High prices, declining inventory and strong sales were the hallmarks of 2017, according to a new release from the Building Industry and Land Development Association (BILD).
Last year was the fourth-strongest year for new home sales in the GTA since BILD’s intelligence-supplier, Altus Group, started tracking in 2000, with 44,143 new homes sold.
By far, most of those were condo apartments, at 82.5% of the market. A few years ago, I spoke to a prominent agent who told me that condos, then the last bastion of semi-affordability in the GTA, were about to catch up and move beyond single-family home sales. He was right, and I hope you were paying attention when I wrote about it! It was the best year for condo apartment sales in the GTA.
The benchmark price for new single-family homes was 23.2% higher than last December’s, at $1,225,774 compared to $995,116; for condominium apartments, the benchmark price was $716,772, 41.3% higher than the 2016 benchmark of $507,128.
In other words, not only are single-family homes increasingly priced beyond the means of many would-be buyers, condominiums now are as well.
In October 2017, Urbanation reported that condominium prices in Toronto had hit $1,000 per square foot; their director of market research, Pauline Lierman, pointed to a lack of available inventory as explanation.
Prices in Vaughan or Milton, by comparison, hit between $600 and $700 per square foot, up a couple hundred dollars from a year to a year and a half prior. Even in resales, Toronto prices were more than $800 per square foot.
In a particularly high-demand neighbourhood such as Yorkville, prices are creeping towards the $2,000 mark. For perspective, in 2016, research by Condos.ca found that condo prices in Hong Kong for 600 square feet averages more than $3,000; in London, that number was $2,732; New York, Singapore, Paris, Geneva and Mumbai all averaged $1,208 — and that was when the Toronto average was just over $500 per square foot.
Key to stabilizing the market this year will be sufficient new housing supply, generally measured in builder inventory at the end of the month including pre-construction, under construction and finished projects. There were 11,397 homes available for purchase in the GTA at the end of last year, down 13.2% from 2016 and more than 60% below the more than 28,000 average new homes available a decade ago.
BILD president and CEO David Wilkes in the release urged municipalities to work with the industry to “expedite the process” of building new homes in the GTA by “simplifying the development approval process, updating zoning by-laws to align with provincial policies, and servicing developable land with critical infrastructure.”
The release stated that since 2000, total inventory of between 20,000 and 30,000 units is typical, but for the last 18 months, it has fallen below 20,000 units; the decline in single-family homes available is down more than 74% from 10 years ago.
I’m on board with everything Wilkes advocates, but it’s time we looked outside the box for additional solutions. It’s great to make big changes that have a wide effect, but a bunch of small changes can go a long away.
Allowing residents to earn bonus equity as they rent, lease-to-purchase programs and rezoning to more easily allow tiny home communities are all ideas that are working in other cities — as they say, why keep doing things the same way and expect different results?