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.
Housing Market News Alerts
Sign up for news alerts on the Toronto housing market
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.