Greater Toronto new home sales are off all-time lows, but not far from it. BILD GTA, a lobby representing homebuilders, noted a rise for new home sales in January. Last month may have seen an increase, but it was still very much below normal.
Toronto Real Estate Prices Are Still Diverging
Greater Toronto new home prices were lower for detached homes, and higher for condos. The price of a detached home fell to $1,130,046 in January, down 8.1% from the year before. Condos on the other had increased to $803,638, up 12.5% compared to the same time last year.
Toronto New Home Sales Rise 14%, Second Worst # In 6 Years
New home sales in Greater Toronto are on the rise, but are still light years away from normal. Altus Group reported 1,362 sales in January 2019, up 14% from the same month last year. Better than last year wasn’t a huge hurdle to clear though, it was the fewest sales since 2009. January 2019 is 34% lower than the median number of sales since 2005, so they’re still pretty light.
Greater Toronto New Home Sales
Total new home sales in Greater Toronto for January.
Source: Altus Group. Better Dwelling.
The City of Toronto proper followed the general sales trend. The City represented 729 sales in January, up 18.92% from last year. The number is still down 28.39% from January 2017 sales. Better than last year, but nowhere near the numbers the City is used to.
Greater Toronto New Home Sales
Total condo apartment sales in Greater Toronto for January, by region.
Source: Altus Group. Better Dwelling.
Greater Toronto New Home Inventory Rises Over 32%
The total number of homes for sale across Greater Toronto jumped last month. There were 15,530 new homes for sale in January, up 32% from last year. This number is also up 18.9% from January 2017 as well. The rise in inventory, especially when contrasted to sales, show much weaker demand.
Greater Toronto New Home Sales To Active
The ratio of sales to active listings for new homes in Greater Toronto, for the month of January.
Source: Altus Group. Better Dwelling.
The sales-to-active listings ratio (SALR) fell to a multi-year low for the month. Last month the SALR dropped to 8.77%, down 14% from the year before. When the ratio is above 20% it’s considered a seller’s market, and prices are expected to rise. When the ratio falls below 12% the market is a buyer’s market, and prices are expected to fall. Between 12 and 20 is balanced, and prices are just right.
Greater Toronto new homes are in a buyer’s market, but the remaining buyers are paying premiums. Only one in ten listings are being absorbed at these prices however, so keep an eye out for a shift. Typically prices will adjust to demand, or demand will climb to match prices.
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First goes volume, then comes prices.
I prefer to look at it this way. The developer is paying a mortgage on empty land, reducing profitability everyday they don’t sell. The question is who can wait longer, a developer or a Boomer HELOCing their property for another rental to replace retirement yield they can’t find elsewhere?
The financing issue becomes especially problematic if the developer has to use a private mortgage, and is paying interest through the nose for the property.
‘No! That can’t be!! I need my average Toronto house to be worth $3.6M by 2026 (sooner if possible). Is the promise still true?’ Says Joe Blow Canada, $60K annual income, just leased a silver 328 for $600 a month.
http://torontostoreys.com/2019/02/average-detached-home-toronto/
Detached homes dropped $13k from December according to that number. 1 in 10 people have no perception of money apparently, because I’d like household to work a whole month less to get the same thing.
“Toronto-Dominion Bank (TD) & Canadian Imperial Bank of Commerce (CM). Two of Canada’s biggest lenders reported first quarter earnings which fell short of market forecasts.”
So that’s 5 out of 6 banks that reported this week have missed earnings. Laurentian Bank was down 9% yesterday…
Globe and Mail is reporting buyers are just waiting for spring weather to appear. Are Canadians really that fickle? I don’t need a sunny day with green lawns to shop for a home. I’ll go visit a home in a blizzard if the home looks promising and I’m in the market.
But I’ll never buy from blueprints, maybe that’s the population the Globe is talking about.
Is not that cold in hongcouver and nobody is rushing to buy anything…doubt it will change in two months or so….tons if inventory and barely any sales
they were saying the same thing last year. ‘Market is delayed will rebound in fall’ and it didn’t. Wishful thinking at this point. All I see is a huge spike in inventory in summer. I am on the sidelines looking to buy a house and am hoping prices come down in summer. If the market doesn’t improve I am moving to the States. I cant justify living here with the current house prices.
Samesies. I’d move in a heartbeat if the SO and I weren’t attached to family and friends. We both have careers in fields that are in demand outside TO, so I’m certain that even with a pay-cut we could live significantly better lifestyles anywhere else… except maybe Van… Oh well, in the next life I guess.
i just started my paper work last night to move to New Zealand. My wife and I earn 180k/yr here even if we get a 60% haircut in salary by moving we can still have a pretty decent life. 450k for a house close to a city, good weather and less time spent in traffic. 8 years ago Toronto was probably one of the best cities in the world. Now its a headache. Recent GDP numbers will keep interest rates low and fuel the asset bubble.
Yeah I’m honestly unsure what I even believe will happen anymore… If rates stay low will that continue to fuel the bubble? Japan (obviously with very different economy and demographics) has seen real estate values decline even with perennially low rates. Part of me thinks most of the fuel may have already been put into our fire when rates were at 0.5%, but maybe that is wishful thinking. I don’t know if prices will decline, but at some point people really do need to be able to afford to live in these houses and I simply can’t comprehend how prices can continue to appreciate substantially. Do we need to see massive job losses here for that to happen?
Either way, I’d be curious to hear the input of others who know more about macro events and bubbles.
I am expecting some kind of migration out of Canada same as during the internet boom of 2000. I expect Canada will lose again its best, most capable people. There is too much inflation in Canada. no good job opportunity and no good life opportunity. As Canada collapse capable will leave.
Eventually international investor will take notice of the Canadian collapsing housing market and collapsing banks shares because of bad loans. This will result in Canadian currency devaluation and even more inflation. I cannot blame people to want to protect them self and leave Canada. High immigration number won’t fix this problem, it will make the problem bigger. This is how personally I see the future for Canada
Me too!
I read an article (perhaps the same) that suggested its because people don’t want the hassle of trying to maneuver or park in tight streets with snowbanks. If I’m buying a property for the long term I’d rather know how crap parking is going to be in the winter LOL.
804,000$ for a condo! Is that average/medium/benchmark?
Regardless, it’s a total ripoff for what you are getting!
GTA is not the center of the World. It’s another big city like many others. Prices dropping all over the World. Toronto will not escape the cycle!
Of course, in the 416, a new home is $2.5 mil + (for >3500sq ft) and sales are not brisk vs the inventory that has accumulated. It’s the only segment where there is oversupply, but even at this slow pace it may be cleared within 1 year to a more normal level, given the reduction in price of about 20-30% from where they were 2 years ago. From there, it will be up and up, but in a more measured way. This is the segment where the bulk of the price drop has occurred. But not surprisingly so. In 2016-17 it was possible to make more than 1 mil profit/unit on these homes. Buy a teardown for 1.2 mil, build 4000 sq ft for 800k and sell for $3.5 mil. 1 mil clear after financing costs.It was for this reason that teardowns quickly went up 2-300k in just a few months, since there was so much room to still make a good profit. Well, you wouldn’t expect that to last, given the constraints on credit, so we are back to where we were before that spike occurred. Compare this to California, where some builders are still hanging on to inventory from 10 years ago, as the overbuilding was so out of hand in areas where now there’s little demand for monster homes. Not gonna happen in Toronto.
$200 sq/ft to build a house from scratch you can sell for $2.8 million in the 416? You are going to be spending a lot more than that.
Guess who was eligible to buy a $3M house? Foreigners who’d pay in cash and not pay taxes in this country? With my current family income close to 200k,im having trouble getting preapproved for $600k. It is an insane market.