Toronto’s new home sales are re-entering the atmosphere but forming two distinct markets. BILD GTA and Altus Group data shows new home sales fell in September. Even with the dip, the volume remains historically strong for all segments. Prices are a little more complicated, with single-family homes soaring and condos dropping.
Toronto Single-Family Home Prices Jumped $51,000 In A Month
Greater Toronto’s new home prices have seen segments once again diverge in performance. The single-family (detached, semi-detached, etc.) benchmark price hit $1,573,764 in September. This is a 3.4% increase from the previous month and prices are now 33% higher than they were a year ago. Single-family home prices hit a new record high and growth is still parabolic.
It’s easy to get lost in the wall of text above but the growth rate for both periods was out of control. Prices rising 3.4% in a month might not mean anything to someone not used to working with asset prices. It works out to $51,796 dollars though — a little over the median wage for a full-time employee in Canada. That’s how much single-family home prices increased in just a month. Not exactly reflective of a cooling market narrative.
Toronto Condo Prices Dropped Over $32,000 In A Month
Toronto condo prices are the exact opposite these days, with very little growth. The benchmark condo price fell to $1,036,831 in September, down 3.1% from the previous month. Prices are only 2% higher than a year ago, drastically underperforming single-family housing.
If you didn’t catch that, the monthly move for condo prices was a similar rate to single-family homes. It made that move in the opposite direction though, shedding about $32,869 in value from a month before. We’re seeing polar extremes in the market. The moves are reflective of the gap in supply but more on that later.
Toronto New Home Sales Fell, But They’re Stronger Than Usual
Toronto’s new home sales are softening from the pandemic frenzy but remain high. There were 3,767 new homes sold in September, down 10.4% compared to the same month a year ago. Sales remain 16.4% higher than the 10-year average though, so this isn’t a weak market by any measure. It’s just weaker than the frenzied market seen last year.
Greater Toronto New Home Sales
Total September new home sales in Greater Toronto.
Source: BILD GTA; Altus Group; Better Dwelling.
Breaking it down by segment, single-family homes are down sharply from last year’s volumes. The segment saw 1,073 units sold in September, down 54% from the previous year. It pushed year to date sales to 11,143 units, which is about 8% lower than they were this time last year. The monthly volume is only ~30 units below the 10-year average, so it’s not a slow market. Last year was just unusually busy.
Greater Toronto New Home Sales YTD
Total year to date (YTD) new home sales in Greater Toronto for September.
Source: BILD GTA; Altus Group; Better Dwelling.
Condo apartments saw a much smaller decline in sales and this year is on track to outperform last year. There were 2,488 condo sales in September, a drop of 10% from last year. Year to date it works out to 23,077 sales, about 50% higher than last year. The monthly volume is even 27.3% above the 10-year average, so the market is very strong — just not 2020 or 2016 strong.
Greater Toronto New Home Sales By Region
Total new home sales in Greater Toronto for September by region.
Source: BILD GTA; Altus Group; Better Dwelling.
Toronto New Home Prices Moved With Inventory
The mix of indicators might be a little confusing at first glance but make a lot of sense. Single-family homes have weaker sales but they’re seeing massive price growth. Condos have stronger sales along with weaker price movements. The answer is inventory.
The sales to active listings ratio (SALR) shows two very different markets. A SALR gives us an idea of how strong sales are, relative to inventory. Single-family homes had a SALR of 81.2% in September, while condos came in at 22.4% over the same period. The general rule is prices fall below 12%, are balanced between 12% and 20%, and rise above 20%.
Both markets are tight enough to see prices rise, but condos are near balanced. Once balanced, the market is priced right for demand and doesn’t need to rise or fall. Condo prices are only up 2% from last year, so this is pretty spot on. In contrast, single-family homes have a quarter of the inventory on a relative basis. That’s a much tighter market, not even close to balanced.
An important note here is there is a lot of supply in the planning stages (not to mention what’s being built). The industry recently said over half of home builders have delayed projects due to unstable material costs. Kind of hard to sell a home if you’re not sure how much it’ll cost to build in a year. An end to QE and rising rate forecasts should stabilize costs. When that occurs, the record home building activity should be joined by even more supply.
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With Canada setting bubble world records, what makes
anyone think coming down, as Tom Petty said, isn’t going
to be “the hardest thing”.
Presumably he was talking about a phantasmagorical drug trip,
but how is that any different from this hallucinogenic market?
Our government and industry have into druglords, and
money-laundering kingpins. By any measure it’s a
concerted criminal enterprise, and with rising interest rates,
up go the protection racket charges.
People need to stop thinking of real estate as mere places to live. Instead, think of property in the same context as rare, precious gems, coveted by many, but available only to a select few.
So, I distinctly remember Better Dwelling articles going booyah and congratulations themselves on calling the top on Canadian housing just a few months ago. Would you now publicly admit you were wrong? Or is this just a position to talk your book and continue to mislead people?
They aren’t wrong if the government takes corrective action to push home prices higher. Every developer we work with has frozen their projects because they’re waiting for the Federal government’s promise to give them money to build.
The government has literally hijacked the monetary system to prove them wrong (which is probably not a coincidence considering how many politicians share their content).
Not even the government can stop rate normalization without causing mass starvation of consumers at this point though.
That would be before the Bank of Canada provided excess credit liquidity to lower mortgage rates even further than the emergency while the market overheated
Really if they stopped calling it, the market wouldn’t know what to do. I hope they make no mention when things crater this time, because I’d love to see a full on financial crisis form.