The Building Industry and Land Development Association (BILD) released its new home market sales figures for July 2016, announcing that the average price of a new low-rise home in the Greater Toronto Area (GTA) has hit a record high.
According to Altus Group, BILD’s trusted resource for new home market intelligence, the average price of a new low-rise home in the GTA was $906,508 as of the end of July 2016. That’s a 12% increase compared to the same period last year.
“New low-rise home prices have grown exponentially due to limited supply,” says BILD President and CEO Bryan Tuckey in a release. “Provincial intensification policies, delays in the approvals process and a lack of serviced developable land in the GTA has reduced the amount of new homes coming to the market.”
Semi-detached homes saw the greatest price growth, reaching a record high of $771,530. Over the last year, the average price has increased by $196,546. The average price of a townhome hit $758,434, which is $122,491 more than last year. Since March, detached homes have averaged over $1 million, and the average in July was $1,095,910.
In the high-rise market, the average price went up 7% to $475,764, mostly due to an increase in average unit size. The average price per square foot hit a record high of $594, while the average size was 801 square feet.
“In previous years, many builders were focusing on offering smaller and more affordable units to help first-time buyers enter the market,” explains Tuckey. “Recent months have seen the introduction of larger suites to meet the demands of the growing range of buyers who have been priced out of the low-rise market.”
New home inventory has hit a record low
The GTA’s new home inventory has dropped to 17,213 units, which is a 10-year low and is 41% lower than a decade ago. The vast majority of these units are high-rise. There were 15,645 high-rise units on the market as of the end of July, but preconstruction units fell 25% to 8,499.
New low-rise supply has dropped to a record low of 1,568 units, which is only about a month of supply. A year ago, there were 4,550 new low-rise homes available, and 10 years ago there were 16,424!
“The industry’s biggest challenge is bringing enough new homes to market to satisfy demand,” Tuckey says. “Projects are being sold as soon as they come to market, which is driving up prices and reducing choice for new-home purchasers.”
According to Trimart Research Corporation, there are more than 30 new releases and openings coming to the new low-rise market across the Total Market Area this fall. This new supply may help satisfy demand, but it likely won’t be enough.
High-rise sales rising, low-rise dropping
In the first seven months of 2016, there were 28,208 new home sales across the GTA, 15,852 of which were high-rise. New low-rise sales are also better than average with 12,356 in the first seven months, which is better than the 10-year average, but 7% lower than last year.
Overall for July, there were 3,131 sales, which is a 12% increase compared to last year. There were 2,226 high-rise sales, a 52% increase, and only 905 low-rise sales, and that’s a 32% decrease.
Will the busy fall season ease price growth? Will condo units continue to get larger as low-rise homes become further and further out of reach for families and couples?