In the summer of 2017, if you walk up to the triangular parcel of land that sits beside the Gardiner Expressway near the foot of Toronto’s York Street, you will be able to ride the elevator to the 41st floor.
Just down the hall, enter suite 4110. It’s newly constructed and still bereft of furniture, but step onto the plank laminate flooring and take a look. To your left sits the master bedroom; to your right, two smaller bedrooms. Continue through the walkway between them and you’ll find yourself in the living and dining area. The suite stretches across 1,305 square feet before you hit the balcony. Step out. Swivel to the south and you can see out over Lake Ontario; pivot right to see the city’s downtown core.
The suite at Ten York is currently for sale with an asking price of $922,000, plus $55,000 for a parking spot and a monthly maintenance fee of about $588. But at the moment, it’s nothing but air hundreds of feet above a parking lot. And its sale coincides with rising questions this year about just how far the condo market in the country’s most populous city will fall.
In 2013, everyone from Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney to economists – and condo buyers – will be keeping an eye on condos like suite 4110 to see if they sell, for how much, and to whom. The hope is that they will, for a solid amount, and generally to Canadians who want to live in them. The fear is that they won’t sell, or only sell at a much lower price, to speculators with no long-term skin in the game.
The fate of condos like suite 4110 will determine whether the highrise market in the country’s most populous city is dangling precariously in midair, or has been lifted by strong underlying demand from residents. Policy makers have shown that they stand ready to intervene at any sign of the former.
Construction of the Ten York tower is scheduled to begin about a year from now, with completion slated for 2017. Some economists expect prices in Toronto’s condo market to fall by 15 per cent or more in the next couple of years, and few will hazard a guess about what the market will look like in four years. Sales are already dropping significantly, and the rising prices of recent years have vanished.
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According to Urbanation, a data firm that specializes in tracking the Toronto market, resales of existing condos in the third quarter were down 22 per cent from a year ago. And the market for newly constructed condos has seen even steeper declines: 3,317 new condos sold in the quarter, down 30 per cent from the prior quarter and down 47 per cent from the same period in 2011.
To put things in perspective, the unusually strong sales of 2011 set a record – one that likely marked the market’s peak. And, also on the bright side, the steady runup of unsold units ended in the third quarter, with the figure retreating back to 17,182. Prior to that, the number of unsold condos had risen for five straight quarters and topped 18,000.
But it’s the cranes in the sky that worry many economists. Urbanation is still tracking about 242,000 condo units that are planned but not yet built in and around the city. If built, those units represent nearly a 20-year supply.