The average price of a new low-rise home in the Greater Toronto Area lurched closer towards the million-dollar mark last month reaching a new all-time high as supply continued to plummet.
Specifically, those in the market for a new townhouse, detached home or semi-detached home in July had to be prepared to drop $906,508 on average, according to the latest monthly data from Altus Group, a real estate consulting firm.
That’s an increase of 12 per cent compared to the same month last year and the first time the average asking price for new-construction low-rise homes has soared above $900,000, says the Building Industry and Land Development Association (BILD), which releases Altus Group’s monthly data.
“New low-rise home prices have grown exponentially due to limited supply,” says Bryan Tuckey, BILD’s CEO and president. “The industry’s biggest challenge is bringing enough new homes to market to satisfy demand,” he adds.
Some 1,568 new low-rise homes were up for sale across the GTA at the end of July, well shy of the 4,550 ground-related dwellings buyers could choose from on the last day of that month a year ago, BILD notes.
It would take less than a month for the current supply of low-rise homes to sell out “based on average 10-year sales trends,” according to BILD. And further driving home how far supply has fallen in recent years, the group says there were 16,424 low-rise homes on the market on the last day of July 2006.
Families have typically favoured low-rise homes in the past, but with dwindling supply leading to ballooning prices, attention is shifting towards the high-rise segment — and builders are responding, Tuckey suggests.
“In previous years, many builders were focusing on offering smaller and more affordable units to help first-time buyers enter the market,” says Tuckey. “Recent months have seen the introduction of larger suites to meet the demands of the growing range of buyers who have been priced out of the low-rise market,” he says.
The average size of available condo units in July increased to 801 square feet, having dipped below 775 square feet last year, according to Altus Group data. Meantime, prices for these high-rise homes have risen, with the average list price climbing 7 per cent year-over-over to $475,764.
High-rise supply stood at 15,645 units in July. BILD says the segment is seeing inventory levels fall as well, with the number of available units in the pre-construction phase posting the sharpest decline. Pre-construction units for sale in July numbered 8,499, down 25 per cent year-over-year.
There were 17,213 new homes of all types on the market in the GTA at the end of this past month, representing a 10-year low and 41 per cent drop from July 2006, when inventory totalled 29,238 homes.
In all, 3,131 new homes sold throughout the GTA last month, an increase of 12 per cent from activity recorded in July 2015. High-rise dwellings accounted for a majority of transactions, with 2,226 units changing hands, up an eye-popping 52 per cent from one year prior. Low-rise sales dropped 32 per cent year-over-year to a total of just 905 transactions.
“Projects are being sold as soon as they come to market, which is driving up prices and reducing choice for new-home purchasers,” Tuckey says.