Condos experience biggest decline as first quarter figures show a drop of 78 per cent over 2008
(Source: Globe and Mail)
Hopes for a rebounding real-estate market buoyed by the traditionally busy spring season were dashed yesterday as the latest data show that new-home sales in the Greater Toronto Area fell 62 per cent in the first quarter of 2009 compared to 2008.
The data, collected by RealNet Canada Inc., show that much of that decline was in Toronto condominium sales: In January through March of 2008, 1,419 units sold, compared to only 317 this year; a decline of 77.7 per cent.
“It’s dramatic but that’s exactly the area where I think you’re going to start to see weakness,” said Robert Kavcic, a Bank of Montreal economist. “Typically it’s a more volatile sector and it’s been a very hot market during the housing boom, so typically that’s one of the markets you’d see cool off the most.”
It might seem counterintuitive that, during a recession, sales of more affordable dwellings, such as condos, lag more than those of less affordable dwellings, such as homes, according to Stephen Dupuis, president of the Building Industry and Land Development Association. But home developers have instituted more aggressive discounts and reduced inventory, especially in the east end of the GTA, he said.
“You’re basically looking at two jobs for every unit we sell, so if we’re down 15,000 units then we’re down 30,000 jobs. So obviously that’s [developers’] problem too, but it’s really a far bigger problem for governments that look to our sector for jobs and taxes.”
Most of that decline was in the areas outside the city proper. Within Toronto itself, there were 1,514 sales in the first two weeks of April, 2008, compared to 1,494 sales over the same time period of 2009.
Throughout the GTA, average sale prices also fell in the first two weeks of April, from $399,177 in 2008 to $383,161 in 2009.
Read Kate Hammer’s full article “Sales of new homes, condos plunge” in the Globe and Mail (April 21, 2009)