New construction house prices in GTA and condo sales hit record levels in August

New construction house prices in GTA and condo sales hit record levels in August
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Newly constructed single-family homes in the GTA hit a new benchmark high price of $1.52 million last month — 30 per cent more than a year earlier — as supply hit near historic lows in the Toronto region.

But a flood of new condos offerings pushed sales of those units to an 11-year August record, according to the Building Industry and Land Development Association (BILD) that represents homebuilders.

The benchmark price for condominium units dipped to $1.07 million in August — a 10 per cent annualized increase but down from July’s $1.09 million benchmark.

The 3,162 condos that sold last month — including stacked townhomes and lofts — was 129 per cent above the 10-year average. It was also 35 per cent more than August 2020 sales but BILD is warning against reading too much into last year’s numbers, suggesting that market was distorted by the pandemic.

August condo sales remained below the June 2017 overall record of 5,170.

“As the supply was made available to the market the demand was still there, which resulted in the record sales,” said BILD CEO David Wilkes.

Market demand is also driving prices on the single-family home side of the market — a category that includes townhomes, semi-detached and detached houses. Only 605 of those homes were sold in August, 15 per cent below the 10-year average, according to the industry statistics supplied by Altus Group.

“We saw single-family sales being lower than they had but that was a function of lack of supply as well,” he said. “As product became available the market responded. On the other side, when there is no supply, the market reacts accordingly.”

Wilkes blamed slow approvals and a lack of designated land on the shortage of homes and warned that the situation can’t be fixed overnight when it takes 10 to 11 years from start to finish to build a new home in the GTA.

Wilkes said that the current situation is the proof that solving the region’s affordability issues depends on injecting more housing stock into the market.

This year to date there have been 9,947 single-family home sales, around the 10-year average. The 20,507 condo sales this year to date is well about the 10-year average of about 15,000.

On a per-square-foot basis, the average condo sold in August for $1,143 per sq. ft. and was 936 sq. ft. in size.

Condo inventory increased last month to 9,967 units and the number of single-family homes under construction, in the pre-construction phase or built but not yet occupied, shrank to 1,354 units, down 244 units since July.

“It’s taken decades to get into this problem,” Wilkes said of the supply issues. “It’s going to take years to get out of it. I think we have the political and market will to correct this challenge.”
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