Photo: James Bombales

There comes a point when high housing costs price out enough potential home buyers that demand is eroded and fewer dwellings get built — Toronto, a new report suggests, has reached it.

“High homeownership costs continue to weigh on the demand for single-detached and row houses thus resulting in fewer low-rise home starts,” reads a news release announcing the latest Preliminary Housing Starts report from the Canada Mortgage and Housing Corporation (CMHC).

Contractors broke ground for 371 single-detached homes in May across the entire Toronto Census Metro Area, which is close in size to the Greater Toronto Area but excludes some parts of it, like Burlington.

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That’s down 55 percent from building activity observed at the same time a year ago, when work began on 833 single-detached homes.

According to the Building Industry and Land Development Association (BILD), the benchmark asking price for a new single-family home in the GTA this April (the most recently available month) was $1,119,772, up 0.3 percent annually. That figure includes linked and semi-detached homes and townhouses as well as detached homes.

Condo-apartment construction recently trended lower on a seasonally-adjusted basis, CMHC says, although the Crown corporation expects building activity in this segment — which remains the last affordable new-housing option for many at a benchmark asking price of $758,585 — to rebound.

“Strong pre-construction sales of condominium apartment units over the past two years will continue to translate into starts over time at a varied pace, despite their starts trending lower in May,” the news release states.

Actual starts for all types of housing excluding single-detached homes numbered 1,367 last month, up 10 percent from the 1,242 dwellings, including purpose-built rentals and condo apartments, started in May 2018.

“The national trend in housing starts decreased in May as a result of continuing decline in the trend for single starts as well as a decline in the trend of multi-unit starts that follows gains in this segment in recent months, in urban areas,” says Bob Dugan, CMHC’s chief economist, in a statement on the national downturn of which Toronto was a part.

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