Toronto New Home Sales Up In November
Tony Wong – Toronto Star
Brian Johnston is ending this year with a far different outlook than in 2008 when the economy stalled.
The president of Monarch Corp., Canada’s oldest home builder, has 25 different projects on the go in Ontario, with most of them in the Greater Toronto Area. Strong sales have also meant that he has bumped staffing up by at least 10 per cent this year to meet demand.
Some of that is because he had to cut staff in 2008 when the global economy faced a liquidity crisis.
While both the high and low rise sectors are strong, much of the demand is from continued strength in the condominium sector.
“High rise just keeps rocking,” says Johnston, who is also the former president of the Ontario Home Builders’ Association. “Part of that is affordability, where condos are more accessible, and it’s also a lifestyle issue, where people are choosing to live in high rises.”
Greater Toronto Area new home sales are up by 1 per cent in November compared with a year earlier, according to a report by the Building Industry and Land Development Association.
Sales of homes totalled 4,081 units in November, just barely besting last year’s figures, Most of that rise was due to condominium sales, which continue to attract buyers, despite some analysts warning about a possible oversupply in the market.
Comment: And those same analysts have been warning about over supply since 2003. The condo market is stronger than ever, not to worry. Not sure what over supply is, anyway. All of the new ones being built have been paid for. Some will come up for sale, others will not. This is not going to send the world off its axis, trust me.
“New home sales were healthy in November,” said housing analyst Will Dunning. “Housing markets are showing some improvement, we may be seeing a phase of recovery from the payback period of the summer.”
Low rise sales in November were actually down by 7.1 per cent, but a surge of condos, up to a record 8.4 per cent propelled November sales above last year.
High rise sales have accounted for 56 per cent of all the units sold in the first 11 months of the year.
“The stars seem aligned for high rise,” says Johnston. “There are more people who just don’t want to drive in from Whitby or Oshawa because the Don Valley Parkway is jammed. They’re saying maybe it makes sense to buy something in the downtown core.”
Low rise sales meanwhile are hampered by not just affordability because of rising prices, but the fact that builders have had trouble finding lots.
“There continues to be a lack of supply on the low rise side,” said Johnston.
However, while projects in major cities such as Oshawa and Toronto are doing well, Johnston cautions that the market is slower in other parts of the province.
“This has been a tougher year for some areas that have seen a loss of manufacturing jobs,” said Johnston.
Still, the market is much better than the depths of 2008 when the banking sector crashed in the United States, causing a worldwide economic crisis. “That was a disaster,” says Johnston who estimates sales are multiple times better today than then.
The traditional split has been 40 per cent condo and 60 per cent low rise. Johnston says the numbers will be reversed, and become even more pronounced in 2011 as condos gain in popularity.
But with an additional estimated 17,000 completions estimated in 2011, some analysts wonder whether there will be an oversupply issue.
One troublesome spot according to Dunning is that recent employment numbers are relatively weak in the GTA.
“The employment data for Toronto and Canada has been tepid for the last three months,” said Dunning. “While we are seeing job creation, the share of the population that is employed is far below pre-recession levels…This is likely to impose a drag on housing markets for some time.”
But so far prices have not fallen, and investors are still very much active in the market.
“If developers take a less aggressive pricing strategy at launch, interest rates stay low, and investors stay interested, the market should continue to chug along in 2011 barring another global economic meltdown,” said Ben Myers, executive vice president of condo research firm Urbanation.
Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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