The Building Industry and Land Development Association (BILD) released its new home sales figures for July 2017, announcing that as prices continue to rise, sales and supply are still dropping.
There were only 1,752 new home sales in the Greater Toronto Area (GTA) in July 2017. That’s a huge drop compared to last year and it’s significantly below the 10-year average. A whopping 92% of the sales were in the new condo market, accounting for 1,615, which is 4% above the 10-year average.
That means there were only 137 new low-rise sales, which is the fewest we’ve seen in a month in decades! According to BILD President and CEO Bryan Tuckey, there is no need to panic.
“July is typically a slow month and many builders wait until fall to launch developments and bring product to market. We are not seeing an increase in unsold product sitting on the market,” he says. “In fact we are seeing new housing supply continue to shrink from what are already depleted levels.”
As of the end of last month, there were only 7,801 new homes available in the GTA, which is a record low. A year ago, there were 16,900 new homes on the market, and 10 years ago there were 28,358. 100 new low-rise homes were added to the inventory, but that only brings the total to 1,713. New condo supply saw a big drop down to 6,088 – compare that to the 15,298 units on the market in July 2016.
“You can’t buy what isn’t there,” says Patricia Arsenault, Altus Group’s Executive Vice President of Research Consulting Services. “There are typically few new home project openings in July and this year was no exception. And among the limited number of new single-family homes available to purchase in builder inventories, the majority are simply not affordable to most potential buyers. Trying to find a new single-family home today in the GTA priced at less than $1 million is a daunting task.”
She’s right. The average price of a new low-rise home in July 2017 was $1,316,693, which is 45% higher than the same period last year. It’s also a large increase from June 2017’s average of $1,250,262.
A new condo will cost you, too. The average price jumped $38,000 month to month, hitting $665,041. This is a 40% year-over-year increase!
The surge in condo prices is due to a lack of supply and growth in average size. Last month, the average unit size was 871 square feet, compared to 801 square feet last year. The average price per square foot has also spiked, hitting $764, much higher than the $594 average last year.
“One month does not a trend make,” says Tuckey. “While overall sales may have slowed down a bit in July, it is likely that things will pick up again in the fall as more product comes to the market, and despite the dip in July we are on pace for a record year for new home purchases in the GTA.”
There were 30,727 new home sales from the beginning of the year to the end of July, nearly 2,000 more than the same period last year. Nearly 80% of these sales were condos.
We’re excited to see what the busy fall brings – hopefully a surge in new home supply!