The Building Industry and Land Development Association (BILD) released its monthly new housing report for February 2018, announcing that new condo prices in the Greater Toronto Area (GTA) continued to rise.
According to Altus Group, BILD’s trusted source for new home market intelligence, the benchmark price for a new condo unit last month was $729,735, which was 39.5% higher than the same period last year. This is also more than $15,000 above January’s benchmark price.
The benchmark price for a new single-family home was $1,219,874, which is slightly lower than the previous month but still 12.8% higher than February 2017.
“Tight supply continues to drive pricing levels,” says David Wilkes, BILD President and CEO. “This is especially true when it comes to the pricing of single-family homes.”
Supply actually increased last month to 12,896 units, 9,285 of which were condos and 3,611 single-family homes. This is approximately four months worth of inventory based on the last 12 months of sales trends. According to BILD and Altus Group, a healthy inventory would be 9-12 months.
“While single-family new home inventory is up from last year, it is still quite low in historical terms,” explains Patricia Arsenault, Altus Group’s Executive Vice-President, Research Consulting Services. “Moreover, there is a dearth of new single-family product that is affordable to a broader range of buyers – fewer than one in five single-family homes available to purchase at the end of February were priced below $750,000.”
When it comes to sales, there were only 2,159, which is much more than the 1,251 in January 2018, but much lower than the 5,243 sales in February 2017. It’s important to remember that the beginning of 2017 saw record sales, so don’t be too shocked by this significant difference in sales numbers.
There were just 264 new single-family home sales last month, an 82% year-over-year decrease. This is also 79% below the 10-year average. The 1,895 new condo sales is 17% above the 10-year average, but 50% lower than the same period last year.
“We encounter excessive red tape, out-of-date zoning, and lack of developable land serviced with critical infrastructure,” says Wilkes. “That is why, as the municipal elections approach, we’ll be initiating public conversations about ways policy makers, urban planners, our industry and residents can work together to address the GTA’s housing supply challenge.”
You’ve heard this story before – supply can’t meet demand so prices go up. The question is, how can the industry and government work together in order to address affordable housing?
We recently heard some decent ideas at the Sidewalk Toronto public roundtable meeting. There was talk of exploring more affordable materials and prefab solutions.
But, we’re starting to question what “rebound” means. We assume it means healthy growth of sales and prices, but that means we need the inventory. Where’s it going to come from?