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Tag Archives: low rise

GTA new home prices hit record $644,427

But new home construction slumps to new lows

Susan Pigg – Toronto Star

New home sales across the GTA hit their lowest level on record for May as average prices were pushed to new highs of $644,427, according to RealNet Canada.

The 26% decline in house sales year over year, but a 6% rise in new house prices, is being blamed on a dwindling supply of enough serviced land to meet demand for new low-rise housing, as well as government fees and charges which, a recent study showed, account for more than 20% of the cost of a new home.

Comment: If you listen to the “experts” the drop in new home sales is because the “correction” that never happened with resales has now “migrated” to the new home sector. Right… Not that land shortages, permit slowdowns, worker strikes and material shortages would have anything to do with it.

New high-rise condo sales declined 33% in May over a year earlier as developers held back launching new projects, according to figures released Wednesday by RealNet Canada Inc. on behalf of the Building Industry and Land Development Association. Average unit prices were down by two% to $431,955.

Comment: But we do not know WHY they held back. One faction says we are overbuilding, so fewer launches should be good, right? The other faction says that the sky is falling because fewer project launches means the new condo market is crashing. They need to make up their mind as to whether or not fewer new condos is good or bad. It cannot be both.

Most concerning about the May numbers is how far new home construction across the GTA has now fallen below historic norms, says George Carras, president of RealNet: Low-rise detached, semi-detached, townhome and rowhouse construction is now 33% below 10-year averages.

Comment: Not that fewer people are buying low rise homes or anything… Come on, Mr. Carras should know the demographic trends.

High-rise condo sales were down by 22%.

Housing affordability “will get worse before it gets better,” says Neil Rodgers, vice president of land acquisitions for Tribute Communities, noting that subdivision land prices have virtually doubled just in the last seven years in the face of provincial greenbelt and intensification policies.

Also impacting sales dramatically, on the new and the resale side, are tighter mortgage lending rules which have had a dramatic impact on first-time buyers.

Sales of homes in the price range, $400,000 or less, have slumped 18% in the five months up to the end of May, says veteran economist Will Dunning who has done an in-depth analysis of the Toronto Real Estate Board home sales for Canada’s mortgage brokers.

Comment: What about supply in that segment? Finding housing under $400k is harder every day. Hard to compare sales without knowing the listing data.

Move-up home sales, from $400,000 to $2 million, are down just 5% and homes over $2 million have held virtually steady, he found.

That may explain why GTA resale prices have continued to climb, says Dunning, with those higher-end sales propping up price gains.

Comment: Sure, when the sales volume trends to the higher segments, the average is pulled up. It does not mean the average house costs more, just that more higher-priced houses are selling. Or simply more higher-priced homes are for sale, thus accounting for more sales overall. Always rational reasons, people just need to stop and think for a second.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.

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