Greater Toronto’s new construction housing has seen demand completely vaporize. Data from BILD GTA and Altus Group show new construction sales fell 90% in September. Prices are now falling, especially for condos which saw a $30k drop in the month. The segment was mostly bought by investors which have disappeared, helping inventory recover.
Toronto New Condo Prices Are Suddenly Plunging Lower
Greater Toronto Area (GTA) new construction prices are falling, just not as fast as resales. Single-family homes (detached, semi-detached, and town) saw the benchmark price fall to $1.85 million in September. That’s a drop of 0.4% (-$8,400) for the month, with prices now 4.2% (-$80,698) lower than the July 2022 peak. Not nearly as much of a contraction as we’ve seen in the resale market, which are now double-digits off peak.
Condo apartments are seeing sharper price declines, which are coming suddenly. The price of a typical, or benchmark, condo fell to $1.16 million in September. This is a decline of 2.5% (-$30,200) from a month before, with prices down 7.4% (-$93,100) since peaking in February 2022. Monthly price declines were nearly 5x the rate of single-family. A price correction is 10% or more so we’re not quite at a correction for the segment, but it’s getting close.
Greater Toronto New Home Prices Are Falling After An Abrud Run
The Altus Group benchmark price for a new home across Greater Toronto.
Source: Altus Group.
Greater Toronto New Home Sales Fell 90%
Greater Toronto’s investor-dominated market has seen demand for new homes disappear. Just 45 single-family homes sold in September, down 96% from last year. It was the slowest September in at least a decade, and likely goes much further back.
Condo apartments were on a similar spiral of falling demand right across the GTA. Just 289 condos sold in September, down 89% from last year. Once again, the worst September in at least a decade, but likely goes much further back. In contrast, the 2015 condo slump saw a volume 3x higher than we just saw.
The City of Toronto saw a sharp slowdown in particular, when it came to sales. Just 109 condo apartments were sold in September, down 92% compared to last year. Not one single family home sold in the month, down from 71 units last year.
Toronto New Construction Inventory Jumped 17%, But Still Low
Greater Toronto new housing inventory is rising, but still not at pre-2020 levels. There were 11,900 new homes for sale in September, up 14.3% from the previous month. Single-family inventory fell to 1,609 units (-1.0%), while condos jumped to 10,290 units (+17.1%) from a month before. It sounds like a big jump, but in the past decade, we haven’t seen anything this low prior to 2021. An exception being the 2017 mini-bubble. Soft sales tend to delay new project releases, so the condo bump is a bit of a surprise.
Higher interest rates play a significant role, throttling leverage and profitability. Considering nearly 60% of Toronto’s new condo supply is investor owned, this was predictable. What’s not so easily predictable is whether investors will jump back into the market soon. Especially as investor mortgages are set for another global regulatory hit next year.