According to the first report of the year from the Building Industry and Land Development Association (BILD), 2016 was a record year for low inventory, high prices, and high-rise condo sales in the Greater Toronto Area (GTA).
Altus Group, BILD’s trusted source for new home market intelligence, reported that there was 29,186 new high-rise sales across the GTA last year, which is 30% more than in 2015. Durham, not known for its condo development, more than doubled its sales.
Overall, there were 47,161 new home sales in the GTA, 62% of which were high-rise and 38% low-rise. The year with the most new home sales on record is 2002; there were 53,660 new home sales, 72% of which were low-rise and 28% high-rise. It’s interesting how these figures have switched more than a decade later.
“The decline in low-rise sales in 2016 was due to the lack of product available to purchase, not softer demand,” says Patricia Arsenault, Executive Vice President of Research Consulting Services at Altus Group. “The fact that new product is being quickly absorbed, despite rising prices, shows there is continued buyer interest in purchasing new ground-oriented homes in the GTA.”
New home inventory dropped to dangerous levels last year. As of the end of 2016, there were only 13,670 new homes available in the GTA. Compare that to the 30,400 available 10 years ago. High-rise supply hit a 10-year low with only 11,792 units on the market. New low-rise supply dropped to 1,878, and only 742 of which were detached homes.
In 2006, there were 12,871 new high-rise units available across the GTA and 17,529 new low-rise homes, 11,602 of which were detached. Even though high-rise supply fell to a 10-year low, the inventory has remained pretty stable. We expect high-rise inventory to stay stable and sales to increase with stronger demand since buyers are being forced out of the unaffordable new low-rise market.
“We have a shortage of housing supply in the GTA that is approaching crisis levels,” says BILD President and CEO Bryan Tuckey. “Housing is selling as quickly as the industry can bring it to market and the lack of developable land that is serviced with infrastructure, excessive red tape, out-of-date zoning and NIMBYism are hindering our ability to bring more to the market.”
That’s the way it works – if supply doesn’t meet demand, prices go up. The average price of a new low-rise home in the GTA hit $995,116 in December 2016. Over the course of the year, the average went up $273,000. The average price of a new detached home was $1,264,604.
The average high-rise price hit an all-time high of $507,128. The average price per square foot went up to $614 and the average size of a unit went up to 826 square feet. A year ago, the average price per square foot was $584 and the average size was 775 square feet. The increase in condo size seems to be a reaction to more couples and families choosing to buy in high-rise condos instead of low-rise.
What will 2017 hold? Will the GTA actually run out of land for new detached homes? Will condos continue to transform into a more family-friendly option? Will new home prices continue to soar? We’ll be keeping our eye on the market all year!
Feature image: Construction beginning at Minto Westside last year.