housing starts

Developers dampen risk by reaching sales targets

Wednesday, July 20, 2016

According to the recent Toronto Housing Market Insight Report from Canada Mortgage and Housing Corporation (CMHC), most condominium developers in the city begin construction only when they have sold over 70 per cent of inventory, dampening risks associated with speculative building.

The report finds that 79 per cent of condominium apartment projects only start construction after at least 70 per cent of units are sold. According to the report, projects that start construction significantly under that 70 per cent sales threshold tend to be smaller in size or an additional phase of a larger development.

“Condo building activity in Toronto seems to be well managed,” said Dana Senagama, principal market analyst in the GTA for CMHC, in a press release. “In spite of this encouraging information, future inventory management remains critical.”

According to the report, much of the unsold inventory is concentrated in downtown Toronto and Markham, as condominium markets are more active in those regions. It also states that many of the projects that currently have a high level of unsold inventory began construction before reaching a sales threshold of 70 per cent.

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