Is There an Over Supply of Condos in London Ontario?

“Where is the condo market headed, in Canada & specifically London Ontario?” I was asked this question today by a client who wants to sell her condo in Toronto and move to London Ontario. Below is part of what I emailed to her.

The oversupply of condominiums in Canada is becoming a concern as two-thirds of all housing starts are condos and the supply of completed but unoccupied condominiums is high.

Vancouver & Toronto lead the way in new construction and as an example; Toronto has 132 high-rise buildings under construction compared to 17 in Chicago or 86 in New York City.

In a report by Bank of America Merrill Lynch, if Toronto condo developers stopped developing and completed their existing projects, there would be enough to supply the market for five years! The report also stated that between 40-60% of the sales of pre-construction units are to investors!

What is going to happen when units are on the market longer, are not selling and supply out paces demand? Yes, prices tumble and turmoil accelerates the uncertainty of real estate which in turn can affect all of Canada.

In London Ontario, we too have many new condo projects under way but the majority of units being built are one floor townhomes with amenities that are attracting the Boomers and the high-rise buildings are actually attracting the Boomers with very few investors on the scene.

As I wrote yesterday in my blog about why London Ontario will not experience a real estate bubble burst, the stability in London and the new demographic changes for the fore seeable future are quite positive.