Canada

Greater Toronto New Home Sales Dive To Lowest Level On Record

Greater Toronto new home sales dropped to one of the lowest levels in history. Altus Group and developer association BILD data shows it was the slowest May for sales on record. The decline in sales has slowed new project launches, helping to push inventory lower. Declining inventory isn’t that big of a deal right now though, since sales are falling much faster.

Toronto New Home Prices Are Mixed

The price of a new home is still split, with the few condo buyers left paying a huge premium. Altus Group’s benchmark price for single-family homes reached $1,109,643 in May, flat from last year. The condo apartment benchmark reached $985,436, up 26.4% since last year. Condo apartment prices are still on fire. Single-family homes? Not so much.

Toronto New Home Sales Drop To Lowest Level Recorded

The pandemic was expected to drop new home sales, but not nearly this much. There were just 866 new home sales in May, down 81% from last year. Single-family homes represented 438 of those sales, down 56% from last year. Condo apartments represented the other 428 sales, down 89%. This is the fewest new home sales for May in Altus Group’s data set going back 20 years.

Greater Toronto New Home Sales

Total May new home sales in Greater Toronto.

Source: Altus Group, Better Dwelling.

New Home Sales Are Falling Faster In The City

The City of Toronto is seeing sales drop at a faster rate than the average across Greater Toronto. The City represented 222 of the sales in May, down 84% from last year. Single-family homes were 14 of the sales, down 61% from last year. The other 208 sales were condo apartments, down 84% from last year. In case you missed it, all segments fell faster than the aggregate numbers.

Greater Toronto New Home Sales

Total new home sales in Greater Toronto for May, by region.

Source: Altus Group, Better Dwelling.

No New Launches Mean Inventory Is Falling

Greater Toronto is seeing less new home inventory during the pandemic. There were 13,647 units for sale in May, down 1% from the month before. Compared to last year, this is 20% lower. Much of the decline has to do with a few sales trickling in, but virtually no new projects announced.

New Home Sales Fall Much Faster Than Inventory

Just because inventory fell, doesn’t mean it’s a tight market. Sales dropped much faster than listings, leading the sales to active listings ratio (SALR) much lower. The SALR for Greater Toronto fell to just 6.35% in May, down from 26.77% last year. For context, the “brutal” dip in 2018, left the market with a SALR of 17.85%. Generally speaking, analysts believe prices rise when the ratio is above 20%. When it’s below 12%, they expect prices to fall. If sales don’t bounce higher soon, this indicator points to falling prices in the future.

Greater Toronto New Home Sales To Active

The ratio of sales to active listings for new homes in Greater Toronto, for the month of May.

Source: Altus Group, Better Dwelling.

Greater Toronto new homes saw fewer sales, less inventory, and mixed prices. Higher prices are odd at first glance, but prices tend to disconnect on low volumes. Fewer transactions mean fewer points to confirm a price movement. When sales fall faster than inventory, sellers tend to need to motivate buyers with lower prices.

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8 Comments

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  • Reply
    David Brown 3 months ago

    I have an agent that specializes in investment properties, and he’s been doing email blasts where he explains rents are falling, so if you’re negative cap it might be a good time to pull back.

    If you’re selling your investment properties, you’re not adding to your portfolio. And prices are steep compared to rent for regular people to jump into the market.

    • Reply
      Jason Chau 3 months ago

      and eviction courts aren’t even open yet. Once everyone’s evicted, there’s going to be even bigger pressure on rents to fall.

      These people are also less likely to be able to rent again for a while, so they’ll end up having to share households with people with better credit. Household formation is likely to rise.

  • Reply
    KL 3 months ago

    There’s always going to be demand for Toronto condos. There’s no where else to move in Canada, unless you want to deal with recessions and job losses every other year.

    Canada is designed this way.

    • Reply
      Nav 3 months ago

      Definitely going to be demand at the right prices. I don’t think we can assume any asset is going to always appreciate in value, Toronto condos are no exception.

      I’d argue that demand is higher in the burbs right now, lots of people have the ability to work remotely now so they don’t want to pay the downtown premium.

      Time will tell.

    • Reply
      straw walker 3 months ago

      Homeless.. where else do you move to when your destitute ..live on the streets.
      Some are buying a cheap camper trailer and living in it.. I just recently sold mine and I couldn’t believe the interest.

    • Reply
      AreYouKidding 3 months ago

      I really don’t understand comments like this. This is complete nonsense. What, do you think Toronto is the “chosen city” from some greater power that has carefully designed the Canadian economy? Cityplace 2br was selling for what, 250k in early 2000s prebuild when I was in the sales center? And with a historical YoY average of 3% gain per year on real estate assets (remember inflation is 2% of that, on average), that would make Toronto condos in 2020 worth what…oh wait, history doesn’t matter because Toronto is the chosen world class city that everyone wants to move to. You have to be kidding me. Do the math. Seriously. Actually do the math. There are valid reasons why the market could go up or down depending on what happens. But do actually do the math. Comments like this contribute nothing to the discussion.

    • Reply
      Jim Straughan 3 months ago

      KL London Real estate is looking good for investment as well as a boon for
      those who can work from home.
      With our mix of white collar jobs from civil service , hospitals,
      University of Western Ont,insurance,companies,Fanshawe College ,teachers
      Light industry and manufacturing seems healthy here as well
      It’s Toronto that historically been boom an bust not London
      http://www.houseforsalelondonontario.com to check out prices

  • Reply
    Dennis 3 months ago

    Hearing a lot of chatter about projects being cancelled or delayed. The cost of carrying projects while selling isn’t easy. At this rate, with zero new launches, there’s 15 months of inventory. That’s gotta be the highest in a very long time for pre-sales.

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