Buyers Snatching up Condos In the Push for Affordability
I’ve been documenting the historical rise in the condo market for awhile now, basically ever since the detached market became unhinged. As the market began to exhaust itself last spring, the introduction of the foreign buyers tax appeared to be the final nail in the coffin for the detached market. As prices began to fall sanity reemerged, budgets were readjusted, and the race for affordability was on.
Condos became the new prized possession. The sales composition began to shift, fewer and fewer detached sales were taking place. As foreign capital began to dry up, locals were unable to pick up the tab on a 1.8 Million dollar detached home.
The sales composition (total number of sales across REBGV for all market segments) for detached homes hit a new low of 30% of total sales in August 2016, right after the introduction of the tax. Falling from their peak in February of 44%. Condos were left to pick up the slack, going from 43% in January 2016 to hitting a new high of 55% in November.
The purge of multi million dollar homes is also seen in the total dollar volume (how much total money is spent). Homes with 4 bedrooms or more saw their total dollar decline by 48% year over year. Three bedrooms dropped to 32%, two bedrooms by 23%, while the dollar volume for one bedrooms barely dropped, just 7%.
It begs the question, is this the last bit of buyers scraping up the remaining affordable homes or a temporary hiccup as the sales composition for detached homes begins to swing upwards once again. Time will tell.