Toronto Hits A Multi-Year Record For New Condos Under Construction

Toronto real estate is about to get a whole lot of supply. Canada Mortgage and Housing Corporation (CMHC) numbers show Toronto CMA is just under the all-time high for homes under construction. Over 3 out of 4 of those units under constructions are condo apartments. The number of condos under construction vs population increase ratio, is now almost three times as large as it was in the early 1990s.

Greater Toronto Population Growth

To appreciate today’s numbers, you really need some context on population growth. Toronto CMA had a population of 5,928,040 at Census 2016. Between Census 2011 and 2016, the region averaged a net-population increase of 68,995 people per year. That sounds large, but it’s a decline of 26.58% compared to the growth observed in the 5 years before that. The average household size was 2.7 in 2016, a minor downward revision from 2.8 at Census 2011. The city is showing healthy signs of growth, but not even close to the expectations being set.

Toronto Now Has Over 70,000 New Homes Under Construction

There’s a whole lot of homes under construction in the Toronto CMA. CMHC’s latest update shows 70,709 units under construction in June 2018, an increase of 3.87% from last year. This is off of peak construction in March 2018, when it reached 72,344. That’s an impressive amount of supply in the pipeline, especially in the context of population growth.

Toronto Housing Units Under Construction

The total number of all housing units under construction in Toronto CMA.

Source: CMHC. Better Dwelling.

Most of The Construction Are Condo Apartments

The vast majority of construction are condo apartments. CMHC counts 55,939 apartment units under construction, the highest number since 2014. To understand just how many condos this is, we can look back to the “condo bubble” of 1990. The indisputable bubble saw a ratio of 1 unit under construction, for every 3 people the region gained. Today, we’re at a ratio of 1 unit for every 1.23 people the region is expected to gain.

Toronto Condo Units Under Construction

The total number of condo apartment units under construction in Toronto CMA.

Source: CMHC. Better Dwelling.
Saying Toronto is building a lot of condos would be a huge understatement. Yes, most of the units have buyers that have placed a deposit, but how many are ready to close on completion? The sharp increase of private mortgages used for closing shows it’s a lot less than the market is likely anticipating.

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  • Reply
    Ian 6 years ago

    This is going to get interesting, as rates climb. If we’re at 1 in 10 dollars in the GTA going to private lender, and sales have been tapering, these people are closing with the expectation that prices would rise at least 8% per year. That’s without any additional costs, these guys are going to get slaughtered.

    • Reply
      Papagorgio 6 years ago

      Slaughtered?? What are you talking about. It’s a fact that 100% of the people who bought preconstruction in 2015/2016 and who’s unit will be available for occupancy this year and next have already made a minimum of 150-300k EACH.. On 70k units that over $10billion in materialized profit in the bank… Personally I should have bought a second and third property but I just don’t have the balls to use AMEX debt as a weapon….

      • Reply
        vnm 6 years ago

        “Learning To Fly” – Tom Petty

        Well I started out down a dirty road
        Started out all alone
        And the sun went down as I crossed the hill
        And the town lit up, the world got still

        I’m learning to fly, but I ain’t got wings
        Coming down is the hardest thing

        Well the good ol’ days may not return
        And the rocks might melt and the sea may burn

        Well some say life will beat you down
        Break your heart, steal your crown
        So I’ve started out for God knows where
        I guess I’ll know when I get there

        I’m learning to fly, around the clouds
        But what goes up must come down

      • Reply
        Grizzly Gus 6 years ago

        They are up that much on paper. It is not money in the bank.

        What happens though to the investor who put down his 20% deposit and assumed he would be able to get financing from the bank at 2015-2016 rates, and no B-20.

        At least half the units hitting the market are investor owned. Record supply on its way. What happens to those paper gains if a bunch of those investors decide to try and cash out at the same time?

        Will first time buyers or downsizing boomers step in a bail them out?
        Maybe, but all of those first timers are having their borrowing capacity lowered each and every time rates go up. Downsizing boomers need to be able to find someone to cash them out. Time will tell

        • Reply
          NJ 6 years ago

          Hope first time buyers who are now renters waiting in the sidelines, should not loose their sense and buy this sh*t load. As the Banks have already tightened lending, I don’t know how long would this private lenders stretch themselves..

      • Reply
        D 6 years ago

        are you referring to those advertised on Kijiji -ASSIGNMENT FOR SALE ?

  • Reply
    Irving Fisher 6 years ago

    Hopefully, these new units ease the city’s tight rental situation.

  • Reply
    Andrew Turner 6 years ago

    Is that an imperial or metric “shit ton”?

  • Reply
    vnm 6 years ago

    And with at least half of condos being bought by investors, the cascading effect on the overall market will be devastating.
    If a large multi-generational house is out of reach, you’ll be able to buy sets of adjoining condos in a building, one for each family member.

  • Reply
    Robert Shore 6 years ago

    Mr. Wong,

    Thank you for your detailed analysis. We all benefit from honest scrutiny of market statistics to better understand what is going on.

    I would pose a challenge to the following excerpt from your post above: “To understand just how many condos this is, we can look back to the “condo bubble” of 1990. The indisputable bubble saw a ratio of 1 unit under construction, for every 3 people the region gained. Today, we’re at a ratio of 1 unit for every 1.23 people the region is expected to gain.”

    The composition of housing under construction in the GTA has swung dramatically away from ground related product and towards more dense condominium projects since 1990. So a more relevant comparison might be the total number of *housing* units under construction (which would include detached, semi-detached and townhouses) in 1990 vs the current figure for those housing types.

    Or perhaps not? To preserve the integrity of your post though, I would challenge you to do this comparison and report the results back on this comment board.

    Best regards, and many thanks in advance,

    Robert Shore

    • Reply
      Trader Jim 6 years ago

      I think I see why condos were segregated.

      Detached homes fell in price by a lot, but there’s an argument to be made that a detached home at least has the land under it. If land is mis-priced (which is where the majority of real estate crashes occur), then the cost is quickly reflected. In a city like Toronto, that land will likely eventually be upzoned, so the possibility of it rising again is much higher.

      As for condos, there’s little land value attached per unit, it’s expensive to redevelop, and few projects retain value. The older the unit gets, the faster appreciation slows.

      In the event of a condo correction, your ability to recover lost value in real terms is much more difficult. Not to mention your cost basis increases, as maintenance rises.

      Comparing the lack of value retained in condos makes much more sense that way.

      Look to NYC. Apartments have only recently got back to their 2001 prices, while rows and detached homes recovered very quickly. The misprice of condos is lost money if you’re wrong.

  • Reply
    John 6 years ago

    I’ve clearly missed something in this article…

    “The indisputable bubble saw a ratio of 1 unit under construction, for every 3 people the region gained. Today, we’re at a ratio of 1 unit for every 1.23 people the region is expected to gain.”

    How is this not a complete bull statement? With supply so close to population growth, shouldn’t we continue to see stable price growth?

    • Reply
      Grizzly Gus 6 years ago

      Average household formation is 2.7.

      This would be mamma bear, papa bear and baby bear all owning their spot.

      • Reply
        Grizzly Gus 6 years ago

        *own spot

      • Reply
        vnm 6 years ago

        lol, A 3 bedroom 3 living room 3 bath 3 kitchen 3 balcony 3 underground parking spots, exercise room and pool, for less than the cost of a 3 bedroom fixer upper on a noisy street today!

        • Reply
          Justin Thyme 6 years ago

          And all three in the same space as the average rec room in the suburbs.

    • Reply
      vnm 6 years ago

      Jan. 2018 BD:

      “The number of households formed between the 2011 and the 2016 Census averaged 29,241 households. That’s 18% lower than the average annual completion data of 35,978 from the City of Toronto.”

      • Reply
        Trader Jim 6 years ago

        I was thinking of that article as well, but couldn’t remember what it was called. They should probably link to that, since (no offense to the author), Stephen’s piece made the issue much more clear.

    • Reply
      John 6 years ago

      Thank you Grizz

  • Reply
    Andy 6 years ago

    Just look at the gongshow Bisha. 18 units for sale in one condo alone.

    I ran an Airbnb business and can attest the rents for a 1 bedroom at 101 Peter (Peter & Adelaide) were $1650 no parking in 2016. $1950 no parking 2017. And no owners asking $2300 no parking in 2018.

    The sick part is that many owners are negative cash flow even at these rents.
    They’re just banking on it going up and uppppppp

  • Reply
    Joe Blow 6 years ago


    interesting comment, I was thinking the exact same thing in regards to the people holding investment properties (with negative cashflow).

    seems like everyone is sitting on the fence whether or not the market just took a minor dip and is going to continue upwards, or the curve is actually in the transition to start a bear market. Time will tell I guess, but from last year and the last 5 years after that if we proposed a thought to the majority they would laugh at you for thinking it could go down.

    Today some are at least questioning its possibility now, and if more months go by of poor performance I am curious how many of these people holding investment properties with negative cashflow are going to start listing to be all the others to the race of cashing out the gains before its too late. Im excited for winter for once.

    • Reply
      Trader Jim 6 years ago

      I think they hinted st it, but didn’t quite say it. If you e ever bought a condo, you know that you only need your name, ID, and a cheque for $10,000. When the market was really hot, you could flip that whole assignment without putting any more money.

      As it cools, you need to pay 5% every x number of days. Once it gets to building, you need to quality for a mortgage, at B-20 levels. If rates rise faster than your condo, you needs to go to a private lender. If you’re paying 7% on a two-year term, and prices decline in 2 years, you won’t be able to go to an a-lender. That puts you at sell, or renew at an even higher private rate.

      It’s going to be a shit show two years down the road.

      • Reply
        gear74 6 years ago

        You bears never give up eh? How many times people explained to you guys already : condos in good location like Downtown Toronto with a walking proximity to work will only appreciate higher. I agree it’s not going to be 20% a year, but 8% likely. Here is my live and true example : purchased 2 condos in 2015 in St Lawrence market area (preconstruction). The price for a condos in this area is already 250000 $ or even more higher per condo. The rents in that area is easy 2700$ for a 2 bedroom and every rent is 15 applocations at least. I am cash positive even now but within 1.5 year when the condo will be ready I don’t see why the rent won’t be 3000$ or more. And don’t tell me there are not enough tenants who can afford this rent. We are talking about prime Downtown area where lots of High paying jobs. The working couple can afford that I am sure. So tell me that it was bad decision? And again I am not talking about GTA as the whole and not even houses. But I don’t see any issues with my investment in Downtown Toronto area.

        • Reply
          gear74 6 years ago

          Had to continue. No I am not going to sell this condos even though I have an assignment option. Why would I sell the assignment and then pay 50% capital gain? The worse case scenario if I really will need money I will hold it for at least one year (rent it). This way I am reducing my capital gain to 25% I believe and also the tenant will pay for my mortgage. But ideally I will hold this condos as much as I can to leave it for my kids.

        • Reply
          vnm 6 years ago

          Bought in 2015. Talk about late to the party. Ouch!

          “Coupled with the early 90s recession, a spike in unemployment and a drop in the inflow of immigrants to the area, housing prices in the GTA collapsed. Between 1989 and 1996 average price of a house in GTA have declined by 40% adjusted for inflation or $182,625 in today’s money. Downtown of Toronto was hit the worst with over 50% decline in value of a home.”

          • gear74 6 years ago

            VNM – we will see. It’s different times now. I hear predictions about crash for last 10 years.

          • Joe 6 years ago

            Every generation has to go thru it. Every generation has to learn. It’s never different this time. I hope it works out for you Gear, it will not.

            “And it’s certainly no different today than its ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987-Jesus, didn’t that fuck up me up good-92, 97, 2000 and whatever we want to call this. It’s all just the same thing over and over; we can’t help ourselves.” ~Irons, Margin Call

  • Reply
    Bluetheimpala 6 years ago

    Had to post this, comment on SFH from a couple days ago, not condo related but…”Based on our analysis the market has bottomed out,” said Phil Soper, the CEO of Royal LePage.
    Live in the light. BD4L.

  • Reply
    vnm 6 years ago

    Say it aint so Joe!

    Say it ain’t so, Joe please, say it ain’t so
    That’s not what I wanna hear Joe

    They told us our hero
    has played his trump card
    He doesn’t know how to go on.
    We’re clinging to his charm and determined smile,
    But the good old days have gone.

    The image and the empire may be failing apart
    The money has gotten scarce …

  • Reply
    Justin Thyme 6 years ago

    As usual, you are looking at the wrong metrics, and trying to co-relate them.

    It’s like being back in 1927, and trying to predict the number of automobiles sold from looking at the number of buggy whips sold. ‘But it worked for carriage sales’, you protest, ‘Why not automobiles?’

    With downtown condos being used for AirBnB, and not long-term residential units, you should be looking at hotel room vacancy rates and demand, not housing availability and demand. What is the rate of hotel room construction? What is the demand for short-term (two to three month) temporary accommodation? Business centers like Toronto have a very different mix of demand, not just residential.

  • Reply
    Justin Thyme 6 years ago

    Downtown Toronto is a transient marketplace. Business men come, businessmen go. Consulting, contracts, temporary assignments, nurturing start-ups and new expansions. Temps and interns. Students, Trainees and trainers.

    These temporary accommodations do not show up in statistics for permanent resident migration. They are not new families settling in, They may not even show up on such things as election lists and mailing address changes, certainly not in CRA databases and such.

    So really, what metric do you use to track them? Hotel vacancy rates? But Airbnb is cutting into hotel statistics and skewing them. How about business employment stats? Maybe even the business climate in general? How about new office construction? These offices have to be filled up by somebody, and these people have to live somewhere. You do not live in a modern downtown condo with a wife and two kids. Chances are, you are single or in a transient relationship. Room mates. How do you measure the population changes of university students, temps, interns? The 20-30 year olds, who officially are still living at home in the suburbs, but just got an insecure starter job in an office in downtown Toronto. They do not form family units until the early to mid-30’s, and do not want to officially ‘move’ to their own ‘home’. $3,000 rent divided by two room mates is $1,500 – steep, but affordable for an unattached individual , with an income above $20 an hour. With minimum wage going to $15 an hour, the numbers become understandable.

    University residence fees for eight months are pushing $1,000 a month. When I went to university, TOTAL living costs including food and utilities were $420 for the entire term.

    If only 10% of Canadians can afford these higher prices, that is still 3.5 MILLION people. That is a lot of demand. The old rules have not caught up to a world population of 7.5 billion people. There were less than two billion people when the foundations for all of the old rules were thought up – the early 1900’s. Distortion of the curves at the top and bottom ends becomes really, really noticeable at these new numbers – when 1% of the population – the outliers – number 75 million, that is a LOT of outliers, and they now have a global reach.

    The system is broken. It is in transition. The old rules do not apply, Discontinuities in the graphs. Stop trying to make sense of it using last century’s rules. Sit back, observe, and learn the new relationships, THEN make predictions based on the NEW relationships, Otherwise, the economy will just make a fool of you, the way it has done so for the last ten years. NO metric predicted the 2008 recession, particularly NOT any M metric. They were all lagging indicators. The economy was tickety-boo, until it wasn’t.

    • Reply
      gear74 6 years ago

      Justin Thyme – I cannot agree with everything you said. Downtown Toronto is very unique place. There are lots of high paying jobs there. With all the traffic mess around Toronto people want to be close to work now. And demand is huge because today Downtown Toronto can cater and satisfy everybody : young millennials want to be close to buzz and nightlife, single professionals in their 30 find the place convenient and they don’t need car, baby boomers want to be close to transportation and hospitals and with the house prices around Toronto there is new demand forming – young couples will deliver their babies in condos. Yes condos from now on will see more and more kids in them and developers will build more and more daycares, schools and parks in Downtown to satisfy all this people. The demand is there and it’s here to stay.

      • Reply
        Justin Thyme 6 years ago

        The demand will stay, and so to will the demographics of single and childless.

        But these childless couples will have children.

        That is why Toronto has restrictions on new condo developments, such that a certain percentage of them must include units suitable for families with children. Town house type units. With suitable child play areas

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