The Building Industry and Land Development Association released its monthly new home sales results for December 2018, as well as sales totals for the year as a whole. As we were expecting, new home sales fell to the lowest level in nearly two decades.
According to Altus Group, BILD’s trusted source for new home market intelligence, there were 25,161 new home sales in the Greater Toronto Area last year. This is the lowest number of sales since Altus started recording new home sales data in 2000.
A whopping 21,330 of the sales were new condo units. While this is a large percentage of the total share of sales for 2018, it’s 38% lower than 2017’s total. We saw condo sales spike in 2017, so it makes sense that 2018 was slower. Last year’s total condo sales total is actually only 4% below the 10-year average.
In 2018, new single-family home sales hit a record low with 3,831 sales, which is a 50% year-over-year decline and a staggering 74% lower than the 10-year average.
“A number of factors combined to produce the drop in GTA new home sales in 2018,” says Patricia Arsenault, Altus Group’s Executive Vice President, Data Solutions. “More stringent mortgage stress testing, rising interest rates and lack of single-family product affordable to a broader range of buyers all played a role. As well, the record new condo apartment sales in 2017 brought forward some demand that would otherwise have occurred in 2018.”
The average price of a new condo in the GTA in December 2018 was $796,815, which is 11.2% higher than the same month in 2017. The average price for a new single-family home dropped 6.7% year-over-year to $1,143,505.
“From our point of view, the market is out of balance,” says David Wilkes, BILD President & CEO. “We must continue to work with all levels of government to ensure that policies don’t artificially price consumers out of the market.”
As of the end of December, there were 15,768 new homes available across the GTA (10,687 condo units and 5,081 single-family homes).
“We commend the provincial government for taking action toward increasing housing supply in Ontario,” says Wilkes. “We join other industry groups in calling on the federal government to revisit the stress test and allow a longer amortization period for first-time buyers. And we look forward to working with our municipal partners on removing barriers to development such as excessive red tape and outdated bylaws.”
A longer amortization period for first-time buyers is a pretty interesting idea that we haven’t thought of for a while. It makes sense because first-time buyers are rarely (likely never) buying their forever home and will probably never pay it off until they sell and move. Stretching out the amortization would give them more borrowing power and make for more affordable mortgage payments.
With recent news that Mattamy started out the year with a bang, selling out 180 homes in two days, we’re curious to see how the rest of 2019 shapes up!