We never expected to see such a significant price increase like this. What caused it? What changed in 2016 from 2015 to have the condo market increase so much?

The median price of a condo in December was a record setting $485,000. Compared to the December 2015 price of $400,000, it's a  year over year increase of 21%. Let's dig deeper into what may be behind this...

Most Decembers have about 850 suites for sale. This December we had only 310 available for sale, so the inventory was less than half of what we typically see. Even during the year of the financial crisis, we had more inventory.

The number of condos that sell is always lower in December as you can see by the troughs in the graph above. You can see the trend developing of both the troughs and peaks increasing since 2012.

Downtown condos are in a strong Seller's Market. The cause is the extreme shortage of condos on the market for sale along with a healthy level of demand. Their have been some good articles written about all the possible factors contributing to the rising prices, including a study by RBC:

- low interest rates
- higher incomes
- an increase in the percentage of incomes used to make mortgage payments
- larger down payment gifts from family members

We also think other factors contributing include:

- low Canadian Dollar encouraging foreign Buyers
- more people choosing investment properties over stock market
- geographic constraints (greenbelt and lake)
- limited sprawl due to environmental and infrastructure
- increasing population, 100,000 people joining the GTA per year
- investors buying condos to use as Airbnb's 

We expect to see some relief to the condo inventory in the coming months as the Spring market begins but I don't expect to see lower prices. Will it be enough new inventory to keep prices from rising even further... probably not.