Imagine you had $4 million to spend on a new downtown home. In New York, one of the world’s great cities, you could buy a three-bedroom, 2½-bathroom apartment on the edge of Central Park. If you were feeling more frugal you could move a couple of blocks away and snatch up a penthouse with a full view of the park for less than half the price, $1.5 million.
Or you could spend the money on a three-bedroom, four-bathroom suite at the Residences at the Ritz-Carlton with a full view of . . . Toronto. A two-bedroom, two-bathroom suite in the same building costs as much as that New York penthouse, and a survey of the Multiple Listing Service shows over 100 condos in Toronto selling for $1.5 million or more.
The multi-million-dollar New York price tags for some condos in Canada’s biggest city speak to a dangerously overheated market, say some observers. In Ontario, construction of multiple urban units (which mostly means condo buildings) was up a staggering 50 per cent in March from the previous month. In Toronto alone, there are nearly 48,000 units under construction. In 2011, the city counted 132 residential high-rises under construction—more than New York, Chicago, Miami, Boston and Dallas combined. Later this year, that number is expected to reach 189, according to housing market analyst Ben Rabidoux.
For some, the cranes that have taken over parts of the city skyline are a sign of a large unmet demand for housing, driven by a growing population and urban policies meant to constrain the city’s horizontal development in favour of building upward. Others, though, see a bubble market that is headed for a bust. In the first three months of this year, resale prices for condominium apartments have fallen for the first time since 2009, says Rabidoux, adding: “It’s potentially a disaster waiting to unfold.” If that happens, a few buyers will no doubt regret spending New York prices for a Toronto condo. But at least they’ll have the bragging rights of a Ritz-Carlton address—and plenty of bathrooms.