While prices across most property types have remained relatively flat in 2018, there does seem to be one exception.
The price of condos has been on the rise month-over-month in almost every major housing market this year, as buyers shift their focus from single-detached to high-rise homes.
The reason? Affordability. While many first-time buyers have been priced out of the low-rise home market, condos—for which the average price hovers around the $500,000 mark in some cities—are relatively accessible entryways into the housing market.
This shift in preference was highlighted by the Teranet-National Bank Composite National Price Index, which rose 1 per cent in May, bolstered by strong condo sales.
“It is true that this stabilization was accompanied by a shift of price momentum in favor of condos,” said National Bank Senior Economist Marc Pinsonneault in a statement.
First-time buyers have found themselves with less purchasing power this year, as the result of a mortgage stress test that went into effect on Jan. 1. According to Pinsonneault, it’s a big factor in the rise in demand for condos.
“Given the high price level for other types of dwellings, rising interest rates and tighter mortgage underwriting standards, this shift should not be surprising,” he added.