Homebuying

Toronto’s condo market is on fire as sales of single-family homes evaporate

By: Jessica Mach on December 22, 2017

In November, single-family home sales in the Greater Toronto Area were lower than they had been for any November since at least 2000, the Building Industry and Land Development Association (BILD) said Thursday.

Sales of detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses) were down 82% compared to last November, and 79% below the ten-year average for the month, according to BILD’s new home market intelligence arm, Altus Group.

These sales also accounted for only 9% — 312 units — of total new home sales for the month.

Sales of single-family homes in the GTA have dropped substantially this entire year — down 58% from 2016, and 49% below the ten-year average.

This doesn’t mean that Torontonians are reluctant to buy, though. A report from the Canadian Real Estate Association last week said that November was the fourth month in a row where housing sales increased across the country. Sales in the GTA accounted for most of those sales, increasing 16% month-over-month.

Most of those sales were for condos, which prospective homeowners tend to favor because of their affordability compared to single-family homes. And prices keep getting higher.

The benchmark price for new condo apartments was $702,992 in November 2017 — a whopping 42.6% jump from November 2016’s benchmark price of $493,137

Many experts believe that the uptick in sales — unusual for the season, as less people tend to buy in the winter — can be explained by people rushing to buy before the OSFI’s stress test rules kick in on Jan. 1.

In November, the benchmark price for a new single-family home was $1,223,610, 25.1% higher than last November’s $977, 890. Meanwhile, the benchmark price for new condo apartments was $702,992 in November 2017 — a whopping 42.6% jump from November 2016’s benchmark price of $493,137.

One of the reasons that prices are so high is that inventory is low. BILD defines a healthy new home market as one that has nine to twelve months’ worth of inventory available for purchase. In the GTA, there is currently only three to four months’ worth of inventory on the market.

“The decline in new single-family home sales in the GTA relative to last year in large part reflects low inventories of new homes available to purchase — and in particular, the lack of more affordable product,” said Patricia Arsenault, Altus Group's executive vice president of research consulting services.

“As well, with more resale single-family homes available to purchase compared to last year, many potential new home buyers now feel they can take the time to explore their range of options more carefully.” 

 

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