Canada's Condominium Magazine
The Building Industry and Land Development Association (BILD) put out a statement a few weeks ago, on the election of Kathleen Wynne as premier-designate of Ontario, congratulating her and expressing their enthusiasm for working with her “to protect the interests of consumers.”
BILD, the voice of the home building, land development and professional renovation industry in the GTA, said it looked forward to discussing with Premier Wynne issues such as wood-frame construction, a “fair and adequate strategy for transit funding,” and other “economic imperatives” facing the province.
That all sounded pretty innocuous, but the real message to Wynne comes at the end of BILD’s congratulatory release. After reminding the new premier of just how big the housing industry is in this province (193,000 jobs, $10.1 billion in paid wages in 2011), Bryan Tuckey, the president and CEO of BILD, says, “I look forward to working with her . . . to ensure that our industry can deliver affordable and diverse housing options to meet the growing needs of our province.”
That was January 31. No doubt Premier Wynne, if she saw the message, would have got it. But today, BILD effectively issued what amounts to an open challenge to her government. Looking at new home sales statistics for the month of January, BILD calls the situation “a tale of two markets.”
The high-rise market continues to thrive, though at a slower pace than in previous months. Home buyers in this market “are looking for and finding quality, affordable homes,” mostly in the city of Toronto. The choice available to high-rise buyers, BILD says, is a direct result of public policy favouring intensification, and the building industry is adapting to this. So far so good.
But in the low-rise, or “ground-related housing” market, that same policy of intensification has resulted in slashed sales. This past January saw almost 1,000 fewer sales of new homes than in a “typical” January.
“This is a direct result of reduced affordability and choice in the low-rise sector and illustrates the effect of public policy on the market,” said Tuckey.
According to a backgrounder provided by BILD, high-rise sales in January were down 8 per cent on a year-over-year basis, but were just 5 per cent off the long-term (14 years) average. This can be explained in part by tighter mortgage requirements imposed by the federal government.
But low-rise house sales were down a stunning 52 per cent year over year, and 64 per cent off the long-term average. It was the second worst year for sales on record for ground-related housing in the GTA. (Records go back 14 years.)
According to Tuckey, people in the GTA still want to purchase these homes—detached, semi-detached, townhomes—but the numbers doing so have been dropping “over the last few years” and it’s because the affordability and choice are not there. Affordability declined, according to the RealNet New Home Price Index, by 16 per cent compared to January 2012.
Condominiums remained the most affordable housing option in the GTA, with a 2 per cent increase in the per-square-foot cost. The average unit cost is now $435,722.
With numbers like these in the low-rise market, how long can it be before the building industry adopts a more aggressive stance?