Latest news with #JohnPasalis
Yahoo
a day ago
- Business
- Yahoo
Weak condo markets in Toronto and Vancouver threaten future housing supply: CMHC
Falling condo prices and rents in Toronto and Vancouver are driving a construction slowdown and could frustrate longer-term efforts to ramp up overall housing supply in Canada, according to an analysis from the Canada Mortgage and Housing Corporation (CMHC). Spurred by a range of factors, the weak condo markets in the two cities have seen sales plummet, just as scores of new completions keep adding to inventory. Recent economic uncertainty means there is 'little evidence to suggest that price and rent declines are likely to quickly reverse,' the CMHC says. 'In the short term, these developments present relief for buyers and renters in the most expensive cities in the country,' the analysis notes. 'However, they do so at the cost of discouraging new construction and fuelling underlying housing shortages in the future.' Low interest rates before and during the COVID-19 pandemic helped fuel demand and a condo construction boom, but a rise in rates in 2022 depressed demand, 'reducing affordability for homebuyers and potential returns for investors,' the analysis says. Ongoing affordability concerns and the recent trade war with the U.S. have helped maintain the grim market conditions. 'We're just at this period where buyer sentiment is in the gutter, both from end users and of course from investors,' John Pasalis, president of Toronto-based brokerage Realosophy, told Yahoo Finance Canada. 'So demand is at the lowest level it's been in 20 years. And inventory just keeps piling up.' Between 2022 and the first quarter of 2025, total condo sales fell 75 per cent in Toronto and 37 per cent in Vancouver, the CMHC analysis says, while inventories in the two markets rocketed upwards. 'In Toronto, where the market weakness is the most pronounced, the months of inventory for pre-construction condominiums in Q1 of 2025 were more than 14 times higher than they were in 2022,' the analysis says. Average resale prices dropped 13.4 per cent in Toronto and 2.7 per cent in Vancouver over the same time period. Say they bought a brand new pre-construction condo for a million bucks. That's really only worth 700 or 750 grand president John Pasalis Pasalis said he met with a condo owner last November, and discussed similar units selling at the time for around $950,000. One month ago, two similar units sold for $850,000, he said. 'That's not of course happening everywhere, but this is what happens in really, really slow markets when demand is in the gutter and some people just desperately need to sell.' Some investors have been clobbered by the changing market conditions. Toronto investors 'face as much as a six per cent capital loss on pre-construction purchases concluded in 2024,' the analysis says. Those who bought condos in Toronto in 2019 or 2020 now find them 'not worth anything remotely close to what they paid for them,' Pasalis said. 'Say they bought a brand new pre-construction condo for a million bucks,' he said. 'That's really only worth 700 or 750 grand today. So, many of them are underwater.' Economists and other experts have said Canada's housing crisis is in part due to new supply not keeping up with population growth. The new federal government has promised to ramp up supply, though some economists say the government's policies won't be enough. In Toronto and Vancouver, many new units — largely bought before the market turned — will be completed this year, nearing the records set in both cities in 2024. After that, however, new supply looks like it will be limited. Around 55 per cent of pre-construction units in Toronto went unsold in 2024 and in the first quarter of 2025, the CMHC analysis says — putting the projects in jeopardy, given financing usually has a pre-sale threshold of 70 per cent. 'In 2024, condominium apartment unit cancellations were 5- and 10-fold higher than they were in 2022 in Toronto and Vancouver, respectively,' the analysis notes. Some developers have been converting condo projects into purpose-built rentals, but the number of cancellations has been growing, the CMHC says. 'The condominium projects cancelled today mean fewer housing completions in the future,' the analysis says. 'The relief for buyers and renters is temporary with future housing shortages compounded.' The market could still turn around, Pasalis said, if trade issues are resolved and consumer confidence is restored. At the same time, he said, if the economy struggles under an enduring trade war, 'the market can definitely get worse.' John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
Yahoo
31-05-2025
- Business
- Yahoo
Should Canada Post stop delivering letters? FP Video looks at what's ahead for the postal service and economy
With Canada Post struggling to survive, FP Video looks at what measures might be taken to save the ailing postal delivery service. We also examine two major economic red flags as home sales in Canada reach crisis levels and Canadian banks ready themselves for a looming recession. Plus, a closer look at the small but powerful commercial smelt fishery. Ian Lee, Associate Professor, Carleton University's Sprott School of Business talks about how nothing short of a major overhaul will save the Crown corporation, including dropping all mail delivery in five to 10 years. Realtors John Pasalis from Toronto and Steve Saretsky from Vancouver speak about how Canadian home sales have sunk to historic lows. Rebecca Teltscher, portfolio manager at New Haven Asset Management, talks about the state of Canadian banks as they report second-quarter earnings. The Great Lakes region drives a $8-trillion economy and supports millions across major cities like Toronto and Chicago. Lake Erie, the smallest lake, plays a unique role with its commercial smelt fishery, a lesser-known but vital industry. Money in the bank: FP Video looks at what the markets may bring At home and abroad: FP Video on continuing tariff turbulence
Yahoo
30-05-2025
- Business
- Yahoo
What can Toronto's real estate industry do to solve the city's big problem of small condos?
In Toronto, towers upon towers of small condo units fill block after block downtown. Condo sales across the board are slumping in Canada's biggest cities as supply soars and demand shrinks. And the hardest units to sell are often the tiniest. Bachelor and one bedroom units in the Toronto area made up 20 per cent of condo sales in the last quarter of 2024, according to the Toronto Regional Real Estate Board. Bigger units, such as one bedroom plus den, two bedrooms and two bedrooms plus den, collectively made up 72 per cent of sales. One bedrooms are also fetching less on the rental market — the average rent for a one-bedroom apartment in Toronto has dropped 5.8 per cent year-over-year, according to data from rental unit listing site while that decline is even steeper in some other Canadian cities. Toronto-based real estate broker John Pasalis says one-bedroom and studio spaces are the hardest to move in the current market. "Especially very small one bedrooms, under 550 square feet," he said. "Demand is very slow." It's a trend that's been building for years, according to Christopher Wein, chief operating officer of Ontario-based real estate development company Equiton Developments. Over the last five years, he says developers have been building units that are too small to be comfortable, and the realities of the market are catching up with the industry. "Small is great from a price point perspective, but not if it's not functional, feasible or livable," Wein said, noting that the industry has figured out that it went too far in terms of the number of small units they made. Now, he says "the pendulum has to swing back." As the city's condo-buying market switches from investors looking to flip small units for a profit or use as rentals to end users who actually want to live in the condos they buy, some builders, real estate agents and other industry insiders are re-evaluating what once worked and trying to figure out how the current supply of smaller floorplans can be reimagined to meet demand for bigger units. It's something experts say is doable, but complicated, expensive and very much dependent upon what stage of development buildings are in. Wein says changing a condo's footprint is possible sometimes — he's redesigned several buildings in the past at various stages of the construction process, both with Equiton and other companies. But once a building is finished, he says, swaps can be really difficult to make, whether its being done by a builder or a single condo owner hoping to merge two units. "Now you are tearing things apart, you're doing a renovation," Wein said. "You have to look at how that affects not just the structural engineering, but also mechanical and electrical." WATCH | Why the condo market is plummeting during a housing crisis: Expansions require knocking down walls between units, which presents challenges. Wein says midrise buildings might have walls made of wood or steel, but most buildings over 12 storeys require concrete walls for support. He says merging units in high-rise towers is often "so complicated, so expensive, and it's going to require so much engineering solution, that we just shouldn't bother." In cases where Wein has removed walls, only part of the wall is made of concrete — then, it's a matter of finding the gaps and making the floor plan functional between the two spaces. But this still requires lots of work and results in waste — for example, ripping out one fully-functional kitchen which means all those fixtures and materials would end up as scrap. Pasalis, the real estate broker, says merging units does happen occasionally, but mostly in the luxury condo market. The average person looking to buy two units and merge them — especially two previously occupied condos rather than units in a brand-new building — would likely have a tricky time finding a place where that's possible, he says. "The probability of two units going on the market at the exact same time for sale that are well suited to be merged … that will be virtually zero." On top of difficult structural challenges, experts say the math also doesn't add up in most cases. According to Pasalis, smaller condos sell for more per square foot than bigger ones. Buying two small condos might cost about $1.2 million, he estimates, plus more to renovate and merge them. For close to that amount, he points out, you could buy a semi-detached house in Toronto's downtown, and of course, it would cost far less to simply buy a condo pre-built with multiple bedrooms. The only way the option might become viable is if the price of small condos falls significantly and bigger two or three bedroom units keep their value, Pasalis says, as folks buying and renovating condos would actually gain something from their investment. Helen Stopps, an assistant architectural science professor at Toronto Metropolitan University, says even if buyers could stomach the price and the extensive renovations required to merge smaller condos into larger ones, red tape might stop construction anyway. WATCH | Just how small is a micro condo?: Condos are built on a shared ownership model, where people own their individual units but invest and make decisions about the overall building as a group. Most construction in condos needs to be approved by the condo board that oversees building management, which Stopps says can make getting this kind of renovation done "incredibly hard." The cases where it makes the most sense sense is on a mass scale when people aren't living in the building, she says. So that means either in the pre-construction phase while the developer is still in control, or in vacant buildings where a single company or collective has bought the entire condo. Even if small condo units sit on the market for a while, Stopps says they'll eventually be sold or rented — though she notes prices might have to fall substantially before that happens. On some level, that means working with a small space to make it more livable. Things like movable walls or dividers, reconfigurable furniture and off-site storage units could all make smaller spaces more functional, Stopps suggests. Adding more shared amenities or public spaces to condos, she says, could also help people get some of the extra space they crave. Stopps also says it's up to provincial or municipal governments to incentivize developers to build more livable housing. Allowing developers to "do whatever they want in order to maximize their profits" is part of why we ended up with so many tiny condos in the first place, Stopp says, noting that because smaller units can be sold for more money per square foot, that's what developers choose to build. A "density bonus" from the government, or lowering development charges for condos that are planned with bigger units could help push developers away from micro-units, she says. On the development side, Wein says he and some other developers have started changing future projects where necessary to make units bigger in response to buyer demand. He notes that Equiton's project at 875 The Queensway in Toronto is a good example. Designs, zoning and approval were all done when Wein says he went back to the drawing board after realizing the units were too cramped and weren't matching what buyers wanted. That project, expected to be move-in ready in 2027, will now have 152 units instead of 177, with each unit becoming about 10 per cent bigger. Wein says it's the smart move, given the demand for bigger spaces doesn't seem to be going away. "You're far better off [adjusting now] than you are, you know, just forging ahead and hoping market conditions change."
CBC
20-05-2025
- Business
- CBC
What can Toronto's real estate industry do to solve the city's big problem of small condos?
Social Sharing In Toronto, towers upon towers of small condo units fill block after block downtown. Condo sales across the board are slumping in Canada's biggest cities as supply soars and demand shrinks. And the hardest units to sell are often the tiniest. Bachelor and one bedroom units in the Toronto area made up 20 per cent of condo sales in the last quarter of 2024, according to the Toronto Regional Real Estate Board. Bigger units, such as one bedroom plus den, two bedrooms and two bedrooms plus den, collectively made up 72 per cent of sales. One bedrooms are also fetching less on the rental market — the average rent for a one-bedroom apartment in Toronto has dropped 5.8 per cent year-over-year, according to data from rental unit listing site while that decline is even steeper in some other Canadian cities. Toronto-based real estate broker John Pasalis says one-bedroom and studio spaces are the hardest to move in the current market. "Especially very small one bedrooms, under 550 square feet," he said. "Demand is very slow." It's a trend that's been building for years, according to Christopher Wein, CEO of Ontario-based real estate development company Equiton Developments. Over the last five years, he says developers have been building units that are too small to be comfortable, and the realities of the market are catching up with the industry. "Small is great from a price point perspective, but not if it's not functional, feasible or livable," Wein said, noting that the industry has figured out that it went too far in terms of the number of small units they made. Now, he says "the pendulum has to swing back." As the city's condo-buying market switches from investors looking to flip small units for a profit or use as rentals to end users who actually want to live in the condos they buy, some builders, realtors and other industry insiders are re-evaluating what once worked and trying to figure out how the current supply of smaller floorplans can be reimagined to meet demand for bigger units. It's something experts say is doable, but complicated, expensive and very much dependent upon what stage of development buildings are in. Structural hurdles Wein says changing a condo's footprint is possible sometimes — he's redesigned several buildings in the past at various stages of the construction process, both with Equiton and other companies. But once a building is finished, he says, swaps can be really difficult to make, whether its being done by a builder or a single condo owner hoping to merge two units. "Now you are tearing things apart, you're doing a renovation," Wein said. "You have to look at how that affects not just the structural engineering, but also mechanical and electrical." WATCH | Why the condo market is plummeting during a housing crisis: Why the condo market is plummeting during a housing crisis 5 days ago Duration 5:59 Expansions require knocking down walls between units, which presents challenges. Wein says midrise buildings might have walls made of wood or steel, but most buildings over 12 storeys require concrete walls for support. He says merging units in high-rise towers is often "so complicated, so expensive, and it's going to require so much engineering solution, that we just shouldn't bother." In cases where Wein has removed walls, only part of the wall is made of concrete — then, it's a matter of finding the gaps and making the floor plan functional between the two spaces. But this still requires lots of work and results in waste — for example, ripping out one fully-functional kitchen which means all those fixtures and materials would end up as scrap. Pasalis, the realtor, says merging units does happen occasionally, but mostly in the luxury condo market. The average person looking to buy two units and merge them — especially two previously occupied condos rather than units in a brand-new building — would likely have a tricky time finding a place where that's possible, he says. "The probability of two units going on the market at the exact same time for sale that are well suited to be merged … that will be virtually zero." Financial issues and red tape On top of difficult structural challenges, experts say the math also doesn't add up in most cases. According to Pasalis, smaller condos sell for more per square foot than bigger ones. Buying two small condos might cost about $1.2 million, he estimates, plus more to renovate and merge them. For close to that amount, he points out, you could buy a semi-detached house in Toronto's downtown, and of course, it would cost far less to simply buy a condo pre-built with multiple bedrooms. The only way the option might become viable is if the price of small condos falls significantly and bigger two or three bedroom units keep their value, Pasalis says, as folks buying and renovating condos would actually gain something from their investment. Helen Stopps, an assistant architectural science professor at Toronto Metropolitan University, says even if buyers could stomach the price and the extensive renovations required to merge smaller condos into larger ones, red tape might stop construction anyway. WATCH | Just how small is a micro condo?: Just how small is a micro condo? 6 years ago Duration 1:01 Condos are built on a shared ownership model, where people own their individual units but invest and make decisions about the overall building as a group. Most construction in condos needs to be approved by the condo board that oversees building management, which Stopps says can make getting this kind of renovation done "incredibly hard." The cases where it makes the most sense sense is on a mass scale when people aren't living in the building, she says. So that means either in the pre-construction phase while the developer is still in control, or in vacant buildings where a single company or collective has bought the entire condo. What happens to these units, then? Even if small condo units sit on the market for a while, Stopps says they'll eventually be sold or rented — though she notes prices might have to fall substantially before that happens. On some level, that means working with a small space to make it more livable. Things like movable walls or dividers, reconfigurable furniture and off-site storage units could all make smaller spaces more functional, Stopps suggests. Adding more shared amenities or public spaces to condos, she says, could also help people get some of the extra space they crave. Stopps also says it's up to provincial or municipal governments to incentivize developers to build more livable housing. Allowing developers to "do whatever they want in order to maximize their profits" is part of why we ended up with so many tiny condos in the first place, Stopp says, noting that because smaller units can be sold for more money per square foot, that's what developers choose to build. A "density bonus" from the government, or lowering development charges for condos that are planned with bigger units could help push developers away from micro-units, she says. Developers responding to buyer demand On the development side, Wein says he and some other developers have started changing future projects where necessary to make units bigger in response to buyer demand. He notes that Equiton's project at 875 The Queensway in Toronto is a good example. Designs, zoning and approval were all done when Wein says he went back to the drawing board after realizing the units were too cramped and weren't matching what buyers wanted. That project, expected to be move-in ready in 2027, will now have 152 units instead of 179, with each unit becoming about 10 per cent bigger. Wein says it's the smart move, given the demand for bigger spaces doesn't seem to be going away.
