The Building Industry and Land Development Association (BILD) released its new home market statistics for January 2018, announcing a drop in Greater Toronto Area (GTA) sales compared to last year.
According to Altus Group, BILD’s trusted source for new home market intelligence, there were only 1,251 sales in January 2018, which is the lowest since before 2000. Only 365 of these sales were single-family homes, meaning the vast majority were condos (more than 70%).
To put this drop in single-family home sales in perspective, there were 741 sales in January 2017 and 1,047 in January 2016.
“The January data continue a trend we have seen in the GTA,” says David Wilkes, BILD President and CEO. “Our industry wants to meet consumer demand in terms of the mix and type of homes available, but we are constrained by government policy. Affordability and the lack of supply of single-family housing remain a challenge.”
While sales drop, prices are still on the rise. The benchmark price for a new single-family home last month was $1,229,454, which is a year-over-year increase of 19.6%. Price growth was even stronger in the new condo market where the benchmark price was $714,430, which is 40.8% higher than January 2017.
“New condominium apartment sales in January were in line with typical levels for this time of year,” says Patricia Arsenault, Altus Group’s Executive Vice-President of Research Consulting Services. “New condos remain an attractive option for end-user buyers looking for more affordable homes, as well as for investors who are ensuring needed new rental supply continues to flow into a tight rental market.”
Don’t let that condo benchmark price of $714,430 scare you. There are condo options in the $300,000s, even in downtown Toronto.
When it comes to new home supply, levels are still too low to be considered healthy despite a small jump from December 2017 (11,397 units) to January 2018 (11,750 units).
The new home industry would consider 9-12 months of inventory healthy. Based on the pace of sales of the last 12 months, there’s only about 3-4 months of inventory available across the GTA.
“The GTA is expected to grow to 9.7 million people by 2041,” Wilkes says. “How are we going to house them? All levels of government and the building industry have a role to play in increasing housing supply and we need to work together to simplify approval processes, update zoning by-laws and service developable land so we can bring more homes to market.”
There were also new mortgage regulations that kicked in starting January 1st, so that probably slowed the market down a bit as buyers stepped back to see the repercussions. One market analyst says that he doesn’t expect the market to rebound until late summer or early fall.