Toronto

Toronto New Home Sales Drop Over 40%, But 905 Demand Surges Higher

Greater Toronto new home sales are on fire, everywhere but in the actual city. Data from Altus Group and BILD GTA shows new home sales had the biggest July in over a decade. Surprisingly, this trend is driven almost exclusively by suburban home sales. In the City of Toronto, new home sales have dropped by nearly half, despite the 905 setting new records.

New Home Prices Rise, But Condos and Houses Now Down From Peak

New home prices across the country are higher than last year, but both segments are now down from peak. The benchmark price for single-family homes reached $1,182,199 in July, up 8.3% from the same month last year. The benchmark for condo apartments reached $993,811, up 18.5% from the same month last year. Big gains, but condo apartments are showing some signs of cooling.

Greater Toronto New Home Sales

Total July new home sales in Greater Toronto.

Source: Altus Group, Better Dwelling.

Both segments are down from their peak, and condo apartments are seeing deceleration. Single-family homes are up 18.5% from last year, but still down 9.08% from their 2017 peak. Condo apartments are up 18.5% from last year, but down 0.54% from the peak reached in June. The rate of growth increased for single-family homes, which was just 3.9% in June. Condos are seeing growth decelerate, falling to 18.5% from 24.2% the month before. A lot of this trend is explained by the shift to single-family buying.

Despite A Record July, Toronto New Home Sales Are Lagging

Pent up demand, that was created from a period of artificial restraint, is responsible for the surge. There were 17,616 new home sales across Greater Toronto from January to July. This represents a decline of 11% when compared to the same period last year. The rise seen in July is most likely people forcefully delayed by the pandemic, a form of momentum difficult to carry over.

Greater Toronto New Home Sales YTD

Total YTD new home sales in Greater Toronto for July.

Source: Altus Group, Better Dwelling.

Toronto New Home Sales Dropped 43%, On Weak Condo Demand

The rise in sales is really a 905 story, as new home sales in the City of Toronto plummet. The city only represented 783 of the sales in July, down 43% from the same month last year. Single-family homes were 36 of the units, up 5% from last year. Condo apartments dropped to 747 units, down 44% from last year. Despite a record month for sales, new homes in the City dropped to nearly half the volume seen last year. This is a trend that was also reflected in last month’s resale numbers as well.

Greater Toronto New Home Sales

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

Source: Altus Group, Better Dwelling.

New Home Inventory Dropped Over 25%

A lack of sales in the City is leading to fewer pre-sale project launches, slowing inventory. There were 13,828 units for sale in July, down 25% from the same month last year. Single-family units fell to 3,999 of the units, down 10% from the same month last year. Condo apartments represent 9,829 of the listings, down 31% from last year.

The spike in sales and lack of new releases helped to tighten the sales to active listing ratio (SALR). The SALR reached 25.63% in July, compared to 22.24% last year. This indicates the market is tighter, and therefore there’s pressure on prices to rise. However, most of this pressure is in the 905, where the ratio is much higher.

Greater Toronto New Home Sales To Active

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

Source: Altus Group, Better Dwelling.

New home sales are soaring across Greater Toronto, but it’s mostly a 905 story. Similar to what we’ve seen with resale homes, suburban demand has been driving the market. Meanwhile in the city, the primarily condo-based market is seeing demand decline. If pent up demand is behind the sudden surge, the rally should wear out as the year progresses.

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5 Comments

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  • Reply
    Fazid 1 month ago

    The difference between a condo in the city and a full house in the suburbs is almost closed. Why would you buy in a city when there’s nothing to do anymore?

    • Reply
      SH 1 month ago

      Nothing to do anymore….well maybe for the next 6-12 months. I’m pretty sure most people buying condos have a longer time horizon than that (or they should).

      • Reply
        RainCityRyan 1 month ago

        You give people too much credit!
        We’re a bunch of myopic blundering fools with a severe case recency bias.

        Though … to be fair even when Covid-19 is long gone there will likely be another bug pop up before long …
        SARs 2002,
        H5N1 bird flu 2005,
        H1N1 swine flu 2009,
        MERS 2012,
        Ebola 2013,
        Measles 2019,
        Covid 2020

        Ok ignore that part about recency bias

    • Reply
      alvi 1 month ago

      Because they like the city and the region

  • Reply
    Tom Wolfe 1 month ago

    how come the Realtor.ca website headline number is so static….
    ‘Search 269,199 listings from trusted REALTORS’ its been saying the same thing for months….up or down less than 100 a day…i still think it bogus.

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