Welcome to my blog on housing, culture, and design! I’m Steve Fudge, and I’m celebrating my 35th year as a realtor and property consultant in Toronto, Ontario, Canada.
As someone who believes housing is a right, not a privilege, in 2018, I started doing deeper dives into the number of new condos snaking their way through the approvals pipeline. Why? Because I was shocked by the enormity of new condo projects being launched, and/or under construction, and/or taking delivery. The appetite for new condos was voracious, and as the alarm bells tolled ‘Housing Crisis!’, critics were accusing developers of catering to investors – whether they be Mom & Pop investors or global Real Estate Investment Trusts – at the expense of first-time Buyers desperate to get a toehold on the property ladder. With the flow of capital into the Toronto real estate market peaking in 2021, it turns out the critics were right, because when the Bank of Canada started increasing interest rates in March 2022, Buyers of preconstruction condos all but evaporated. In fact, the headline in today’s Toronto Star tells it like it is: “In Toronto’s Core, Only 25 New Condos Sold Last Month As The New-Home Market Continues To Crater.” Ouch!
According to Urbanation, the number of condo completions in the GTA reached a record 22,473 in 2020, fell to 13,885 in 2021 due to pandemic-related supply chain disruptions and construction delays, and soared to 32,000 in 2022 (in addition to 7,740 purpose-built apartments, which is the highest number of completed units in more than 30 years), with 24,117 unit completions in 2023, 24,386 unit completions in 2024 and – get ready! – 29,800 units in 2025. That’s 146,000+ condo completions in the GTA over 6 years, or 16 percent of all the condos built over the past 60 years. Wowsers!
To provide more context, when the Bank of Canada began raising interest rates in March 2022, about one-third of the 146,000 Toronto condos scheduled for completion by the end of 2025 had been delivered. Over the following 16 months, as the Bank of Canada implemented 9 additional interest rate increases (to a total of 475 basis points), an additional one-quarter of the new condo supply moved into occupancy. It was during this time that the risks associated with purchasing a condominium preconstruction became glaringly evident. The once brisk trade of Assignment Sales – where original Buyers assign their Agreement To Purchase with the developer to a new Buyer for a profit – dried up. In fact, even when the original Buyer was willing to forgo any profit or, in several instances, to forfeit their 20% down payment to extricate themselves from their contractual obligations to the developer, the assignment market remained unalive. Why? Because the pace and cumulative size of the rate hike from near zero to 4.75% in just 16 months was unprecedented in modern central banking history in Canada. The escalation in interest rates instantly eroded the value of all the bricks and mortar in our hugely tethered asset-based economy. Mortgage appraisals on recently completed condos were coming in at 80% of the unit’s original preconstruction purchase price. The higher interest rates pushed up the benchmark interest rate of the mortgage stress test, shrinking the purchasing power of previously prequalified Buyers. In many instances, the preconstruction Buyers didn’t have additional capital to make up the shortfall between their original purchase price and the new, lower appraised value, so they could remain uninsured borrowers.
On The Loonie Hour – a macroeconomic podcast covering newsworthy events across the globe and the impact on Canadians – in Episode 126 on March 10th, 2024, called – Canadian Businesses are Failing at the Highest Rate Since 2006 – they discuss the emerging practice of “blanket appraisals” by big banks on new condos. These big banks are setting blanket appraisals on new condos that are aligned with the original sale prices of the buildings, rendering a new appraisal unnecessary. In the podcast, they cite situations where Buyers who originally purchased a unit pre-construction have forfeited their deposit and been released from their contract, and the new Buyer who has purchased said assigned unit at the original purchase price less the deposit is closing with 20% down, but then going back to the bank and refinancing based on the original blanket appraisal sum. This effectively means the unit is then financed at 100% Loan-To-Value. This smoke-and-mirrors tactic is similar to banks helping homeowners extend the amortization period of their mortgages to align with their original monthly payments, even if it means they’re not paying the full interest cost of their debt, which means their mortgage is getting bigger, not smaller. And the practice of banks allowing homeowners to consolidate their credit card debt by adding it to their mortgage, which may already be in negative equity. I don’t want to suggest that these homeowners should be forced to sell, but I do want to point out that these practices are not permitted under the rules of the Office of the Superintendent of Financial Institutions Canada.
Although interest rates stopped rising after the last increase in July 2023, the Bank of Canada held them steady for 11 months until June 2024, when it reduced its overnight interest rate by 25 basis points. Since then, we’ve seen four more cuts to interest rates, each by 25 basis points, in 2024, and four this year – two by 25 basis points and two interest rate reductions of 50 basis points over the summer. Of course, everyone is relieved to see these incremental drops, especially all of the new condominium Buyers taking delivery of their units in 2024 and 2025. Although interest rate cuts have brought the policy rate down to 2.25%, a level closer to the mid-2010s (around 3-4.5%), but still higher than the record lows of the 2020s (e.g., 2.79% in 2021), the Toronto real estate market hasn’t had much of a heartbeat, with 2025 poised to be one of the worst in two decades. Since 2021, when prices peaked and a record number of properties sold, the real estate industry has been running on fumes, generating just over 50% of its 2021 income each of the last 4 years. The reason lay squarely at the feet of the second coming of Donald Trump as US President, whose combative nature, misguided love for tariffs, and desire to annex Canada as the 51st state prompted many Canadians to press pause on purchasing real estate and see whether our economy unravels, leaving the Toronto condo market in a precarious state.
Unfortunately, I worry the condo market will get worse. The data shows that 80% of new condo buyers who put down 20% on their purchase are in negative carry, which means the rental income does not cover the mortgage payment, common fees, and property taxes. The average shortfall is about $600 per month, but for 30% of Buyers, it exceeds $1000 per month. When the Toronto real estate market was firing on all cylinders, speculator investors were willing to endure negative carry because values were soaring. It was worth the risk. However, when values flatline or decline, being a landlord of a poorly designed, poorly constructed, high-density crackerjack box in a sterile placeless landscape becomes a terrible investment. Right now, the cap rate for a Toronto condo is currently around 3.75% to 4.25% – (which was appropriate when the market conditions favoured Sellers, not Buyers, but the current crappy market conditions mean Sellers should anticipate incoming investors seeking a better return on their investment, like a cap rate in the range of 5% to 5.5% which is not unreasonable). This means that the Net Annual Rental Income (say your tenant pays $2500 per month = $30,000 a year gross) which, after deducting the annual property taxes (est $2800/year), the monthly common fees (est $725/month) for 12 months (= $8700/year), plus any additional costs payable by the owner (such as property management services (est $2400/year), accounting (est $600/year), an insurance rider for custom upgrades in the unit (est $350/year), repair and/or cleaning costs (est $800/year) (Total annual costs $15,650 From Annual Rent of $30,000 = Net Annual Rental Income –> $14,350) should be providing you an income (also called the Cap Rate) equivalent to 4% of the value of the condo. Based on a Net Rental Income of $14,350, this extrapolates the condo’s value to $358,000. Well, only a handful of condos have sold in this price range this year, and they are not generating a rent of $2500 per month, which means not only are the current owners of new condos in negative carry, but condo prices have to plummet even further just for an investor to get a 4% return on their investment. If you can put your money in a Guaranteed Investment Certificate when current rates for 5-year GICs are hovering around 3.5% to just under 4%, why would you lock up your money in bricks and mortar when the property has to increase about 7% just to recover your buying and selling costs, and you run the risk of selecting a tenant who knows the Residential Tenancies Act inside out and intentionally bleeds you dry? (Per Openroom.ca data, landlords with tenants who stop paying rent incur an average loss of $15,863 plus months of duress).
Today, anyone who ever bought a condo in Toronto is seeing its value erode from its 2021 peak value (including those that purchased the contract from a developer in advance of it being built), and everyone involved in any aspect of the shelter industry are facing financial challenges or risk of being laid off – whether they’re employed in architecture, urban planning, construction, finance, real estate development, a retailer selling appliances, furniture or window coverings, or real estate.
Fortunately, just as I witnessed in 1989 when the Toronto real estate bubble burst (because, yes, too many condos), our market will recover. If you’re curious, here’s my post When Dreams Of Domesticity Became Nightmares: A Recollection Of The 1989 Toronto Housing Market Crash. Will it take over a decade to crater, flat line, and then rise from the ashes as it did back then? It’s not a prediction I want to make, but it will be a bumpy ride in the immediate future.
In the meantime, although Sellers of freehold housing across the GTA are having to adjust their expectations due to the ripple effect of a cratering condo market, they’re in a much better position because Old Toronto’s destiny for the next dozen decades is to tear down old houses to build new condos, even if it’s taking 1 single family lot to create 4 as-of-right units. As this happens, owners of single-family dwellings will see products like theirs become scarcer and even more coveted, fueling price escalations we can’t fully fathom.
This is why the Business Improvement Association of Oakwood Village is, how shall I say, ‘on trend’ because in their own words, they’re an “old village with new ideas”.
I love that.
It’s a neighbourhood with history, one that has adapted to changing times and become a coveted place to live in Toronto.
Take, for example, the multiple developments underway in the Oakwood Village area, a growth boom tied in part to the arrival of the Eglinton Crosstown LRT. Density is essential to the growth of urban neighbourhoods, and when development is strategically planned around infrastructure like transportation, there is upside for stakeholders across the board. Housing with access to transportation naturally attracts more residents, and with them come shops and vendors that provide more amenities for everyone. And for current residents, the area they live in becomes more valuable and sought after because easy transit access makes it a coveted location. It certainly already appeals to commuters with vehicles, given that the village is bordered by three of Toronto’s major transportation arteries: Eglinton Avenue West, Dufferin Street, and St. Clair Avenue West.
Oakwood Village is fascinating in that turning to high-density isn’t only about creating more homes. It’s about creating at-home foot traffic to support many of the small, local businesses that Oakwood Village is known for. In fact, Oakwood Village has less high-density housing (or high-rises) than many other Toronto neighbourhoods of its size and age.
This next step in the area’s evolution is emblematic of how Oakwood Village’s community groups – and its residents – have been historically proactive in promoting walkable lifestyles. Recently, in conjunction with the city of Toronto, the village launched the Oakwood Village Streets Plan to enhance road safety for everyone, including cyclists and pedestrians. Phase 2 of the plan was completed earlier this fall, during which community feedback was collected, and plans to implement recommendations are underway. Initiatives like this, coupled with Oakwood Avenue’s designation as an Arts District and all that that entails, make it clear that, across the board, this community is on track to become a desirable pedestrian village.
Here are the new developments – proposed, planned, or already under construction, totalling over 3600 units that – given the state of flux the Toronto real estate market is currently in – may or may not be completed in the near future ( but surely, one day) in Oakwood Village:
1711-1741 Eglinton Avenue West
• A proposed 39-storey mixed-use condo, rental replacement & retail building
• 427 Units
• Designed by Kirkor Architects for Shelborne Capital
• Situated on the south side of Eglinton Avenue West, east of Northcliffe Boulevard and west of Glenholme
• A proposed 42-storey residential building
• 336 Units
• Designed by superkül for Stanford Homes
• Situated on the east side of Northcliffe Boulevard, north of Vaughan Road and south of Eglinton Avenue
• A 9-storey mixed-use building with commercial space on the ground floor and residential units above.
• 329 Units
• Designed by Turner Fleischer Architects for Tridel
• Situated on the intersection of Shaw & Dupont, one block east of Ossington.
• A proposed 40-storey condominium and a rental-replacement building
• 442 Units
• Designed by superkül for Stanford Homes
• Situated on the west side of Northcliffe Boulevard, south of Vaughan Road
• A proposed 34 & 4-storey mixed-use residential development
• 441 Residential, 64 Commercial Units
• Designed by RAW Design for Lindvest Properties
• Situated on the northwest corner of Dufferin Street and Ramsden Road
• A proposed 41-storey mixed-use rental and condominium building
• 446 Units
• Designed by BDP Quadrangle for KingSett Capital
• Situated on the south side of Eglinton Avenue West, east of Dufferin Street
• A proposed 50-storey mixed-use residential & retail building
• 687 Units
• Designed by Arcadis IBI Group for DMJ Eglinton Development Corporation
• Situated on the north side of Eglinton Avenue West, east of Dufferin Street
• A proposed 12-storey mixed-use condominium building
• 173 Units
• Designed by TACT Architecture for Canderel and KingSett
• Situated on the northwest corner of St Clair Avenue West and Alberta Avenue
• A residential tower (Market Rate rental)
• 51 Units
• Designed by Superkul for Oben Flats
• Situated on the east side of Vaughan Road just north of St. Clair Avenue West
• A proposed 17-storey purpose-built rental building
• 110 Units
• Designed by BNKC Architects for InnoDev Partners
• Situated on the west side of Vaughan Road just north of St. Clair Avenue West
• A proposed 12-storey rental apartment
• 80 Units
• Designed by Arcadis for NJS Capital
• Situated on the east side of Vaughan Road, south of Maplewood Avenue
• A proposed 8-storey purpose-built rental apartment
• 59 Units
• Designed by Superkül for Stanford Homes
• Situated on the southwest corner of Vaughan Road and Northcliffe Boulevard
• A proposed 8-storey purpose-built rental apartment
• 37 Units
• Designed by Superkül for Stanford Homes
• Situated on the south side of Vaughan Road, west of Northcliffe Boulevard
That’s over 3600 Units in 14 Buildings!
Oakwood Village is an area poised to grow while keeping an eye on small, simple steps that enhance livability. It’s got it all: high-density housing, access to public transit and transportation arteries, and village-style amenities that embrace pedestrian living.
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We have a fresh-to-market listing right at the heart of Oakwood Village, which, as you can see above, is densifying quickly! And no wonder, being just minutes from the Eglinton LRT. This means more shops, restaurants and amenities on the way too, to support the densification!
We’d be delighted to show you our fresh-to-market listing: A Sensational Sun-Kissed Semi In Oakwood Village, offered for sale at $939,000!
Located just south of Eglinton Avenue West and one block west of Oakwood Avenue, this heart-grabbing 2-storey 3-bedroom character dwelling (built in 1926) possesses all the charm and beauty you’d expect from a well-maintained Edwardian home. It’s steps to the shops of Oakwood Village, a 7-minute walk to the soon-to-be-open Oakwood Station on the new Eglinton Crosstown LRT, and a 7-minute stroll to the Fairbanks Memorial Swimming Pool, Park & Recreation Centre!
Situated on a 17.5-foot x 110-foot fully fenced lot with a generous patio, raised planter bed, and charming storage shed, the property shares a mutual drive with its neighbour to the north. This semi-detached brick-and-frame dwelling encompasses 1158 square feet on two levels above grade, plus an additional 501 square feet below grade.
Have questions? Interested in booking a private viewing? It would be our pleasure to assist. Contact James Ormston by email (james@urbaneer.com) or phone (647-388-1357).
Since 1989, I’ve steered my career through a real estate market crash and burn; survived a slow painful cross-country recession; completed an M.E.S. graduate degree from York University called ‘Planning Housing Environments’; executed the concept, sales & marketing of multiple new condo and vintage loft conversions; and guided hundreds of clients through the purchase and sale of hundreds of freehold and condominium dwellings across the original City of Toronto. From a gritty port industrial city into a glittering post-industrial global centre, I’ve navigated the ebbs and flows of a property market as a consistent Top Producer. And I remain as passionate about it today as when I started.
Please consider contacting me at 416-845-9905 or emailing me at Steve@urbaneer.com. It would be my pleasure to assist you.
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Celebrating Thirty-Five Years As A Top-Producing Toronto Realtor
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