The pandemic and record low mortgage rates have played out in a blockbuster summer for the Toronto region’s new construction home market, according to numbers released by the building industry on Tuesday.
August sales of single family homes – a category that includes detached, semi-detached, link and town houses (stacked town homes excluded) – soared 355 per cent year over year in August, outstripping the gains of condos, which also saw a 159 per cent year over year boost in sales last month.
Although the benchmark price of newly built and pre-construction homes dipped slightly compared to July, condos still sold for 15.7 per cent more year over year at $972,859, and single-family homes were up eight per cent annually to $1.17 million.
“We have seen spring push into summer,” said David Wilkes, CEO of the Building Industry and Land Development Association (BILD). “The spring sales that didn’t happen because of the pandemic are happening now and are being added on to the sales that would usually occur at this time of year.”
This year there have been slightly more than the average number of single-family home sales to date — 9,678 versus 9,342, the average between 2014 and 2020. The average number of condo sales in the same period was 14,500. This year to date there have been only 13,008.
The total 22,776 new construction home sales this year to date remains below the 2017 peak of 29,531 sales, according to data supplied to the industry by Altus Group.
The 1,150 detached houses sold last month is the highest number for August since 2011 with the most – 425 – sold in Durham Region. But the 4,762 detached homes sold this year to date remains below the 10-year average.
While this year’s numbers don’t veer significantly from the average, there has definitely been a shift this year to ground-level housing, said Wilkes.
“People are certainly looking for some green space as we use our homes to work, live, shelter, have comfort,” he said.
But low mortgage rates have also helped some buyers afford a house rather than a condo.
But, he said, “The demise of the condo market – certainly it’s not there at this point.”
“As people are looking at home prices they look at the carrying costs as much as anything else. So it’s a combination of having more affordable money. We did see a dip in prices this year,” said Wilkes.
But he said the industry and the government need to continue to watch the supply side of the housing industry where demand has long outstripped supply.
Inventory – new construction homes that are either built or in the selling or construction phases – is down year over year. There were 10,776 new condos available for sale at the end of August, compared to 12,079 last year at the same time, he said. Inventory of single family homes was down to 3,555, from 4,450 a year ago.
“To me the solution to affordability will be addressing the long-term supply challenges. There needs to be continued effort to address some of the structural challenges that we’ve had in the market where demand has outstripped supply for so many years,” said Wilkes.
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