Oversupply of condos? No. Oversupply of analysis? Yes.

Everybody has an opinion on the future of the Toronto housing market, and just about everyone has made a real estate forecast regarding the next few months or years. If I had a dime for every time someone online said, “This won’t end well,” I’d be a wealthy man.

To be honest, there are way too many people that lack knowledge and relevant experience making forecasts and gaining media attention.

The condominium market in Toronto has been a magnet for terrible forecasts. What is really bizarre about the folks and their wild claims is they don’t get fired from their jobs; to the contrary, they continue to be sought out for their opinion! In some publications, the crazier, the better.

Having said that, I’m glad people don’t generally get fired for making bad forecasts, as my prediction for 2017 new condominium sales in the Greater Toronto Area (GTA) was about 10,000 too low! Yet people complain that I’m too optimistic. Approximately 35,000 new condominiums sold that year. Sales dropped off in 2018 simply because many developers pulled their launches forward to take advantage of the hot market conditions in 2017, and a spike in sales led to a pretty significant spike in construction costs as well last year. After a fairly tame spring market for new condo launches and sales in the GTA this year, the new openings are coming hot and heavy now, with several major launches coming to market in the summer of 2019. It will take several months before the dust settles and we can figure out if we’re got another 2017-like market on our hands, or just another steady year.

One thing potential buyers will have to consider when looking at all of the new condo developments for sale this summer is how future supply could impact the value of the unit they’re looking at purchasing. According to Canada Mortgage and Housing Corporation (CMHC) there were 52,774 condominium apartments under construction in the Toronto Census Metropolitan Area at the end of May, the highest level since June 2014.

Whenever the level of highrise units hits a high water mark, the same rhetoric and recycled opinion is thrown out – Toronto is building too many units, there isn’t enough people to fill all these condos, investors will get nervous and flood the market with suites and prices will crash. After making the same prediction for the past 10 years, maybe they’ll be right in 2019, but I doubt it.

CMHC reported that there were nearly 33,000 condo completions in 2015, which was almost 20,000 more than the average over the previous 10 years of 13,200! New and resale condo prices didn’t rise as quickly in 2015 as in other years, but they didn’t crash, investors didn’t sell en masse, and there wasn’t the “massive oversupply” problem that had been all but guaranteed if you read the newspaper in the years prior. Some analysts were calling for as many as 30,000 condo completions in 2019, but there have only been 5,419 through the first five months of the year per CMHC, so I don’t think we’ll make it.

The figures are certainly worth investigating again in 2020, but there doesn’t appear to be an oversupply this year. In May, the Toronto Real Estate Board indicated resale condo prices are up 4.9 per cent annually in the GTA to $590,000 on average. According to data from Rentals.ca, the average condo for rent in the GTA was listed for $2,520 per month in the second quarter, up from $2,505 in Q4-2018. New condo prices continue to rise, but at a much more modest pace than the booming 2017, which is more sustainable and better for the long-term health of the market.

In conclusion, take all forecasts with a grain of salt (mine included), as there is more likely an oversupply of housing analysts than an oversupply of Toronto condo units.

Buy for the long term, buy what you can afford, and do your own research. Good luck.

Related reading

The ultimate and accurate Toronto new housing forecast