Greater Toronto real estate is doing some soul searching after soaring mortgage costs. Data from Altus Group and developer-group BILD GTA show new home sales cratered in March. Demand dropped across segments, but so did inventory. Despite scarce inventory, single-family home prices still saw the benchmark price drop.
Toronto Single-Family Home Prices Slip, But Condos Surge Higher
The price of a single-family home in Greater Toronto pulled back by tens of thousands in one month. The benchmark price slipped to $1,838,400 in March, down 1.09% ($20,300) from a month before. It’s just off the record high and more than 27% higher than last year, so few buyers would have broken a sweat. However, this decline with tight inventory is an interesting dynamic we’ll circle back to in a sec.
New condo apartments are experiencing the opposite market, seeing prices soar once again. The benchmark price of a new condo reached $1,252,500 in March, up 6.34% ($74,800) from a month prior. This represents a new all-time high for the segment, with prices now up 17.7% from last year. Detached buyers didn’t pass the memo to exuberant condo buyers, apparently.
Greater Toronto New Home Sales Fell 21%, Ending This Year’s Boom
New home sales are down sharply across Greater Toronto. In March, just 4,115 new homes were sold, down 21% from last year. Broken down, single-family homes represented 838 of the sales, down 50% from a year before. Condo apartments fell to 3,277 units, down 7% from last year. This was a sudden and rapid slowdown, especially considering how the year started.
Greater Toronto March New Home Sales
Total new home sales in Greater Toronto for the month of March.
Source: Altus Group; BILD; Better Dwelling.
The year-to-date (YTD) home sales highlight the sudden drop-off in March. Sales for March YTD came in at 10,974 new homes, down only 2% from last year. Even with single-family units cut in half and condos down 7%, sales this year are only 2% below last year’s numbers. March’s decline was abrupt, to say the least.
Greater Toronto New Home Inventory Is Very Tight, Despite Single Family Prices Falling
Greater Toronto real estate always claims low inventory, but this time it’s for real. There were just 8,050 listings for new homes in March, the lowest going back to at least 2013. Both single-family and condo apartments have seen inventory plummet.
There were just 830 single-family units in inventory at the end of March. This cuts last year’s numbers roughly in half, but it’s also up 50% from the multi-decade low last January. It’s relative, there’s a lot less inventory than last year, but if you’ve only been browsing since January it may feel like more. Either way, this is very tight inventory, making the price drop for the segment a little odd. Tight markets usually result in higher prices, not lower ones.
As for condo apartments, there were just 7,220 units, down almost a third from last year. It was the fewest number of units available since 2011, and marked the 10th consecutive drop. Only nine projects launched in March with many planned, though. They may have been waiting for the federal budget released recently, or the provincial election in a few weeks. They might have also been busy with the potential labor disruption that’s coming to a head. Or they might just be pressing pause until costs stabilize. It’s difficult to tell and not likely to be clear for a few more weeks.
New home sales are seeing a sudden drop in demand and developers have less inventory. Various factors are making it both difficult to provide supply, and purchase it, including unstable inflation and rising mortgage rates. At the same time, home buyers are seeing their budgets rapidly shrink. In other words, it’s a less than ideal time to be a developer selling new homes.