In many ways, Greater Toronto Area real estate is flying high. New home prices are soaring to previously unseen heights as transactions take place at a dizzying pace.
But when it comes to the market’s supply of new low-rise homes, a different kind of record was set in August, according to the latest numbers from real estate data firm Altus Group.
Based on a count of GTA builders’ inventories, 1,379 new low-rise homes were on the market at the end of last month.
That’s the fewest on record, says the report, based on Altus data and published by the Building Industry and Land Development Association (BILD) this week.
It’s a far cry from the 16,560 new low-rise homes available to house hunters in the area back in June 2006, which BILD points out is when the Ontario government introduced Places To Grow, a policy meant to curb urban sprawl.
Turning back the clock on the detached market, the difference is similarly stark. Builders had 10,823 single-family homes for sale in June 2006. On the last day of August this year, there were 592 such homes on the market.
Prices continue to surge in the drum tight low-rise segment, which includes standalone homes as well as semi-detached houses and townhomes.
The average asking price for a new low-rise home in the GTA was $931,506 in August, up a roaring 16 per cent from that time a year ago and yet another record, according to Altus data, which goes back to 2001.
Showing how much home prices in the GTA have risen since Places To Grow was launched, BILD offers the June 2006 average low-rise home price: $393,398.
Note that’s less than the list price of a new high-rise condo, which hit $480,914 last month — that’s a record, too — having grown 7 per cent year-over-year.
Through the first eight months of the year, builders have sold 17,949 high-rise condo units across the GTA, compared to 12,956 ground-related dwellings.
In August alone, 1,880 new high-rise units changed hands, while buyers snapped up 491 low-rise homes, the latter being a 44 per cent drop from activity recorded a year earlier.
Bryan Tuckey, BILD’s CEO and president, speaks to the persistent demand for the low-rise homes, especially ones that don’t share walls with a neighbour.
“The supply of low-rise homes — especially single-family detached homes – has plummeted in the years since the Growth Plan was introduced, but demand for those types of homes has not diminished. As a result, prices have increased dramatically,” says Tuckey in a statement.
While in a recent report CIBC Deputy Chief Economist Benjamin Tal, alongside research assistant Katherine Judge, cited Places to Grow as a driver of home prices, he noted it wasn’t just a matter of supply challenging affordability.
Among the causes of what the report calls a GTA “affordability crisis” are government-related development costs and a lengthy approval processes for new projects. And that’s not all.
“Low interest rates have created the potential for house price inflation,” reads the report, titled The GTA Housing Market: Is There Logic Behind the Madness. “Policy-driven land shortages released that potential, resulting in today’s housing affordability crisis.”