GTA sees new home sales begin on a good note this year

Amid a marked slowdown in nationwide activity recently, the Greater Toronto Area has actually experienced a considerable year-over-year increase in new home sales, according to the Building Industry and Land Development Association.

Citing data from Altus Group, BILD announced recently that GTA new home sales volume increased by 14% annually in January, reaching 1,362 transactions.

A deviation from this trend was the single-family segment, which saw its sales settle at levels 53% lower than the 10-year average for this asset class. New condo apartments comprised a notable portion of last month’s activity, with sales being only 5% lower than the 10-year average.

Despite the road bumps, BILD president and CEO David Wilkes deemed the January numbers as a welcome change.

“It looks like the market is starting to return to typical levels after a particularly difficult year,” Wilkes said. “With the spring budget coming up, we are calling on the federal government to take steps to make it easier for first-time home buyers to get into the housing market.”

“The improvement in new home sales over last January is consistent with our outlook for somewhat higher annual sales in the GTA this year, following the drop in 2018.” Altus Group executive vice president of data solutions Patricia Arsenault added.

Healthy sales made their mark in the region’s remaining inventory, which includes preconstruction projects, units currently under construction, and completed buildings. Supply went down to 15,530 units comprised of 10,364 condo apartment units and 5,166 single-family homes.

As for price levels, single-family homes saw their benchmark value shrink by 8.1% year-over-year in January, down to $1,130,046. On the other hand, the average price of a GTA condo apartment unit grew by 12.5% during the same period, up to $803,638.

GTA REALTORS® Release February 2019 Stats

Toronto Real Estate Board President Gurcharan (Garry) Bhaura announced that Greater Toronto Area REALTORS® reported 5,025 homes sold through TREB’s MLS® System in February 2019. This sales total was down by 2.4 per cent on a year-over-year basis. Sales were also down compared to January 2019 following preliminary seasonal adjustment.

“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy. The stress test should be reviewed and consideration should be given to bringing back 30 year amortizations for federally insured mortgages. There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability,” said Mr. Bhaura.

Despite sales being down year-over-year, new listings actually declined by a greater annual rate. This suggests that market conditions became tighter compared to last year. Tighter market conditions continued to support year-over-year average price growth.

Both the MLS® Home Price Index Composite Benchmark and the average selling price were up modestly on a year-over-year basis in February 2019. The MLS® HPI Composite Benchmark was up by 2.4 per cent year-over-year. The average selling price for all home types combined was up by 1.6 per cent over the same period. Price growth was driven by the condominium apartment segment and higher density low-rise home types. On a preliminary seasonally adjusted basis the average selling price was down compared to January 2019.

“Home sales reported through TREB’s MLS® System have a substantial impact on the Canadian economy. A study conducted by Altus for TREB found that, on average, each home sale reported through TREB resulted in $68,000 in spin-off expenditures accruing to the economy. With sales substantially lower than the 2016 record peak over the last two years, we have experienced a hit to the economy in the billions of dollars, in the GTA alone. This hit has also translated into lower government revenues and, if sustained, could impact the employment picture as well,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

The rental market continued to operate in a high demand, low inventory environment during the first two months of 2019. Strong competition between renters resulted in average rents for one- bedroom and two-bedroom apartments leased through TREB’s MLS® System increasing well- above the rate of inflation on a year-over-year basis for the January-February period. The average one-bedroom rent was up by 8.1 per cent to $2,145. The average two-bedroom rent was up by 7.4 per cent to $2,810.

“With vacancy rates hovering in the one per cent range and average rents increasing in the high single digits, it is clear that signing a lease for a rental unit is not an easy proposition in the GTA. While some rent control provisions have been relaxed by the new provincial government, policy makers need to look at further initiatives to encourage rather than discourage investment in rental apartments. A recent Ipsos survey conducted for TREB found that almost one-quarter of investment property owners are very likely to list their property for sale this year, which is concerning in an already tight rental market,” said TREB CEO John DiMichele.