Low interest rates and affordability are driving Canadian demand for this property type
Demand for townhouse-type options has been robust during the pandemic as consumers have been taking advantage of low interest rates and affordable prices, according to a recently released study by Altus Group.
“While much of the focus tends to be on the condominium apartment product in the new home sector, the townhouse market has been building in importance with demand up or stable in most markets in the country,” the organization wrote in the November 2020 edition of its Housing Report.
Significant changes in consumer preferences were also cited as a contributor to the trend.
“As the markets deal with the second wave of COVID‐19, low interest rates, increased home buying intentions and shifts to flexible work a few factors are expected to keep demand resilient,” Altus said. “Many millennials delayed forming families and are in search of affordably priced options with room to grow, in a family-friendly built form.”
Intensified townhouse sector activity was particularly apparent in Vancouver and Toronto.
“Vancouver saw townhouse volumes double last year’s levels, with strong sales occurring at affordably priced townhouse developments in Surrey, Langley and Coquitlam,” Altus reported. “The Greater Toronto Area has seen a sharp increase in demand for all single‐family built‐forms, but townhouse activity has seen the biggest improvement over 2019. Outside the GTA in the broader [Greater Golden Horseshoe region], townhouse volumes are the highest recorded since tracking began in 2014.”
Mounting prices in these high-traffic areas will keep pushing younger Canadians towards townhouses as budget-friendly options, especially since the asset class can be typically found for less than $600,000 – far below the single‐detached average of over $1 million.
“New townhouse buyers are a diverse group, but the built‐form is becoming increasingly popular with younger consumers with or without children,” Altus said. “Given the single‐family price affordability challenges in the major markets, and economic uncertainty resulting from the pandemic, demand for affordable townhouse product is anticipated to continue to grow in Canada potentially accelerated by the changes brought by COVID‐19.”
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