Toronto condo boom is driving total starts up
Driven by a surprisingly strong condominium boom, housing starts in Toronto continue to defy expectations.Starts at the end of June were a seasonally adjusted annual rate of 43,800, up from 40,000 in May, according to figures released by the Canada Mortgage and Housing Corporation. yesterday.
“The reality is, single detached homes are becoming awfully expensive, and more and more people are turning to condominiums,” said Alex Medow, manager of CMHC analysis for Ontario.
Toronto condominium construction continued at a record pace through June, with year-to-date starts up almost 18% compared to last year. The majority of the starts are within the former city of Toronto and such popular nodes as North York and Mississauga, the CMHC said.
Still, overall new home construction declined slightly in comparison to the first half of 2005 because of weaker starts for single, semi-detached and town homes. The bellwether single detached housing segment experienced the largest drop.
Across Canada, starts were up to an impressive 232,200 units in June, up 4.5% in the month. “Not too shabby at this stage in the game,” BMO Capital Markets chief economist Sherry Cooper said.
New home prices also beat expectations, climbing 1.3% in May, or about 9.1% compared to a year earlier. However, the details indicate there are weaker developments underway.
Overall, starts are still below year-ago levels for the third month in a row, and the singles component is down nationally from a year ago.
“We expect the level of activity to moderate in the second half of 2006 as rising prices and marginally higher mortgage rates result in a softening of demand for both existing and new homes,” the CMHC said.
Meanwhile, the resale market in the Toronto area continues to see solid sales. The Toronto Real Estate Board says year-to-date sales are up 2% over the record year of 2005. Average prices came in at $358,035 in June, up by 4% recorded in June of 2005.
While most analysts see a cooling down in the market in the second half of the year, much of the slack will be taken up by the non-residential sector. A third office building for the downtown core — the Telus tower — was announced this week, among the first commercial skyscrapers in Toronto in more than a decade.
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