Toronto

Toronto New Home Prices Are Finally Seeing Growth Slow

Toronto’s new home market is finally starting to cool, but it’s got a long way to go. Altus Group and BILD GTA data show new home sales were firm in June. Weakness in the city, especially for condo apartments, weighed on price growth though. Annual price growth is starting to slow, with condos even seeing prices dip from a month before.

Greater Toronto New Home Prices Slow In Growth

The benchmark, aka “typical,” price of a new home had mixed movements last month. The benchmark price for a new single-family home reached $1,405,597 in June, $25,106 higher than it was a month ago. Prices are now 23.1% higher than they were last year. Huge annual growth, but the rate is over a point lower than a month before.

Condos are a little weaker, with the benchmark price actually slipping lower. The benchmark fell to $1,058,366 in June, down $5,607 from the previous month. Prices are up 5.9% from last year, significantly slower than detached housing. For those curious, that’s decelerated annual growth. It appears to be the exact opposite trend seen with existing condo apartment prices.

Greater Toronto New Home Sales Are 4% Higher Than The 10-Year Average

Slowing price growth definitely isn’t due to falling new home sales. There were 3,860 units sold in June, double last year’s volume (almost exactly). It sounds like extravagant growth, but the base effect is making it look bigger than it really is. For more context, sales are 4 percent higher than the 10-year average for June. Not quite as big as it sounds, but a market driven by sentiment may place more emphasis on how it sounds, than reality.

Greater Toronto New Home Sales

Total June new home sales in Greater Toronto.

Source: Altus Group; BILD GTA; Better Dwelling.

Toronto New Home Sales Slower Than Usual

New home sales in the City of Toronto are higher than last year, but much slower than usual. Toronto represented 882 of the new home sales, up 113% compared to a year before. That comparison is obviously influenced by a base effect due to the pandemic, so don’t read too much into it. When contrasted to June 2019 sales, last month was 39.38% lower. Weaker city sales and stronger GTA sales mean the 905 is doing the region’s heavy lifting.

Greater Toronto New Home Sales

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

Source: Altus Group; BILD GTA; Better Dwelling.

Greater Toronto New Home Inventory Is Still Tight

Inventory has been loosening from the crunch, but the market still lacks supply. The sales to active listings ratio (SALR) reached 33.7% in June, almost double the 13.9% seen a year before. A balanced market requires the SNLR to fall below the 20 point ratio. In June the market was somewhere between the 43.6% squeeze in March, and a balanced range.

Greater Toronto New Home Sales To Active

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

Source: Altus Group; BILD GTA; Better Dwelling.

The market is cooling down, but hasn’t cooled down yet. Inventory is still tight, and prices are still significantly higher than last year. That said, the market is cooling down very quickly and price growth is falling fast.

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2 Comments

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  • Reply
    Mitch 2 months ago

    sh… the few people in Toronto buying condos think it’s the hottest market ever. 17 bids on one property, the highest premium ever paid for a studio… on declining sales. This is some really funny stuff.

    • Reply
      RW 2 months ago

      Probably spending their pre-approval before B-20 cuts their borrowing power. The regulators were so worried about people overleveraged, they gave the market plenty of notice they’ll only have the summer before leverage rules change. Swell guys.

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