Is downtown Toronto really becoming a ghost town in 2024?
With condos sitting empty, buyers hesitant and renters disappearing, the headlines are always doom and gloom.
But is it really as bad as they say?
Today, we are going to deep dive into the data behind the rental and resale markets.
Let’s see what’s going on!
First of all, let’s define the area of downtown Toronto.
The first area is what we called C08.
It is bounded by the Don Valley Parkway and Yonge Street, south of Bloor, all the way to the waterfront.
The second area is C01, which goes from Yonge Street to a little bit west of Dufferin Street.
Together, they make up downtown Toronto.
And we will be looking at all the rental and resale transactions that happen here from the first day of 2024 to the second week of December 2024.
Let’s start with the rental market.
This year, it is characterized by a surge in rental listings because of the record high new condo completions in downtown Toronto.
As a result, landlords are facing downward pressure in rents.
Back in 2021, when the entire Toronto real estate market was red hot, do you know how many condo units were leased in downtown Toronto?
24,815 units.
In 2022, 18,678 units.
In 2023, 19,015 units.
What about in 2024?
24,285 units.
Surprisingly, the rental demand in downtown Toronto was actually as strong as in 2021.
After all that work from home stuff, downtown is still in high demand.
We just couldn’t feel it at all because the market was flooded with new units.
Now, let’s take a look at the distribution of the types of units that were leased.
7.7% of the leased units were Studios.
1 Bedroom, 31.1%.
1+Den, 27.9%.
2 Bedroom, 22.9%.
The larger units made up the rest 10%.
No surprise, the most popular unit type among renters is 1 bedroom.
What about the rent distribution of the units leased in 2024?
You can see that it’s hard to find units below $2,000 in downtown Toronto.
They only made up 3.6% of the total units leased in 2024.
The sweet spot was between $2,000 to $2,500.
Those are pretty much the 1 Bedroom and 1+Den units.
Let’s talk about the outlook for the rental market in 2025.
You may have heard that 2025 will be another record year for condo completions.
However, if we zoom into the core downtown area, we definitely won’t have as many completions as we did in 2024, roughly just 60% of that.
But of course, the cut in work and study permits is going to have a hit on the rental market.
Our temporary population is projected to decline by around 450,000 country wide in 2025.
So there are potential challenges in the rental market.
As of now, we are still having actions and getting units leased even in the December market.
Overall, we have less demand but also less supply, I would expect the rental market in downtown Toronto to remain fairly stable in 2025.
Now, let’s check out the resale statistics.
In 2021, we had 8,828 condo sales in downtown Toronto.
In 2022, the number came down to 5,665.
In 2023, only 4,540.
This year, how bad was it?
4,173 sales.
So we were actually pretty much at the 2023 level.
But again, it felt a lot worse because many investors are trying to sell, resulting in a high level of inventories.
Let’s take a look at the distribution chart and see which type of units was the most sellable.
1+Den units were the most popular, making up 30.7% of the total sales in 2024.
The next one was 1 Bedroom, 28.2%.
The smallest and the largest unit types each only made up around 4% of the sales.
Now, let’s talk about prices.
Here’s the price distribution of the units sold in downtown Toronto in 2024.
There were only 35 units below $400,000.
The entry level pricing for downtown Toronto would be around $400 to $500 thousand dollars, that would pretty much be a studio unit unless you are looking at some very old buildings.
The sweet spot was between $500 to $700 thousand dollars.
Almost 50% of the total sales transacted within this price range.
Units above $1 million dollars altogether made up 12% of the total sales.
With the new mortgage rules coming into play and interest rates continuing to come down, I would expect to see an increased number of sales in downtown Toronto in 2025.
In terms of prices, I don’t think we will see any big improvements soon because we are still sitting on 5 months of inventory.
Let’s see how things unfold in 2025.
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