Short Supply Keeps GTA New-Construction Home Prices High in March
Tight supply and demand from a growing population continues to buoy the cost of new construction homes in the Toronto area but belies a housing market that is badly out of balance, says the head of the building industry association.
“Until we get alignment on how to fix the supply problem, we’re going to continue to have challenges within the housing market,” said Dave Wilkes, CEO of the Building Industry and Land Development Association (BILD).
Single-family home prices, including detached, semi-detached and townhouses, rose 7.4 per cent year over year in March to $1.207 million, although they dropped about $12,000 compared to February.
Condo prices increased more dramatically — rising 39.4 per cent year over year to an average cost of $742,801.
Overall there were 1,960 new home sales in the Toronto area in March, most of them condos, according to BILD.
Single-family homes accounted for only 311 of total new home sales in March. That’s up from 265 in February but down 77 per cent year-over-year and 79 per cent below the 10-year average.
Most condo sales in the region were in the City of Toronto where 1,006 units sold in March, down from 3,633 a year ago. But only three new-construction single-family homes were sold in the city last month.
More than a third, 133, of the single-family transactions were in Peel Region in March.
The “quiet” March was a more normal month than last year’s unusually hot real estate season that saw both re-sale and new construction home prices soar across the region.
That’s due in part to an extraordinary 2017 that prompted some buyers to move ahead with a purchase ahead of this year, said Patricia Arsenault, executive vice-president of Altus Group, which compiles the building industry statistics.
“After an adjustment period, we expect the monthly pace of condo apartment sales to improve,” she said in a press release on Tuesday.
There was about four months of inventory in the market last month.
A healthy market would have nine to 12 months’ supply, according to BILD.
“We have some challenges within the fundamentals of the marketplace in the GTA. The key challenge is affordability and we’ve seen the impact of some government policies on dampening some of the demand,” said Wilkes in reference to the provincial foreign buyers’ tax, interest rate increases and mortgage rules that have been launched in the last 12 months.
“More importantly we have an ongoing supply problem,” he said.