Canada's Condominium Magazine
The number of new homes sold in the GTA in 2016 is notable for one reason: more condominiums were sold last year than in any previous year on record, an amazing 30 per cent more than in the previous year. Condo sales were up in every region, even doubling in the Durham Region, according to the latest numbers from Altus Group for the Building Industry and Land Development Association (BILD). In all, 47,161 new homes were sold in the GTA, of which 62 per cent (29,239 units) were condos, and the remainder low-rise homes. This was the highest level of new home sales in fourteen years, 12 per cent above 2015 sales. Sales of low-rise homes in December, however, were down 11 per cent compared to one year ago. Despite the December drop, year-to-date sales for low-rise homes were above the ten-year average.
In reporting this, BILD notes that there has in fact been a significant decline in the number of new low-rise homes being built, resulting in record-low inventories and record-high prices in 2016. BILD refers to the year 2002, the year in which more new homes—53,660—were sold in the GTA than in any other year to date or since. That year, the ratio of low-rise to high-rise was effectively reversed: 72 per cent low-rise vs 28 per cent high-rise.
Not surprisingly, Altus Group spokesperson Patricia Arsenault commented in a statement that the decline in low-rise sales is not due to softer demand but rather to lack of product available to purchase. At the end of 2016, just 13,670 new homes were available, less than half of the 30,400 homes available a decade ago. The fall in inventories affected both categories of homes: new high-rise inventories reached a ten-year low of 11,792 units in December, while just 742 single-family detached homes were available for purchase.
For the first time, BILD President and CEO Bryan Tuckey used the word “crisis” in referring to the current housing supply, saying that the shortage is “approaching crisis levels.” As he has often said before, housing is selling as fast as the industry can build it, but the industry is hampered by “the lack of developable land that is serviced with infrastructure, excessive red tape, out-of-date zoning and NIMBYism.”
With supply so short—real estate agents regularly use words like “insatiable” and “frenzied” to describe the current demand for housing in Toronto—prices for new condos also reached an all-time high in 2016. In December, the average price of condo units in the GTA was $507,128, an increase of 57 per cent over ten years. The average size of a condo suite in the GTA was 826 square feet last month, with an average price per square foot of $614.
The price of a new low-rise home, meanwhile, rose 20 per cent year over year, reaching $995,116 in December 2016.
The year 2016 was one of new records in commercial real estate and land sales as well, Altus Group reports. Investment property sales, including land, as well as sales of office, retail, industrial, hotel and rental apartment properties reached a total of $17.2 billion, up 12 per cent over 2015 and a record for the sixth consecutive year. Residential land sales contributed a record $5.7 billion to the total, up $640 million over 2015.