What Does 2015 Hold for the GTA’s New Home Market?

Welcome to 2015! Last year was very exciting for the new home industry; low-rise homes saw record highs for average pricing and the condo market saw record high sales. Builders and developers focused more on targeting first-time homebuyers and end-users, but investors still played a strong role in the Greater Toronto Area (GTA) with condo living being in such high demand. So, what do we have to look forward to in 2015? See below for a few things to watch out for this year!

Average low-rise prices still rising. In November 2014, the average prices for a new low-rise home broke $700,000 for the first time ever. The cause? Limited land, rising development charges, and an overwhelming demand for single-detached living. Ben Myers, Market Research & Analytics at Fortress Real Developments, believes that the average price for a new detached home in the GTA will increase 7% to 8% this year. Myers expects Pickering, Ajax, Georgetown, Queensville, King City, and Nobleton to see major price increases throughout 2015.

Mulberry Meadows in Ajax - via Sundial Homes

Because of rising prices of detached homes, another thing to watch out for in 2015 is a surge in townhome communities. In our most recent interview with Myers, he explains that it makes more sense for a builder to sell 60 townhomes at $600,000 than 30 detached singles for $1.15 million. Since this is the case, pricing for townhomes will probably increase as well, which may drive many first-time homebuyers to the condo market.

With investors, first-time homebuyers, end-users, and empty nesters all finding suitable options in the condo market, we can expect Toronto’s condo market to continue to thrive. Last November, the GTA saw a 25% year-over-year increase in high-rise sales, and as usual, the majority of the sales were in Toronto. There was a lot of talk last year about overbuilding, but the truth is there were only around 13,000 high-rise starts last year, compared to 18,000 in 2013. There were many completions last year, so as we continue into 2015, we may actually be underbuilding, which could potentially lead to a sudden and unexpected rise in prices.

Transit will continue to guide development. When the Eglinton Crosstown was announced, builders and developers jumped on it, and promoted the proximity to the new form of transit. Now, with the election of Mayor John Tory, we have SmartTrack to guide development. In December last year, council approved fast track studies for SmartTrack, putting it on course to be completed in the seven years that Tory promised. So, we can look forward to more developments popping up along Eglinton between Mt. Dennis and Kipling, neighbourhoods south of Bloor between Lansdowne and Bathurst, areas around Queen East and Pape, and even further north in Scarborough.

DIVA Condo - via Torbel Group

For a while at the beginning of 2014, supertall towers were all the rage, especially with all the new renderings and controversy surrounding the Mirvish-Gehry Towers proposal for King Street West. Well, it looks like 2015 is off to a different start with the spotlight on boutique condos. There are many boutique condos underway in Toronto right now, and now that the province has approved six-storey wood structures, it is likely that we will see even more come to market. This is exciting because wood is more cost effective and is easier to work with on infill sites. This means that Toronto’s smaller sites could be targeted by developers looking to build intimate condos, creating more affordable options for first-time homebuyers.

Every year, there are negative headlines in the papers, magazines, and onlines. There is always some journalist, analyst, or blogger calling for doom and gloom for Canada’s housing market. So, what will be said this year? OVERVALUED will be the scary word this year. Myers recently explained that many pundits will claim the market is overvalued based on a price-to-inflation ratio, a price-to-income ratio, or a Canadian price to American price ratio. He also pointed out that the truth is, there are just too many significant factors to determine whether the Canadian market is overvalued or not. The demographics are constantly changing, and the factors that define those demographics are also changing. A simple two-variable measure isn’t enough to decide a market’s value.

To sum it all up: The GTA’s not-so-overvalued new home market will continue to see the average price for low-rise homes rise, condo sales will be strong, more townhomes will start popping up, more boutique infill condos will launch in the downtown core, and SmartTrack will be used to market and promote new developments and communities.

Stay tuned to Newinhomes.com for coverage on it all. We’re looking forward to watching the GTA’s new home market flourish throughout all of 2015!