Greater Toronto new home sales cooled abruptly, as pent-up demand collapsed. BILD GTA and Altus Group data shows a sharp decline in new home sales for February. The drop hit the City the most, especially in the condo apartment segment. While the drop was sharp, total sales for the month were more in line with historic levels.
Toronto New Home Prices Rise Up To 25%
Homebuyers are paying big premiums for new homes, even if demand has tapered off. The benchmark price for a new single-family home reached $1,373,473 in February, up 25.1% over the past 12 months. For condo apartments, prices climbed to a slightly more modest $1,042,064, up 8.4% over the same period.
The price for both segments is at new record highs, but condos have a small footnote. For single-family homes, people are paying a record amount per sqft. For condo apartments, the price is actually lower than the peak achieved a few months ago. This means falling prices have been compensated with larger units.
Greater Toronto New Home Sales Fall 34%
Greater Toronto new home sales made a sharp drop, returning to a more typical level. There were 3,240 new homes sold in February, down 34.1% from the same month a year before. Breaking it down, single-family homes represent 1,617 of the units sold, down 28.7% from last year. Condo apartments represent the other 1,623 sales, down 37.9% over the same period.
Greater Toronto New Home Sales
Total February new home sales in Greater Toronto. Source: Altus Group, Better Dwelling.Home sales made a sharp decline largely due to falling demand for new condo apartments. Total sales of both single-family and condos combined are in line with the 10-year average. Condo apartments by themselves are lower, as buyer demand shifted to suburban single-family units.
City of Toronto New Home Sales Fall 39%
The decline in condo apartment demand impacted the City of Toronto mostly. The City of Toronto represented 865 of the new homes sold in February, down 39.2% from the same month last year. Single-family homes represent 77 of the city sales, up 327.8% over the same period. Condo apartment sales represent the other 788 sales, down 43.9% from last year.
Greater Toronto New Home Sales
Total new home sales in Greater Toronto for February, by region. Source: Altus Group, Better Dwelling.In general, new home sales are down a lot in the City of Toronto. The city is overrepresented in the decline, compared to other regions. There is a big surge in single-family sales, but it always represents a small portion of total sales for the city. The reduction in sales volume now puts York Region in the top spot for new home sales.
Inventory Is More Balanced Than Last Year
Greater Toronto new home inventory is also down, but not as much as sales have dropped. Total inventory for all new home segments in the GTA fell to 12,774 in February, down 1.0% from the same month last year. The decline puts the ratio of sales to active listings ratio (SALR) at 17.0% for the month, compared to 27.1% last year.
Greater Toronto New Home Sales To Active
The ratio of sales to active listings for new homes in Greater Toronto, for the month of February. Source: Altus Group, Better Dwelling.The sales to active listings ratio is often used as a proxy on price and demand. When it’s above 20%, the market is considered undersupplied. In this situation, prices are expected to rise. When it’s below 12%, the market is considered oversupplied, and prices are expected to fall. Between 12% and 20% means the market is priced correctly for current demand.
Greater Toronto new home sales fell sharply, especially in the City of Toronto. Much of the decline is confined to the condo apartment segment, where a well supplied resale market competes. Despite the better balance of inventory, people are still bidding up prices at a rapid rate.
Like this post? Like us on Facebook for the next one in your feed.
Hard to see anyone buying pre-sales when there’s condos sitting on the market for grabs at 20% lower. Especially since rent for these units are much cheaper than buying them.
Well, GTA prices should fall, its way over priced. However with so much money printed world wide other under value markets will see super growth soon.
Im seeing Ottawa as the next growth star, its the capital with large government work force which can withstand any recession. Most importantly its still under valued.
Wait until we get an austerity government, since government employees are the only ones seeing wage brackets rise with housing.
I can go to school, get a PhD, and work for the CMHC…and make $90k in Vancouver. Or I can get an entry level job, and make the same with 5 years of service. When the state is the only option for the average person, you face a collapsed economy.
People are leaving Toronto for smaller communities with cheaper home prices….now driving up those markets and making it unaffordable for locals to buy.