GTA new home sales back on track, but the price gap widens
By Lucas on Mar 22, 2016
According to the Building Industry and Land Development Association’s (BILD) latest new home sales report for February 2016, sales in the Greater Toronto Area (GTA) are back on track after a slow start to the year.
Last February, there were 3,629 new home sales in the GTA, making it the second high February for sales in the last decade (there were 3,650 sales in February 2011). This is a 21% year-over-year increase and it’s also 36% above the 10-year average.
“There were several new projects launched toward the end of January, which resulted in above-average February sales,” explains BILD President and CEO Bryan Tuckey.
In the new low-rise market, there were 1,780 sales last month, which is 22% higher than the same period last year and 25% above the 10-year average. The high-rise market saw 1,849 sales, which is 20% higher than February 2015 and a whopping 48% above the 10-year average. This is also the second highest February for high-rise sales in the last decade.
While sales are up, inventory levels are down. As of the end of February, the new low-rise inventory had dropped to 4,017 units, which is the lowest it’s been in 10 years and only accounts for about three months of inventory to satisfy the current demand. High-rise inventory was only down a bit, hitting 19,105 units.
“The GTA faces a constrained amount of serviced land designated for development, which has reduced the amount of new low-rise projects coming to market,” Tuckey says. “As demand continues to outpace supply, prices in the low-rise market have increased to record-breaking levels.”
The average price of a new low-rise home in the GTA last month hit a record high of $831,212, which is 13% higher than the same period last year. The average price of a detached home hit $998,812, which is 16% higher than February 2015. The average price for a new high-rise unit went up 3% to $453,999, and the average price per square foot went up 5% to $580.
Potentially the most concerning thing about this month’s report is that the price gap between high-rise and low-rise homes in the GTA hit another record high. The price gap is now $377,213, which is a shocking 560% higher than what the gap was five years ago.
Will spring’s new releases provide enough inventory to satisfy the strong demand? Will the pricing balance out sometime this year?
