I often hear concerns about a condo bubble in Toronto based on the amount of construction. Every year there is about 18,000 new condos completed in the GTA. That amount of new inventory added each year has been keeping prices from rising too much and preventing a pricing bubble. 


At first glance, most people might think the blue line on the graph below is the condo prices, but it's not. The blue line is the median price of a detached home in Toronto. The orange line is the median price of condos which looks like slow and stable growth to me. Seems like something really changed in 2011, detached home prices started to rapidly accelerate. This Spring's market is off to a tear for detached homes. I'm seeing bidding wars setting record prices for homes. The condo market is much more balanced as you can see below.


Understandably, most Toronto home owners are very happy with the appreciation they've seen. The median price of a detached home in Toronto in March was $815,750 but the average price was $1.042M. These prices put detached homes out of reach for many people looking to upgrade from a condo but a townhome is a nice stepping stone. I believe the unusually low interest rates are responsible for this rise in home prices. But nobody knows the long term result of being able to get a mortgage rate around 3% for 13 years in a row. I feel condo prices will continue to be stable because we have continued steady demand equaling supply. I think the best thing that could happen for the long term health of the housing market is a nice long plateau.