September 07, 2023
Thirty-one condo projects across the Greater Toronto and Hamilton Area that were on track to launch since the second half of 2022 are yet to come to market, according to figures provided to STOREYS by Urbanation.
The market research firm says that 8,038 units would have been added to the GTHA’s housing supply stock had conditions not been as challenging as they have been over the past year and a half, which has been characterized by sticky inflation and the most aggressive and rapid rate hike cycle in Bank of Canada history.
The largest shares of stalled units are concentrated in Hamilton (2,054) and Toronto (934), but it’s worth noting that the counts were also quite high in Etobicoke, North York, and Scarborough.
Figures provided by Urbanation
“There are a number of projects that launched over a year ago and are still less than 50% sold, which is unusual. Some of these could be cancelled or temporarily taken off the market this year and re-launched later when conditions improve,” a spokesperson for Urbanation tells STOREYS.
“On top of that total, there are many more projects that would have come to market if conditions were better. The current pipeline of projects that are readying for launch totals approximately 30,000 units. However, the majority will not likely end up launching anytime soon.”
Roy Bhandari, Co-Founder and Broker of Record for GTA-focussed TalkCondo, points out that “most builders require around 75% in pre-sales before they can secure financing to build,” and that many have not been able to hit that threshold. In short, people are cash-strapped, and elevated borrowing rates have led many would-be purchasers to pause their buying plans.
"Developers that can afford to do so, and are in no rush to bring their projects to the marketplace, may decide to wait for a better market to launch into,” says Bhandari.
He also notes that projects that are selling relatively well right now are coming from more established developers. Reputation has become increasingly key for trigger-shy purchasers.
“I think buyers right now are super cautious about who they're buying from. More so than probably ever before,” he says. “Buyers now ask who the builder is because they want to make sure that they're getting what they’re promised and it will actually come through.”
Urbanation’s data for the Toronto area and Hamilton is in line with a broader country-wide trend of fewer housing launches. The Canadian Home Builders’ Association revealed last month that 67% of home builders and developers are scaling down their projects to include fewer units — up from 59% in the previous two quarters — while 22% are cancelling projects entirely, citing rising construction costs, labour shortages, and current financing conditions.
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Written by: Zakiya Kassam
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