Tag Archives: realnet
Toronto condo market returned to normal in 2012
Ryan Starr – Yourhome.ca
Sales of lowrise homes in 2012 plummeted to the second-lowest level since 2000, while the GTA condo market experienced its fourth best year on record, according to a report released this week by RealNet Canada Inc.
“We’re dealing with a detached reality,” notes RealNet president George Carras, who unveiled the 2012 housing market numbers at a joint press event with the Building, Industry and Land Development Association (BILD) in Woodbridge Wednesday morning.
“While everybody has been looking at the highrise market, their eyes have been completely taken off of what’s happening in the detached-home market. And what’s been happening in the detached market is kind of shocking.”
There were 14,069 lowrise sales across the GTA in 2012. This represents a 20% decline from only a year earlier and the lowest year of sales on record since 2008, at the outset of the global economic crisis.
The big dip in lowrise sales largely was the result of a decline in lowrise supplies, which have plunged by 52% over the last 48 months, compelling evidence of the provincial government’s intensification policy in action.
Comment: Thank you for the context! So sales dropped 20% when supply dropped 52%? Wow… We all know there are fewer and fewer houses being built, but wow…
“That’s massive,” Carras says in an interview. “That means one out of every two homes that would have been available four years ago is no longer there.”
The steep drop-off in detached home sales also stemmed from a sharp spike in the index price for a new lowrise home, which reached a record high in 2012: $632,868. This represents a price increase of 16% compared to the year before, and a whopping 44% price increase over the past 48 months.
Comment: Wow again. That is an average for detached, semi-detached and townhouses. How much is the average new detached I wonder?
The GTA condo market fared better in 2012, with 18,755 highrise unit sales. While this was the fourth best year for condo sales since 2000, last year saw a decline in highrise sales of 35% compared to 2011, the best year on record.
(There were 60,713 highrise units under construction across 237 projects by the end of last year, a record high.)
Comment: And people said the new condo market was crashing. The 4th best year for new condo sales ever, yeah… that must be a crash. Never mind the record number of units being built. Which likely leads to another top-5 year for sales.
Total new home sales across the GTA – lowrise and highrise combined – declined by 29% from 2011, to 32,824 units, the second lowest level since 2000. “It’s really the result of the drag from lowrise,” Carras notes.
The introduction of tighter mortgage rules midway through 2012 played a part in the declining sales, says Carras, but mostly because of the uncertainty this created among buyers. “The big impact was on people’s perception of what was happening.
“The rules were changed without a tremendous amount of clarity. So (lower sales) was the collateral damage.”
Comment: You had lowrise supply drop by 52%, new mortgage rules that cut out the bottom 15% of the buyers, plus constant bad news.
The index price of a new condo at the end of 2012 was $436,024, representing a small increase of 0.4% from a year earlier, according to RealNet. Compared with what was happening in the lowrise market, highrise prices were relatively flat in 2012, Carras says, “especially when you compare it to the 16% year-over-year increase in price (seen in the lowrise market).
“That’s the detached reality.”
The gap between the lowrise and highrise index price also hit a record high in 2012: $196,844 – more than double the long-term average difference of $86,886.
In terms of active inventory – the number of units available at sales centres across the GTA – lowrise homes comprised 26% of the total market, versus 74% highrise. A decade ago it was the inverse, with lowrise homes making up 63% of the available inventory in the GTA, compared with 37% highrise.
In all, total active inventories in the region grew by 29% in 2012, to 28,522 units (the long term average is between 25,000 to 30,000 units). “What you saw in 2012 was the return to normal,” Carras says. “But the composition of those housing choices is now very different.”
Comment: Is it that different? Resales have been changing from a low rise bias to more high rise, it only makes sense for the new market to follow.
The index size of a new highrise home declined by 16 square feet in 2012, to 804 square feet, while the index price per square foot grew by 2%. “We’ve found how much smaller we can make (condos) and it’s levelling off,” Carras notes. “The trend in the last year has been that price flattening has also been tied to unit size flattening. That means that any increase in (builder) costs is now probably going to be reflected in prices.”
In previous years developers were able to manage their cost increases by shrinking unit sizes, keeping home prices more or less flat. “But it’s unlikely you’ll see the masking of further cost increases through that same approach going forward,” Carras says.
2012 by the numbers
Lowrise sales: 14,069 (down 20% from 2011)
Highrise sales: 18,755 (down 35% from 2011)
Total new home sales (lowrise and highrise): 32,824 (down 29%)
Total active inventories: 28,522 units (up by 29% from 2011)
Active inventory composition, 2012: 26% lowrise, 74% highrise
Active inventory composition, 2002: 63% lowrise, 37% highrise
Index price, of new lowrise home: $632,868 (a record high)
Index price of a new highrise home: $436,024
Index size of a new highrise home: 804 sq. ft.
Highrise units under construction: 60,713 (237 projects)
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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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Where Are All The Places To Grow?
Development regulations a hindrance to housing affordability and choice
Toronto Star
It’s hard not to notice all the condominiums cropping up across the GTA these days.
Condos accounted for 62% of new-home sales in the GTA last year, according to RealNet Canada, a Toronto-based national provider of real estate information services. And it seems that everywhere you look, there are construction cranes and new residential towers dotting the urban horizon. What isn’t as visible, however, is the lack of subdivisions being built and the dwindling availability of new low-rise houses.
A decade ago, 75% of all new homes sold in the region were single-family houses. Last year, low-rise housing comprised just 38% of new-home sales, largely the result of provincial policies aimed at protecting greenbelt lands and promoting intensification.
The GTA housing market has been reshaped fundamentally by provincial policies introduced in 2006 as part of the Growth Plan for the Greater Golden Horseshoe, a region in Southern Ontario whose boundaries extend south to Lake Erie and north to Georgian Bay. With the Greenbelt Plan, the province has aimed to protect 1.8 million acres of green space, and its Places to Grow plan has designated areas best suited for intensification.
Commenting on the dearth of low-rise houses, Paul Golini, chairman of BILD (Building Industry and Land Development Association), says,”People can’t see what doesn’t exist anymore.” BILD represents more than 1,375 member companies in the land development, home-building and professional renovation industries in the GTA. “The homes under construction today were sold to the homeowner a few years ago. The industry is worried about the balance in housing options and the affordability of new homes in the future,” says Golini.
The shift from low-density to high-density housing has been directed by provincial intensification policies encouraging a more sustainable approach to urban development. Homebuyers want to choose the type of home that suits their lifestyle through the various stages of life — and choice in the low-rise market is diminishing.
“There just hasn’t been the availability of land when it comes to low-rise product,” Golini explains. “Not only is the low-rise price index the highest it’s ever been — $609,369 [this past] August — it’s also driven the market toward high-rise. And if you’re a first-time buyer, that seems to be your only option.”
There has also been plenty of resistance to the intensification policy in the GTA at the municipal level, delaying approvals of condo projects and pitting developers against community groups opposed to the introduction of denser forms of housing in their neighbourhoods.
“Local interests are not always aligned with the province’s goals when it comes to growth and intensification,” Golini notes. “Not everyone is ready to accept this new form of living.”
The development industry has been operating in accordance with the provincial growth plan, says Golini. But six years in, it has become clear that the policies have had an adverse impact on homebuyers, he says, creating severe constraints on land availability and resulting in limited housing options and ever-increasing prices.
“Places to Grow was designed to put tension in the system to promote higher-density development, and that tension is there,” says BILD president and CEO Bryan Tuckey. “But you wonder if the balance has been shifted too far.”
With an estimated 100,000 people moving to the GTA each year, Tuckey notes that the industry recognizes that the lack of affordable housing options for new and first-time homebuyers is a serious issue in the GTA, and wants to be part of the solution. “Our industry plans and builds about 40,000 homes every year to meet the demand from first-time homebuyers, the aging demographic, immigration and the changing family formation.”
The challenge is getting political and community support to build them.
Many municipalities have outdated zoning bylaws that don’t conform to Places to Grow and don’t include intensification targets, says Tuckey, resulting in further delays, as rezoning is required before construction can begin on higher-density projects.
“I interact with many of the best developers in the city and they all feel that the approval process gets bogged down at the city level,”says Barbara Lawlor, president of Baker Real Estate, a leading brokerage firm in the GTA.
“We need to see more streamlining when it comes to the red tape and the layers of regulation,” Golini agrees, noting too that excessive development charges and parkland requirements create hindrances that contribute to higher home prices.
BILD is determined to ensure the 68,000 hectares of whitebelt lands — the area between the GTA and the greenbelt — are preserved for growth past 2031.
Though the whitebelt was intended to function as an urban reserve that would accommodate future growth in the region — whose population is projected to spike from 6.3 million to 8 million by 2031 — many municipalities have been restricting development of these lands.
“If the province was able to give a clear statement regarding the whitebelt and its long-term future,” says Tuckey, “it would go a long way to helping the implementation of Places to Grow in the GTA.”
Suburban Option – What did you buy and why?
Elaine Viterbo — 40, manager, North 44° restaurant
Where did you buy? Upper Unionville, a 1,700-home community at Kennedy Rd. and 16th Ave.
Tell us about your place. It’s a 2,300-sq.-ft. detached home on a 34-foot lot.
What appealed to you? For six years my husband and I have been living in a townhouse in Richmond Hill, but the pricing there for a detached home is ridiculous. We paid $720,000 for the home at Upper Unionville, so the price was appealing. So is the location — it’s easier to commute to work. Plus, it’s near my aunt’s house and she can take care of my two-year-old. And Unionville is a nice community that’s still growing.
Why a low-rise home, not a condo? My husband really likes having a backyard, even though you have to mow it, and there’s the maintenance of the home itself. But it’s also just the freedom; you don’t have to use an elevator. And we look at condos as a whole bunch of people living in one space.
Why did you buy new, not resale? I like the thought of being the first person using the bedroom and bathroom; being able to create something we want, not having to say, “We like the house except for this, but maybe we can renovate it to be that way”; being able to pick our own finishes — the builder had its own décor centre, so we chose the decor ourselves, and it suited our tastes; also, the smell of a new home (it’s like buying a new car).
When do you move in? August 2013. We visit the site weekly to see what stage it’s at. But it’s still just dirt at the moment.
City Centre Option – What did you buy and why?
David Porter — 39, condo-garden designer, Toronto Condo Garden
Where did you buy? River City, Phase One, King St. E. and River St. (the first residential project in the new West Don Lands precinct)
Tell us about your place. It’s a one-bedroom, 762-sq.-ft. corner unit on the 12th floor, with north- and west-facing views.
What appealed to you? The amazing and unobstructed view of downtown. The second reason was value — it was $437,000, including one parking spot and a locker. This worked out to $525 per square foot, compared to the downtown core, which is five minutes away by streetcar, where condos are going for about $700 per square foot. I thought it was a cool little pocket of the city.
Why a condo, not a low-rise home? I travel quite a bit and I like walking out the door and not worrying about it, so it fits my lifestyle. Although a backyard garden can be nice, I do love gardening on a balcony or a terrace. So easy to maintain and change up.
Why did you buy new, not resale? I’m not big into resale. That’s part of the fun of buying new construction — actually watching it, being able to pick all your finishes and then seeing it go from nothing into something.
When do you move in? Next summer. They’ve just topped off my building and I can see there are windows being installed, so they seem on schedule.
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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.
—————————————————————————————————–
Incoming search terms
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Understanding the new normal in the housing market
George Carras – Yourhome.ca
It’s tough to appreciate a new condominium building without standing back from it to gain some perspective. It is equally as difficult to assess what’s happening in the new condominium market without having a similar kind of perspective.
There’s a lot of discussion about the GTA’s new condo market these days, and all that talk can be both healthy and dangerous.
The market does not exist in a vacuum; it is one part of a total new home market that serves the GTA’s rapidly growing population, guided by a provincial policy that is directing the region to grow up, not out.
Builder inventories are an important gauge used by industry professionals to assess the state of the new home market.
Remaining inventory is a measure of the total number of units left unsold at the end of each month in sales centres across the GTA, whether those units are in pre-construction, under construction, or built and unsold.
Lowrise projects are ground-oriented housing projects, like detached homes, semi-detached homes, townhomes and links. Highrise projects are more intensified residential developments, such as condo apartments, lofts and stacked townhomes.
On a monthly basis, RealNet — the official source of new home information for the Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB) — researches every new home development in the GTA with more than 15 units, both lowrise and highrise.
As of March 31, RealNet’s Highrise Remaining Inventory — which measures the number of unsold units in the GTA — grew to a near record high of 18,369 units.
For a bit of perspective, note that while highrise inventories have returned to the near record high levels set in the fall of 2008, lowrise inventories during that same time period have plummeted by 61% to a near record low of 6,302 units.
Over the long term, total remaining inventories in the GTA — the number of unsold highrise plus lowrise units — has normally been between 25,000 and 30,000 units. The rise in highrise inventories in March led to a 24,671 rise in total inventories.
This represents a new kind of normal for the GTA market. Ten years ago, while the total number of units in builder inventories was roughly the same as today, the composition of that inventory — that is, the types of homes available for consumers to choose from — has become dramatically different.
In March 2002, lowrise homes were the dominant form of new home offerings, representing 65% of total builder inventory. In March 2012, while the GTA housing market is at roughly similar levels of total inventories, there has been a complete reversal in the dominant form of the inventory, with highrise options now representing 74% of builder inventories.
There will always be housing cycles, but what the GTA market has been experiencing is a structural shift away from lowrise housing and toward highrise living. Recognizing that distinction is key for anyone aiming to understand this new normal.
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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.
—————————————————————————————————–
Incoming search terms
Related posts:
- Perspective is the key to understanding the condo market Condos make up the highrise component of the new home...
- Is GTA market pushing the limits? There is no shortage of chatter about the GTA new...
- The GTA is now a four-season housing market I guess we can start talking about the fall rea...
- The new-home market is shifting into high gear George Carras – Toronto Star ast year was a record for...
- The GTA is an area on the rise Highrise construction is certainly on the increase, not only in...
