has received its share of negative press this year, with many reports suggesting it is a bubble about to burst.  In its annual report on Canada’s housing market, Canada Mortgage and Housing Corporation (CMHC) presents data that shows that these fears were overblown.  Although the strong pace of condo construction across Canada is something they are watching closely, factors such as population growth have helped to keep the demand for condos strong as well.

Canadian real estate is on solid ground

Mortgage debt is staying steady, and mortgage arrears rates are dropping, according to CMHC’s report.   In 2012, 31% of homebuyers made extra payments to accelerate their mortgage paydown, and 44% increased their regular payment.

The demand for condominiums continues to be strong

In the Toronto real estate market, the big story was the surge in condo construction.  Many real estate watchers, both in Canada and abroad, spoke out about their fears that there would be a glut of unpurchased condos that would drag down the value of condos overall.

In fact, CMHC states that the construction of condos should be “absorbed” by the market due to these factors:

• consistently strong levels of net migration into Canada
• the rise of ownership rates of people in every age group, but particularly young adults and seniors
• the increasing number of one-person households – they are the “fastest-growing type of household”, and account for 42% of condo ownership
• first-time homebuyers expected to increasingly gravitate to lower-priced condos when making their first home purchase
• condo “builders are responding to market conditions by reducing the number of new project launches and moderation of pricing at launch”

What about condos owned by real estate investors?

Another area that has been the target of criticism is the large percentage of real estate investors owing Toronto’s condomiums.  Here, too, CMHC suggested there was no undue reason for alarm.  They stated, that “condominium apartment rentals in Toronto and Vancouver feature lower average vacancy rates and higher average rents compared to conventional purpose-built rental apartment units”.   In Toronto, the continuing strong demand for rentals resulted in a vacancy rate of only 1.2%.

In sum, CMHC’s report provided very positive news for first-time homebuyers looking to get into the Toronto real estate market through purchasing a condo, and anyone downsizing to a condo from a detached home.

So what do you think?  Have you been sitting on the sidelines, worried by the negative commentary?  Or do you still believe there might be a downturn?  Let me know!

Image credit: [c] Sujin Jetkasettakorn for freedigitalphotos.net