Depending on your source of data, the average asking price per-square-foot for new condominiums in the Greater Toronto Area has increased for about 25 consecutive years. When the COVID-19 pandemic hit in March, and new condo sales in the GTA plummeted in April and May, it seemed the streak would finally be over.

With the borders shut down and immigration grinding to a halt, population growth will be considerably lower than in previous years. Job loss has been unprecedented, and the lockdown has bankrupted many small businesses and left their former employees looking for work. Data from Rentals.ca shows that average rent per-square-foot for condominium apartments for lease in the City of Toronto has trended down since the middle of last year, and the $3.65 per-square-foot figure in June is lower than 2018 rent levels. This multitude of negative factors should prevent investors from jumping back into the market, right? Let’s review the data and anecdotal evidence.

The resale housing market was not hit that hard in terms of a price correction during the early months of the pandemic. Demand clearly plummeted, but so did supply, as sellers held off listing their properties due to health concerns. Pricing is always sticky in the short term, as it often takes sellers several months to realize the market is not as hot as it once was, and the previous comparables for their properties are no longer valid. It is not always easy to evaluate the strength of a market over a two- to three-month period, as homeowners who merely want to sell (as opposed to being forced to sell for financial reasons) can pull back their listings and wait for the market to return. Soft market conditions often result in a higher share of distressed sales and lower share of luxury home sale during poor markets, making the results look worse than they actually are. The opposite is often the case in a strong market as well, as few $15 million-dollar homes sales pulled the average up.

When lockdown restrictions were lifted, demand flooded back into the market, and supply has yet to catch up. However, it appears that the single-family market is stronger than the condo market, as many prospective buyers are tired of being cooped up in small apartments and are seeking larger homes with more outdoor space.

Doctors have strongly advised people to stay six feet apart from each other and avoid large get-togethers, and some major employers have announced that they will continue the work-from-home setup, potentially permanently. The reduced need to be downtown, the desire for personal and private outdoor space, and a fear of being in crowded dense places may significantly reduce high-rise condo demand.

All of these factors, coupled with the onslaught of supply coming to the resale market over the next 18 months in the GTA, should be a deterrent for pre-construction condo investors, but it hasn’t. The first few new condo projects to launch during the pandemic were successful, and that has resulted in a number of developers planning to launch this fall.

As Baker Real Estate’s Barbara Lawlor mentioned on a Toronto Under Construction podcast, buyers see monthly cash flow as secondary to capital appreciation. Investors have had success buying a new condo prior to the start of the build, waiting anywhere from three to six years to take possession. Past experience has shown that prices have been higher when they’ve closed in comparison to when they’ve purchased. The last time it wasn’t the case was the early 1990s.

Investors continue to bet on Toronto. They see Toronto and the GTA as a highly desirable region, and with the instability south of the border, politically and socially, there is no doubt that Toronto will continue to attract top talent looking for opportunities and a high quality of life.

Some volatility is expected along the way, maybe even the end of the new condo price streak in 2021, but if a global pandemic can’t kill the Toronto new condo market, what will?

Ben Myers is the president of Bullpen Research & Consulting Inc. He produces market demand reports and residential pricing recommendation studies for builders, lenders and landowners in Toronto and Ottawa. He assists in the underwriting and due diligence of real estate development opportunities from a revenue and land value perspective. Find him on Twitter at @BullpenConsult