The new home market in the Greater Toronto Area (GTA) experienced a quiet March, with sales plunging 67 per cent year-over-year to 1,960 total new home sales, reported the Building Industry and Land Development Association (BILD). This figure was also 21 per cent below the 10-year average for the month of March.
The 1,960 homes sold include 1,649 condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units, according to Altus Group, which provides BILD with new home market intelligence. March condominium sales were below underlying demand levels, according to Patricia Arsenault, Altus Group’s executive vice president of research consulting services.
“Some of the demand that might have normally occurred this year was brought forward last year, helping to set a record year for condo apartment sales in 2017,” she said, in a press release. “After an adjustment period, we expect the monthly pace of condo apartment sales to improve.”
There were 311 single-family homes, including detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) sold in March, up on a month-over-month basis compared to the 265 sold in February. However, March’s single-family home sales were down 77 per cent compared to March 2017 and 79 per cent from the 10-year average.
This year’s new home sales numbers reflect more typical activity in the housing market after experiencing unusually strong new home sales in 2017, noted David Wilkes, BILD’s president and CEO. Last year was the fourth strongest year for new GTA home sales in nearly two decades.
“This year, the cumulative effects of government measures to cool the housing market are likely keeping many potential buyers out of the housing market,” said Wilkes. “Many may simply be taking a wait-and-see approach.”
In March, the benchmark price for new single-family homes fell slightly to $1,207,832, but this price was still 7.4 per cent higher than last year. Meanwhile, the benchmark price for new condominium apartments continued to climb to $742,801, which was a 39.4 per cent increase year-over-year. This increase in condo prices is likely due to the benchmark unit size increasing to 900 square feet from 800 square feet one year ago, while the benchmark price per square foot has increased from $666 last year to $825 in March 2018.
Low supply of new housing assisted in keeping prices high. The supply of both condominium apartments and single-family homes fell again in March, with total remaining new home inventory at 12,457 units, consisting of 8,756 condominium apartments and 3,701 single family homes. Based on the pace of sales in the past year, this amounts to about four months’ worth of inventory, far below a healthy new home market’s nine to 12 months’ worth of inventory.
“If we want to see more housing that people can afford, we need to address this region’s housing supply problem,” added Wilkes. “And for that to happen, we will all need to work together to remove barriers to development, which include outdated zoning that doesn’t support intensification, miles of government red tape, and lack of critical infrastructure.”