Photo: James Bombales
New condos in the Greater Toronto Area are growing larger, contributing to seismic price gains, according to the latest Altus Group data released by the Building Industry and Land Development Association (BILD) today.
Builders asked for an average of $665,041 for new GTA condos last month, up 40 per cent compared to July 2016, the data suggests. That’s $38,000 more than the average asking price for June.
“The price increases for available new condo apartments in the GTA were the result of both increases in average unit size and growth in the price per square foot,” reads a statement from BILD in a news release including the latest numbers.
Among available condos (these can be units in stacked townhouses and mid- and high-rise buildings) the average unit size hit 871 square feet, an increase from 801 square feet last year.
On a per-square-foot basis, prices for available condos averaged $764, having surged from $594 a year prior.
BuzzBuzzNews reached out to BILD for comment on what is driving this shift towards larger units, but a spokesperson was not available as of publication time.
But Jim Ritchie, senior vice president of sales and marketing at major builder Tridel, says families getting priced out of the single-family home market are creating demand for spacious family-friendly condos in the new-construction market.
“If you asked me point blank are we designing larger condominium homes, the answer is yes — and that has a lot to do with the affordability factor,” he explains.
BILD’s presentation of Altus data pegs the average asking price for detached home at $1,316,693, up a jaw-dropping 45 per cent over last year. “Trying to find a new single-family home today in the GTA priced at less than $1 million is a daunting task,” says Patricia Arsenault, Altus Group’s executive vice president of research consulting services, in a statement.
Rendering: Bianca by Tridel.
“That building… was designed for end users looking for a bigger product,” he says, adding the “vast majority” of the suites at Bianca are between 1,000 and 1,500-1,600 square feet in size.
In response to the latest Altus numbers showing size increases, Ritchie does note that the numbers are influenced by what projects are being released at a given time as well as where they are located. The 500-square-foot unit is still popular at certain projects, he suggests.
Ben Myers, a senior VP of research and analytics at Fortress Real Developments, a real estate financing and developing company, suggests investor demand in new housing is playing a role in a shift to larger condo units.
“I definitely think there’s a little bit of interest from investors,” Myers tells BuzzBuzzNews, noting an investor may choose to rent out a two-bedroom-plus-ren unit to multiple tenants.
He says the shift of families to condos is more of a factor on the resale market, though, partly because new-construction units provide more uncertainty. Closing dates aren’t set in stone and could be four to five years from when the downpayment is made.
“The value is not quite there yet,” says Myers. Other options, such as a stacked townhouse offer parking and sometimes a backyard and more storage space — without the same price tag as a detached home, Myers says.
“I think it (low-rise housing) does need to get a little bit more expensive,” he adds.
The latest monthly Altus data showed high-rise condo sales numbered 1,615 in July, down from the year-ago tally of 2,458 units. The decline is at least partly a reflection of developers holding off on project launches this summer, BILD suggests.
By comparison, low-rise transactions totalled 137 homes, a sharp drop from 927 in July 2016.
“July is typically a slow month and many builders wait until fall to launch developments and bring product to market,” states Bryan Tuckey, BILD’s president and CEO.
The number of new GTA homes available in builders’ inventories sunk to 7,801, a sharp decline compared to a year ago, when 16,900 new homes were available.
“We are not seeing an increase in unsold product sitting on the market,” Tuckey continues.