Tag Archives: homes for sale
George Carras – Yourhome.ca
July and August are the best months in Toronto. Many people take advantage of the splendid weather and head out to cottages, take vacations with family and friends, or remain in town and enjoy all the things you can do in a great city like Toronto.
While the weather was warm and wonderful this summer, sales totals for new homes and condominiums across the GTA felt a bit cool.
Over the past 13 years in the GTA, sales of new highrise homes (condominium apartments, lofts and stacked townhouses) in July and August averaged 2,495 units. During the summer of 2012, however, GTA builders sold 2,083 new highrise homes, 17% below average.
But this apparent cooling in highrise sales appears modest when compared to sales of new low-rise homes (detached, semi-detached, townhouse and links).
For the past decade, the GTA has seen an average of 3,508 sales of new low-rise homes in the summer months. This summer, only 1,478 new low-rise homes were sold, 58% below average.
Why so low? Two main factors are impacting sales in the low-rise market: record-low levels in the supply of homes for sale and record-high prices.
Heading into the summer (as of June 30), there were 6,004 new low-rise homes available for sale in builders’ sales centres. Over the summer, builders managed to release an anemic 1,424 units of new supply, while the market absorbed 1,478 units – or 25% – of what was available at the beginning of the summer.
So although sales appear strong given the limited supplies, the constrained supply is clearly having an impact.
The record-low level of new low-rise homes is also driving the prices to near-record-high levels.
The index price of a new low-rise home hit $609,369 (as of Aug. 30). That represents a 12.7% increase over August 2011 and is making the remaining supply increasingly unaffordable for consumers. By contrast, the index price for a new highrise home in the GTA was $436,460, $173,000 less expensive than low-rise.
And the availability of new highrise homes for consumers is at near-record-high level: 19,984 units at the end of summer.
While the record-high inventories of highrise homes might be cause for concern, when you combine the highrise sales with record-low low-rise inventories, the total inventory of 25,934 units available is at the low end of normal. The normal level of builder inventories for the GTA over the long term is between 25,000 and 30,000 units.
Slower summer highrise sales might also be explained by a lack of new openings.
This summer had 77% fewer openings than in 2011 as most highrise builders either accelerated their launches in order to open for the spring market, or they deferred them until this fall.
New openings often account for between 30% and 50% of the average monthly sales, so the acceleration of the condo market in the early part of 2012 has resulted in both an increase in remaining inventory and a decline in summer sales.
Now the summer is over and the fall sales season is well underway. What will the outcome be? It really depends on how everyone perceives and respond to the changing nature of the GTA housing market.
As the latest RealNet figures clearly demonstrate, the industry and market is responding to government intensification policies, resulting in a greater quantity of new highrise homes and a drastically reduced supply of new low-rise homes.
But housing is something that impacts everyone – consumers, industry and government – and a comprehensive understanding and well-balanced perspective of the entire housing market will be necessary in order to avoid the shift from hitting the fan.
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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