Greater Toronto’s new housing market is slowing just as fast as existing-homes. Altus Group data shows new home sales fell sharply in May, while inventory levels have improved. New home inventory is still low compared to historical levels, but the drop in sales has been so sharp that it’s starting to erode price gains. Just how slow are new home sales? In the City of Toronto proper, just 2 new single-family homes were sold in the month of May.
Greater Toronto New Home Prices Have Fallen From Peak, But Are Still Up Significantly From Last Year
The price of a single-family home (detached, attached, row, etc.) is still up a massive amount from last year. The price of a typical new single-family home reached $1.81 million in May, up 31% from last year. Prices have dropped 2.36% from the peak reached in March, so higher rates are beginning to taper exuberance. Single-family homes have still shown a huge increase, but a $43,900 discount is a little relief for potential buyers.
Condo apartments have seen a large increase over the past year, but fell even more than single-family homes. The benchmark price for a new condo apartment climbed to $1.18 million in May, up 11% from last year. Prices were down 6.1% from the all-time high reached in March, more than double the rate of single-family homes.
Greater Toronto New Home Sales Are Down Sharply From Last Year
Greater Toronto new home sales are behind the drop in home prices. Single-family home sales fell to 491 new homes in May, down 62% from the same month last year. Condo apartments came in at 2,058 units, down 31% over the same period. The significant decline is particularly impressive since inventory was incredibly scared last year, making it more difficult to even find a unit to purchase.
Just 2 New Single-Family Homes Sold In The City of Toronto
Worth a mention is the odd activity in the City of Toronto. Single-family new home sales came in at just 2 homes, a drop of 87% from last year. It’s a huge difference from February, which came in 2,300% higher than May sales. It’s an unusual and noteworthy slowdown.
Greater Toronto New Home Inventory Is Improving, But Still Low
The good news is inventory is improving, helping to bring those prices down. There were 1,954 single-family homes for sale at the end of May, up 40.5% from the previous month. Condo apartments climbed to 8,050 new homes for sale, up a more modest 1.4% from last year. Inventory is still extremely tight, but demand is falling fairly fast.
Greater Toronto new home sales are cooling quickly and prices are becoming more affordable. It has a long way to go, but falling sales have helped reduce pressure on prices to rise.
Affordable is when the average price returns to the Schiller/Case index mean, and we are still a long way from that.
Returning to Schiller/Case index mean at 10% mortgage rate means you still won’t be able to afford the house you want
Well, we have experimented over the last 15 years with throwing money at everyone who could fog a mirror and it has landed us exactly where we are today.
It’s a failed experiment that has cost a whole generation their dream of home ownership or put them in eternal debt servitude.
I’d say let’s go see how we do when the pendulum swings the other way.
Let’s see how many people would be able to afford their dwellings at a higher interest rate but saner house price to income ratios.
Can’t come soon enough.
It’s the total inflation that’s causing them to act. Central banks’ mandate isn’t to cool the housing bubble though.
It has seemed like the central bank’s mandate has been to keep the housing bubble expanding, doesn’t it?