Photo: Ian Muttoo/Flickr
The metro Toronto area is a very different place from what it was back in 1979 — unless you’re looking at the number of single-detached homes completed by builders.
If you’re trying to make sense of Toronto’s piping hot real estate market, which has seen especially rabid competition for homes that don’t share walls with a neighbour, this might be a good figure to start with, suggests BMO economist Robert Kavcic.
“The big story remains below the surface, where single-detached completions hit the lowest level in 36 years in 2015 — and that’s before adjusting for population size,” Kavcic writes in a recent research note.
“Cue the bidding wars,” he quips, though they’ve already begun: demand has driven the average price of a detached home in Toronto proper up 16.3 per cent year-over-year to $1,211,459, according the Toronto Real Estate Board’s (TREB) February numbers.
As Kavcic eludes to, detached home construction — or lack thereof — is playing a big part in this.
In fact, in 2015, builders wrapped up construction on 7,871 standalone homes in the Toronto census metro area (CMA). To find a lower number of completions in the area, you’d have to go all the way back to 1978, when 4,522 single-detached homes were finished, according to Canada Mortgage and Housing Corporation (CMHC).
By the following year, completions had shot up to 8,006, hovering just above the level registered last year in the Toronto CMA. The area’s population is another story, underscoring the significance of completions in 1979 and 2015 trending so closely in line.
Between 1976 and 2015 the population of Toronto’s metro area roughly doubled from 2,803,101 to a projected 6,129,900 last year, according to Canadian census data.
Karine LeBlanc, a CMHC spokesperson, notes how land developers have shifted attention to the high-rise market in Ontario’s capital. “[It is] important to note apartment completions, on the other hand, hit a record in Toronto last year,” she says in an email.
“This is in response to both policy and market driven factors,” explains LeBlanc. “Builders have been intensifying based on provincial policy rules and shifting production to more affordable housing for those interested in ground oriented housing,” adds LeBlanc, citing townhouses as an example.
Last year, apartment completions in the Toronto CMA surged to an all-time high of 34,228, compared to 13,554 in 2014, dwarfing single-detached completions.
Benjamin Tal, CIBC’s deputy chief economist, scrutinized last year’s numbers, explaining registering completions is no science, and even CMHC admits “under some circumstances” a completed home may in fact be 10 per cent from the end of construction.
But there’s no doubt condos are being built at a much faster rate than detached homes in the Toronto CMA, with prices reflecting this. The average price of an existing condo was a more affordable $435,579 in February, although that’s 17.8 per cent more expensive than a year ago.
With Ontario’s Ministry of Finance forecasting the GTA’s population to hit 9.4 million by 2041, it doesn’t seem likely that open houses for detached dwellings will draw fewer bidders any time soon.