Recently, RealNet Canada and the Building Industry and Land Development Association (BILD) released a strategic review of the Greater Toronto Area’s (GTA) 2013 new home market.

“In a market where the supply of new homes must precede sales, a lack of product, obviously, results in a lack of sales,” says George Carras, President of RealNet Canada Inc. “Simply put; you can’t sell what you don’t have. Our study of the 2013 housing market proved lower supply in the High Rise sector due to greater developer discipline, and declines in Low Rise supply caused by structural restrictions imposed on the market by Government intensification policies.”

Listed below are highlights of the strategic review:

New home sales in the GTA

- There were 28,406 sales in 2013, the second lowest quantity in the last decade. This is 23% lower than the 10-year average and 13% lower than the year-over-year.

- There were 16,201 high-rise sales and 12,205 low-rise sales.

- 57% of new home sales in 2013 were high-rises, but sales were still down 13% compared to 2012, and 11% lower than the 10-year average.

- Low-rise sales were down 12% compared to 2012 and 34% below the 10-year average, making it the second lowest in the last decade.

- Only 30,054 new units hit the market in 2013 (17,798 high-rise and 12,256 low-rise), a year-over-year decrease of 22%, making it the second lowest year for new supply in the last decade.

- December new home sales totalled 1,711, a 79% increase compared to December 2012.

New home prices in the GTA

- Average unit price for high-rises went up only by 1.1% to $548/square foot.

- The price gap between new high-rise and low-rise homes reached an “extreme.” 2013 ended with a gap of $217,583. In 2011, the gap was only $75,806.

- Low-rise Price Index: $654,147, up 3.5% compared to 2012.

- High-rise Price Index: $436,564, a year-over-year gain of just 0.1%.

What does it all mean?

While the new home market experienced 10-year lows for sales, very low inventory levels, and a record gap for pricing between high-rise and low-rise homes, the end of 2013 showed some signs of life. With the high number of sales last December, year-over-year sales continue to improve month to month. According to the strategic review, the “monthly sales results suggest a market in the early stages of recovery.”