Every year, the Canada Mortgage and Housing Corporation (CMHC) releases an annual review of the state of housing in Canada called the Canadian Housing Observer. The 2013 edition, released on December 18, 2013, includes a detailed look at the Canadian condo market. Here are some of the key highlights.
Taking Stock Of The Condo Market
While the word “condominium” generally elicits the image of a high-rise tower in an urban centre, the largest number of condos by type in Canada are actually low-rise buildings (36 percent), followed closely by high-rises (31 percent), then row-house condos (23 percent). Detached homes and other building types make up only 10 percent of the nation’s condo stock.
An Undeniable Boom
Regardless of building type, the explosive growth in condos is undeniable. In 1981, there were only about 171,000 owner-occupied condos in Canada. Twenty years later (in 2011), that number had ballooned to 1,154,000, with a further 461,000 rental condos on the market. Still, to put those figures in context, there are more than seven times as many owner-occupied homes in Canada that are not condos (8 million) and four million rental dwellings. The CMHC report also points out that there are a whopping 9.4 million condominiums in the United States.
The Affordable Urban Choice
By 2012, condo units accounted for 40 percent of housing starts in Canada’s urban areas. Not surprisingly, slightly more than half (51 percent) of all condo housing starts in 2012 were in either Toronto or Vancouver. Two-thirds of the condos in Toronto are high-rises. In Vancouver, nearly 60 percent of owner-occupied dwellings are condos. The next-highest ratio is in Montreal at 40 percent.
One of the obvious drivers of this growth in condo buying is the lower price point compared to detached and semi-detached housing. One of Statistics Canada’s questions in the National Household Survey asked, “If you were to sell this dwelling now, for how much would you expect to sell it?” Averaged out, condo owners expected a sale price of $260,000, nearly $30,000 less than the anticipated value of other owner-occupied housing. MLS data for Toronto and Vancouver show that detached homes cost about twice as much as condos in those two cities. There is also a fair amount of innovation that could keep driving this trend forward. This example in Etobicoke is a condo that promises to help cut transportation and energy costs.
Monthly “shelter costs” (the combined price of mortgage payments, property taxes, utility bills, and other housing-related expenses) are also $500 lower for condo owners than other homeowners.
So it shouldn’t come as a real surprise that nearly one in five (19 percent) of condo buyers are less than 35 years old. Perhaps surprisingly though, is the fact that the largest group of condo-buyers by age is seniors 65 and older, at 29 percent.
The Senior Segment
But when you step back and think about it, that makes sense. Seniors have always tended to downsize – condos have an average of five rooms, compared to 7.5 rooms for other owner-occupied structures – in order to reduce their retirement living expenses and build a nest egg from the sale of a larger home.
Condo ownership also seems to be a popular option for widowed women, with 76 percent of condo owners that are 55 and older and live alone being female. Some of the reasons cited for the appeal of condos to both genders in older age groups is the fact that landscaping and many other maintenance chores are taken care of by the condominium corporation; most condos tend to be single-storey units, eliminating the need for potentially treacherous stairs; and the availability of onsite or nearby amenities. Related to the last point, the percentage of owner-occupied condos is noticeably higher in communities that are popular retirement destinations, such as Victoria, B.C., and Collingwood, Ont.