Toronto

Toronto New Home Sales Plummet, But The 905 More Than Makes Up The Volume

Greater Toronto new home sales are improving, just not in the City of Toronto. Numbers from Altus Group, a leading real estate data firm, show a big climb for new home sales in June. While the climb is large, sales volumes are still below average for the month. Most interesting is the market shift. New home sales in the City of Toronto are falling, while sales in the 905 are driving all growth these days.

Greater Toronto New Home Prices Are Mixed

The price of a typical new home in Greater Toronto made a mixed move once again. The price of a typical condo reached $804,591 in June, up 3.9% from last year. Single-family homes fell to $1,098,948, a decline of 3.0% from last year. Condos are at a new all-time high, with single-family prices down 16.10% from peak. The decline for single-family homes has been getting larger over recent months.

Greater Toronto Sales Rise Over 32%, But Far From Normal

Greater Toronto real estate sales made a big climb from last year, but are still well below normal. There were 3,352 sales in June, up a massive 32.22% from last year. While a huge climb, it was still 10.63% below the average for the month of June. This is the second slowest June since 2013, which was a notoriously slow year.

Greater Toronto New Home Sales

Total June new home sales in Greater Toronto.

Source: Altus Group, Better Dwelling.

Breaking it down condos represented 2,420 of the sales, up 13.88% from last year and 7.59% for the 10-year average for June. Single-family homes represent 932 of the sales, up 127.32% from last year and down 43% from the 10-year average. Condos are still showing robust growth, despite being lower than the 2017 number. Single-family homes have seen sales drop to almost half of the monthly average.

The past year of new home sales has been busier than last year, but once again still not up to typical levels. There have been 17,086 sales year to date ending June, up 42.50% when compared to the same period last year. This number is down 21.05% from the 10 year average for the same period. Other than last year, a year hasn’t been this slow since the Great Recession. The takeaway is less about this year’s growth, and how slow it was last year.

Greater Toronto New Home Sales YTD

Total YTD new home sales in Greater Toronto for June.

Source: Altus Group, Better Dwelling.

City of Toronto New Condo Sales Are Down Over 50% From 2017

City of Toronto new home sales continue to decline. The City represented 1,220 of the new home sales in June, down 5.79% from the month before. That doesn’t seem all that bad, until you realize it’s a 53.70% decline from June 2017 numbers. Virtually all of the sales were condo apartments, representing 1,214 of the sales, down 5.67% from last year. Condo sales for the month are down a similar 53.89% from June 2017. This means the massive climb we’re seeing in sales year-over-year is completely driven by the 905.

Greater Toronto New Home Sales

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

Source: Altus Group, Better Dwelling.

Greater Toronto Inventory Soars To Highest Level In Years

Greater Toronto has a lot more inventory, relieving pressure on prices to move higher. There were 19,062 new homes for sale in June, up 25.55% from the year before. Condos represented 14,377 of those homes, up 39.11% from last year. Single-family homes represent the remaining 4,685 homes, down 3.36% from the year before. This is a level of inventory not seen in the region since 2016,  but with fewer sales to match.

The sales to active listings ratio (SALR) made a small climb, but still remained similar to last year. The ratio reached 17.58% in June, up 5.26% from last year. To contrast, this ratio was at 52.87% in June 2017. Generally speaking, when the SALR is above 20% the market is a seller’s market, where prices are expected to rise. When the ratio falls below 12%, the market is a buyer’s market, where prices are expected to fall. Between 12 and 20 and the ratio is balanced, and prices are right for the demand. By this measure, this would mean expect little to no growth – the market is priced correctly. The ratio is just a guideline for comparing relative demand however, so don’t use it as a single reference.

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, Better Dwelling.

Greater Toronto new home sales improved, but are still below average for June. YTD sales are up, but also the second fewest sales since 2009. There’s improvements on a year-over-year basis, but it’s generous to say sales are back to normal. All growth observed is now coming from the 905 now, which is also a big shift.

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6 Comments

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  • Reply
    Mitch 3 weeks ago

    because the 905 drives price trends now? Lol

    • Reply
      GTA Landlord 3 weeks ago

      My favorite is the foreign buyer tax, which applied to 4% of sales, is now dropping sales volumes by over 50%. Is the narrative being crafted by the industry that locals don’t want to buy now that foreign buyers aren’t buying?

      • Reply
        Average Man 3 weeks ago

        To some extent that might be true. I think the spectre of “foreign buyers” was used to push a lot of locals into having FOMO and giving them some urgency to buy. Were the foreign buyers really moving the market like that, or was it mostly a hustle used by realtors? TBD. But I think (know) it was a thing that happened.

  • Reply
    Ethan Wu 3 weeks ago

    There’s a few condos not dropping their prices in the City, but are now doing things like throwing in suite upgrades, and one mega luxury product now furnishes the entire condo in high end furnishings. This is very reminiscent of the early 90s, when they used to put a car in the driveway. Prices aren’t dropping, you’re just getting more. *wink*

    If there’s such a large surge in 905 condo sales, that would account for the price growth – a rising floor. Interesting. Good breakdown as always.

  • Reply
    DB 3 weeks ago

    The writer forgot to finish the title…But the 905 more than makes up the volume….for now…
    Toronto is ground zero when it comes to the rest of Canada..especially the GTA. everyone falls into line eventually; Oh are detached homes not the gold standard in re: Condo’s will eventually do the same as buyers become torn between purchasing a detached home or a condo..what would you do if you had a choice and price was not an issue ?

  • Reply
    SomeFinanceModellingMathGuy 3 weeks ago

    I don’t think it’s the foreign buyers tax as a single factor, its flight capital from China being cracked down upon. Winnie the pooh essentially has fucked his economy by artificially inflating GDP for years. through ghost cities, and they need to have people fill these ghost cities, in China, so he’s preventing people from sending their money over seas and purchasing in China.

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