First time buyers turning to condos

Detached homes are still the preferred choice of most Canadians. But the reality of the marketplace means that more first time buyers are turning to condominiums as an alternative.

Condo sales in the GTA from January to September are up 10 per cent over this time last year, according to a report by ReMax Ontario Atlantic Canada released Monday, something they attribute to a number of factors.

One of these is affordability. According to the Toronto Real Estate Board, the average price for a semi-detached home in Toronto in September was $482,000 and the average for a detached home was an eye-popping $665,000. By comparison, the average price for a condo was $329,000.

This obviously makes condos an attractive alternative, especially for first-time buyers who may not lave large sums of money available for down payments. So far this year, condo sales account for 32.5 per cent of total residential sales in the GTA.

According to ReMax, changing lifestyles is also a factor.

“Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in close proximity to shops, restaurants, and entertainment,” RE/MAX executive vice-president Michael Polzler said in a release.

According to ReMax, the highest concentration of condos in Toronto is in the area bounded by Yonge St. in the east and Dufferin St. in the west, Bloor. St. W. in the north and Lake Ontario in the south. Close to 6,800 units have been listed this year in the area, with the average price being $395,000.

A separate report by Royal LePage says that condos showed the highest appreciation of all housing types in the third quarter of 2010. Average prices are up by 5.9 per cent to $329,138. In contrast, the average two-storey house is up by 4.6 per cent to $577,119.

Along with end users, investors are also heavily involved in the market, particularly from Asia and the Middle East, according to ReMax.

American investors, burned by a stumbling economy are buying domestically in cities such as Chicago and New York to take advantage of better deals.

The ReMax report also has good news for renters. It notes that a greater supply of condos in the GTA means that rental rates have been kept in check, since tenants have far greater choice. But lower rental rates means that investors might not be able to get the return they had hoped for.

Condo communities outside the downtown core such as in Port Credit and Square One in Mississauga are also enjoying good demand.

ReMax also notes that sales of luxury condos are soaring, something the agency attributes to an increasing number of so-called empty-nesters.

Sales of units for $1 million or more are up nearly 50 per cent so far this year, compared to this time last year, with 142 such units having been sold, compared with 95 units between January and September 2009.

Luxury properties however, did not sell well last year because of the gloomy outlook on the economy.

ReMax says new immigration coupled with land scarcity means that condominiums will remain a viable alternative in the years to come.