Developers are rolling out studio and one-bedroom apartments in the Toronto area, even as demand for small apartments has plummeted during the pandemic.
Since the COVID-19 pandemic forced more office workers to work from home, the need for larger living spaces and gardens has exploded, with home sales skyrocketing in most of Canada. But the fact that home buyers want more rooms hasn’t changed the developer’s plan, at least for now.
Among new apartment projects launched in the Toronto area this year, studio apartments and one-bedroom apartments account for 61% of new apartments, according to data from Urbanation. Two-bedroom flats make up 32 percent, while 3-bedroom apartments, loft apartments and larger spaces make up the rest.
That 61% rate is higher than in 2019 and 2018, as well as in 2017 when the number of projects launched reached record levels. That year, smaller apartments accounted for 48% of new product offerings.
Today, cost is the main reason developers keep building smaller rooms. With increased construction and development costs, a pre-built studio in the downtown entertainment district will cost 500,000, a mid-range 600,000 and two-bedroom apartments cost between 800,000 and under 900,000, one said the developer number.
Apartments in the city of Toronto were the only real estate to lose value in a period marked by explosive sales and increasing value. The average selling price of an apartment fell 3% to 640,208 in 12 months, according to the Toronto Regional Real Estate Board. Meanwhile, the average selling price of an apartment in the Toronto suburbs increased 5%.
Although municipal governments across the country have encouraged developers to build larger apartments to accommodate a variety of families, Toronto developers say it’s impractical. A developer is often required to sell 75% of the apartments in his project to obtain the financing needed to start construction. A large number of ready-built home buyers are investors, but they are also looking for cheaper properties.
Cara Hirsch, founder of Hirsch + Associates, said: “I don’t see investors buying larger apartments, helping real estate companies develop and sell apartment buildings before construction. . The most important thing is the price. They want a larger space but they cannot afford it. “
A closer look at the numbers from Urbanisation shows studio and one-bedroom apartment prices in the Toronto area suffered the biggest impact from the first to third quarter of this year.
Most this year’s new condominium projects were launched in July, August and September, when home sales in Toronto, most of Ontario, Quebec and British Columbia all soared.
Demand for real estate with home offices and outdoor spaces has driven up prices in cities, suburbs and resorts such as Muskokas in Ontario, Sunshine Coast in BC, Eastern Townships in Quebec and Lac. Ste. Anne, Alta.
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