New condominium construction continues in major cities across Canada. With the breaking of new ground every week and towering cranes overseeing development of properties, the condominium market seems to be growing and rising at a rapid rate. With new real estate starts significantly favoring condominiums, many residents are left wondering if the market is oversaturated with this type of housing, especially given that many buyers find the local market overpriced and household debt at an all time high.
Recent figures from the Canada Mortgage and Housing Corp. (CMHC) indicate that Ontario, Quebec, and British Columbia continue to see the highest number of condominiums coming to the real estate market. In 2013, Vancouver saw condos make up more than 60 percent of new housing starts, with Montreal and Toronto at both just over fifty percent.
So why so many condominiums? The answer lies in the number of non-native residents migrating to Canada. Various reports put immigrants anywhere from 400,000 to 600,000, often a huge discrepancy of almost 200,000 depending on the agency reporting the figures.
It has been reported that immigrants currently represent seventy percent of Canada’s population growth. Of those immigrants, half are in the prime home buying age range of 20-45. Last year, the level of immigrants in this younger age range grew at the fastest pace ever over a twenty-year period. Overall, in less than ten years, the immigrant population has almost doubled and estimates continually underestimate the number of new immigrants coming to Canada each year.
Whether it is for work, education or a path to a better life, some immigrants are choosing to rent a condominium for their place of residence. In particular, humanitarian refugees and students have a propensity to rent as opposed to buy a residence. Given that home prices are overvalued by up to seventy-five percent, the rental market is starting to see a higher demand. Moreover, condominiums are in especially high demand. With new buildings boasting great access to local transit options and in-house amenities available to tenants, condominiums are a good low-maintenance choice while still offering high-convenience.
Some new residents to Canada, particularly those relocating to the country more permanently for work, are looking to the condominium market as a key entry point for investing in the local real estate market. Given the urban environments of their respective major cities and the high entry cost to home ownership, condos are a preferred choice for many homebuyers, and thus sellers.
Builders, buyers, and renters agree that the supply of condominiums often does not meet current demand. The number of new immigrants each year is offsetting the decline of the number of native Canadian younger generation buying homes. Given the annual increase in the number of immigrants to Canada, many argue that the condominium market is far from being oversupplied. It looks like locals will have to put up with condominium construction for the near future.
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