Soaring house prices continue to drive more first-time buyers into the red hot condominium market in the Greater Toronto Area. Recent figures from RealNet show the number of new condos and low-rise houses sold in the first three quarters of 2014 jumped 54 percent over the same period last year, to a total of $18 billion.
Furthermore, sales of pre-construction condos climbed 39 percent in September alone, year over year, with 2,262 units sold compared to 1,393 a year ago representing the second-strongest September on record, notes RealNet.
In the midst of all the sales activity, however, many new condo buyers and owners alike are still spooked by the class action lawsuits that seem to be creeping out of the woodwork.
Condo developers in and around Toronto have become familiar with lawyer Ted Charney, who in late September launched his sixth class-action lawsuit seeking damages of $29 million over faulty water valves causing wildly fluctuating water temperatures in a Charles St. condominium project.
While none of the lawsuits have gone to court yet, four of them seeking compensation for falling glass and faulty balconies, have been certified by the court to proceed.
While Charney notes in a Toronto Star article that most developers are reputable and experienced builders, he expects that there will be more lawsuits filed in the future because purchasing condominiums is the only feasible option for new buyers as housing costs in Toronto have doubled over the past ten years.
The odds of more legal action are good if one considers that there were 53,614 condos under construction across the GTA as of June, with another 31,372 in the sales stage and a whopping 277,108 in proposal, according to data from Urbanation.
In July 2012, the government amended Ontario’s Building Code to provide requirements related to the design and installation of glass balcony guards, including the type of glass that can be used and how they can be framed.
But not everyone is convinced that's enough to solve the construction standard issue.
Ted Kesik, a professor of building science at the University of Toronto, told Reuters recently: "Many buildings that went up during the beginning of this condo boom are already facing high repair costs, and in many cases, lawsuits, because they are built so shabbily. The life cycle is clear. They are okay for the first five years, they gradually deteriorate by year 10 … and don’t even reach year 20 before significant remedial work needs to be done. In 50 years these buildings may well become an urban slum."
That may be overly harsh on Kesik's part, but 'buyer beware' is still the mantra condo buyers have to adhere to.