Canada

Toronto and Vancouver Are Placing Absurd Price Premiums On Condos

Toronto and Vancouver homeowners are condo crazy, and it shows in assessment values. Statistics Canada (StatCan) numbers show median assessment values for condos were at a huge premium in 2018. The gap between assessments for a condo apartment is as much as double in Toronto. Vancouver, the country’s most expensive city, isn’t seeing nearly as high of a premium on new builds.

Toronto Condos Are Valued At Huge Premiums

The assessed value of Toronto condo apartments show a massive premium. Toronto’s median assessment value reached $457 per square foot (PSF) in 2018, 32% higher than the median of all housing in the city. Vancouver’s median condo value reached $659 PSF, an 11.13% premium compared to all homes in the city. The premium being fetched by Toronto condos is almost 3x the size of Vancouver.

Median Assessment Value Per Square Foot (2018)

The median assessment value per square foot for housing in Toronto and Vancouver, in Canadian dollars.

Source: Statistics Canada, Better Dwelling.

Semi-Detached Homes Carry A Large Premium In Vancouver

Vancouver homeowners have their own segment bias for semi-detached homes. Semi-detached units had a median assessed value of $675 PSF in 2018, 20.75% higher than the median of all homes in the city. To contrast, Toronto semi-detached homes hit $337 PSF in 2018, 2% lower than the median of all home types.

Toronto’s Condo Mania Sees Buyers Paying More Than Double

Toronto’s new condo apartments see this assessment trend amplified even more. Condos built from 2016 to 2017 have a median value of $916 per square foot, 131% higher than the median of all segments of housing from the same period. Condos built from 2011 to 2015 have a median value of $548, 28.04% higher than all segments of housing. Yes, a Toronto condo built between 2016 to 2017 has a 67.15% assessment premium compared to those built from 2011 to 2015.

Toronto Median Assessment Value Per Square Foot (2018)

The median assessment of homes in Toronto, by type. In Canadian dollars per square foot.

Source: Statistics Canada, Better Dwelling.

Vancouver Condo Valuations Are More Sane Than Toronto

In contrast, Vancouver condos have a much more sane assessment values than Toronto. Condos built from 2016 to 2017 had a median value of $829 per square foot, 11.13% higher than the median of all housing. Those made from 2011 to 2015 had a median value of $772 PSF, 14.5% higher than all segments. The largest premium is for those built between 2001 to 2005 with a median value of $783 PSF, 30.5% higher than all housing. Somewhat surprising to see new builds in Toronto assessed above that of Vancouver.

Vancouver Median Assessment Value Per Square Foot (2018)

The median assessment of homes in Vancouver, by type. In Canadian dollars per square foot.

Source: Statistics Canada, Better Dwelling.

Toronto and Vancouver real estate buyers are placing a huge value premium on condos. That premium is even higher in new buildings, that tend to have smaller end units. In Toronto, newer condos are over double the assessed value of any other type of home – even those built in the same year. Worth a mention is the condo units delivered in 2017 aren’t the investor cash cow they appear to be. A CIBC study found that over 44% of investors in these units are cash flow negative.

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23 Comments

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  • Trader Jim 3 months ago

    This is precisely why there are few stats no Toronto condo prices from the 1980s. Detached homes only fell a few points, but condo apartments lost almost half their value.

  • Jason Chau 3 months ago

    Congrats Toronto, you beat Vancouver. Vancouver, one of the wealthiest and most dense cities in the world, has nothing on Toronto’s lack of “supply.”

    • Ethan Wu 3 months ago

      Most units under construction on the planet has gotta preserve that premium value, right?

  • Toronto Dave 3 months ago

    The province is reckless with development and trying to devalue land so they can sell it off to their friends. The government is flooding supply, and “cutting red tape.” That’s just a way to say they’re going to devalue your property and shift developer side taxes to end-users.

    Building this much housing is dangerous for the economy. We need more red tape if we’re concerned with preserving values.

    • Grizzly Gus 3 months ago

      Values cannot be preserved in real terms (maybe somewhat nominally) at this point because they have become so fundamentally detached from what we make and everything else we buy. I agree that allowing so much of our economy and employment to be tied to RE was dangerous, and we will pay a price for this. I also believe we are already building too much supply relative to end user demand, and the extent of which will impact how deep the correction/crash goes. The supply and demand issued that caused all of this was that we had way too much money and too many suckers chasing too few assets.

      That being said, I find it hilarious you are making the argument that to preserve values we should now add red tape and slow down new development. Guess it really comes down to if you own today or not. No owner was complaining about preserving values when prices were going up 10% a year which made it harder and harder for the next person to get into the market. Back then gains were justified by blaming lack of land and supply due to government red tape. Now that prices have flat-lined you think its because a new government came in a year ago and all of a sudden we have too much being built because they got rid of all the red tape?

      • Rob 2 months ago

        Values in real terms,,, who knows, its what people will pay. Once people become fearful and spend less the market will have to follow. Its buyers knowledge or expectations real time that matters.
        Dont believe all the hype about RE, its self interest based. Just look at sales volumes and it speaks for itself. Vancouver is in trouble. Big trouble.
        Other fellow regarding government involvement, a politician is a politician, election later this year, affordability a huge issue, who knows what they might promise.

    • Smaug 3 months ago

      This will come as a shock to you, but government is under no obligation to preserve the value of your home.

    • Mmr 2 months ago

      Amount people coming to Toronto vs the new development is still very low. And many condo projects got cancelled recent times. It won’t change unless government keep bringing 100k people every year to Ontario. It’s simple fact not to mention many immigrant have multiple properties. In future more people will park there untaxed money here its relentless.

  • Ahmed 3 months ago

    Remember market value is not equal to assessed value. In Toronto, the assessed value is 10-20% lower than the market value. It doesn’t change the trend, which can’t just be explained away, just something to consider when shopping for homes.

  • SUMSKILLZ 3 months ago

    I’m seeing more and more retired seniors buy into my modest Aurora subdivision. At first I found it odd, the place is designed for raising kids, but now it makes sense. Condos are just too damn expensive for downsizers.

  • Robert 3 months ago

    I assume article refers to government assessment value for property tax reasons. Funny part is that these assessment values are so disconnected from reality. The average condo price in Toronto is around $700 psf (at least according to condos.ca) while article states assessment value of $457.

  • GB 3 months ago

    I hope you are right… sold my condo in October in downtown Toronto.

    Definitely better relative value in Houses vs Condos now. And if you are buying a Condo, existing prices are much better than new.

    Not surprised to see demand for New Condos plummet – prices are insane.

    A broker sent me this VIP Price List (new launch)

    276 sqft Studio for $490k
    522 sqft 1Br for $852k
    716 sqft 2Br for $1.11M

    At prices between $1500-$1700 psf — makes no sense when you can buy Exisiting Condos at $1000-$1100 psf in the same downtown location. New premiums out of whack.

    Similar premium of 50% existed in 2011, lead to a dramatic fall in sale 2012-2014 — which of course lead to a supply issue in 2016

    • SUMSKILLZ 2 months ago

      Its hard to get a mortgage on a micro suite too. They seem to be aimed at investors as all cash sales. What did the agent tell my frugal, still single, brother a few years back…”Yes, its nice, but ITS NOT FOR YOU.” He was so insulted at the time…

  • Insanity 3 months ago

    Not sure how these govt bloodsuckers have let loose on the amount of developments they allow yet villages like vancouver still dont even have uber lol.

    Pre construction prices makes literally 0 sense right now. So the greedy developer is pricing in “imaginary” future gains lol.

    Even chinese money launderers arent that desperate to wash their cash in canada (the world is a big place).

    This is definitely not going to end well for bagholders as 1k+ per sqft when you can get around 2500 in rent for 2bd(probably lower in van) for a condo that is not even built makes me laugh.

    We will look back at this time 5-10 yrs from now as “peak idiocy”.

  • jon snow 3 months ago

    we already know toronto and vancouver condo prices are at ridiculous levels however there is a market for it clearly….
    not sure what the relevance of property assessments vs market value/prices are in Toronto and Vancouver…there has always been a gap.

    Assessed values in toronto (MPAC) are always below the market value and have been for over 15 years. MPAC values are used to calculate property taxes…not market value.

    • Evan 3 months ago

      000 <- the point
      😃 <- you

      Even if you’re looking at it from just a tax assessment point, condos still have a ridiculously high tax rate for the units by themselves.

      And no, MPAC assessments were lower than market price until a few years ago. The appraisal system has since been overhauled, and MPAC assessments are now closer to manual assessments used for mortgages.

  • Asterix1 3 months ago

    The LakeFront (by Concord) is ridiculous!

    A friend of mine went to visit, 2B+2W @ 849sqf (with 1 parking and 1 storage) = 1,320,000$

    The agent said there was only 1 left at that price. Ha, ha! Of course….

    Buting anything new (or old) at these prices makes no sense.

  • RE EXPERT EXTRAORDINAIRE 3 months ago

    Mpac assessments mean nothing.
    Everyone knows this.

  • John 2 months ago

    You missed the point.

    Yes MPAC assesses your property value, and your property tax calculated off that value. Yes Toronto assessment values are lower than actual sale value (be thankful).

    But this article is about comparing apples to apples. MPAC assessments are higher on new build condos than older built condos. The %difference of MPAC to selling is way higher for condos than other dwelling times. Why?

  • Robert Morgan 2 months ago

    In Ontario, MPAC assessments are updated every 4 years and are phased in over this 4 year period between assessment updates.

    This means a resale price of a property or condo won’t become the value for tax purposes for 4 years plus the number of years remaining in the period between assessment updates. In other words there is a lag of a minimum of 4 years before the resale price, assessed value and phased-in taxable value become the same.

    The next update period starts on January 1, 2020. Selling prices over the 4 years preceding this date won’t be completely reflected until January 1, 2024.

  • Snarky 2 months ago

    Went to visit 1111 Clarkson, advertised from the low 500s near Lakeshore Mississauga. Nothing around that price. 2 bed was at 850 and up and 3 over a million. Keep in mind this is not in the best location and beside the train tracks. Not in the million market range at all but wondering what person in their right mind in that range would want to buy 1500 sq ft for that price to live beside the train tracks not to mention condo fees as these where stacked towns and taxes buying in this range. So many better options if you are in that price range. Seems people have lost their minds.

    • Frost 2 months ago

      Money laundering buyers do not care where the property is. That’s why we have this insanely overpriced situation. Until something is done on a federal level, nothing will change.

  • Edouard Arakelian 2 months ago

    It’s all about GREEEEEEEEEEEEEEEEED!

Comments are closed.