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New home sales

2018 GTA new home sales drop to lowest mark in nearly 20 years

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2018 GTA new home sales drop to lowest mark in nearly 20 years

New home sales

Last year saw the lowest total sales in almost 20 years in the GTA new home market, the Building Industry and Land Development Association (BILD) reports.

Overall in 2018, there were 25,161 new homes sold in the GTA, according to Altus Group, BILD’s official source for new home market intelligence, making 2018 the year with the lowest number of new home sales in the GTA since Altus Group started tracking new home data in 2000.

New record low

There were 21,330 condominium units sold in 2018, including those in low-, mid and highrise buildings, stacked townhouses and loft units – down 38 per cent from 2017 but only four per cent less than the 10-year average. Setting a record low since Altus began tracking new home data in 2000, there were only 3,831 single-family homes sold in 2018, including detached, linked and semi-detached houses and townhouses (excluding stacked townhouses). This is down 50 per cent from 2017 and down 74 per cent from the 10-year average.

“A number of factors combined to produce the drop in GTA new home sales in 2018,” says Patricia Arsenault, Altus Group’s executive vice-president, Data Solutions. “More stringent mortgage stress testing, rising interest rates and lack of single-family product affordable to a broader range of buyers all played a role. As well, the record new condo apartment sales in 2017 brought forward some demand that would otherwise have occurred in 2018.”

In December, the benchmark price for new condos was $796,815, up 11.2 per cent over the last 12 months. The benchmark price for single-family homes was $1.14 million, down 6.7 per cent over the last 12 months.

Out of balance

“From our point of view, the market is out of balance,” says David Wilkes, BILD president and CEO. “We must continue to work with all levels of government to ensure that policies don’t artificially price consumers out of the market.

“We commend the provincial government for taking action toward increasing housing supply in Ontario,” Wilkes adds. “We join other industry groups in calling on the federal government to revisit the stress test and allow a longer amortization period for first-time buyers. And we look forward to working with our municipal partners on removing barriers to development such as excessive red tape and outdated bylaws.”

At the end of December, there were 15,768 new homes available for purchase, comprised of 10,687 condominium units and 5,081 single-family homes. Remaining inventory includes units in preconstruction projects, in projects currently under construction, and in completed buildings.

 

December New Home Sales by Municipality

December 2018 Condominium apartments Single-family Total
Region 2018 2017 2016 2018 2017 2016 2018 2017 2016
Durham 40 17 50 44 15 75 84 32 125
Halton 48 163 59 21 47 93 69 210 152
Peel 108 89 130 32 11 152 140 100 282
Toronto 479 404 1,684 9 8 31 488 412 1,715
York 129 195 345 30 62 274 159 257 619
GTA 804 868 2,268 136 143 625 940 1,011 2,893

Source: Altus Group

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The housing outlook for 2019

GTA among the most promising new home outlooks for 2019, Altus Group says

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GTA among the most promising new home outlooks for 2019, Altus Group says

The new home sector in Canada had a challenging year in 2018, but markets in the Greater Golden Horseshoe, including the GTA, have among the most promising outlooks for 2019, according to Altus Group.

Increased regulations, higher interest rates, new taxes and higher Development Charges are testing the industry,  Altus Group says in its New Home Outlook for 2019.

Altus Group is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry, and tracks new home development and sales activity across the country.

At the start of 2018, the supply of available new homes in both the Vancouver and Toronto markets was constrained, particularly in the condominium apartment sector. The lack of available product contributed to the rapid rise in pricing in 2017 and impacted sales volumes at the start of 2018.

In Alberta, the new home sector, along with the rest of the housing market, continued to be impacted by low energy prices and weaker economic activity. The opposite was the case in Montreal, where a sharp increase in demand for new homes led to peak sales levels.

The outlook at the end of 2017 was that the market would continue to see reasonably strong demand in 2018, but sales would be impacted by the new mortgage regulations and other new policies, taxes, and regulations – the degree to which was unknown.

Looking at 2018’s market performance year-to-date, Altus can see that demand was impacted in the major markets, most significantly in the single-family and higher-end townhouse segments. New condominium apartment sales have also moderated in Vancouver and Toronto where the incredibly strong demand seen in 2017 has softened in the current year. Some of the moderation is normalization from the frenzied market pace noted in recent years.

KEY FINDINGS

Greater Toronto Area

The GTA market came off a record new condominium apartment sales year in 2017. However, the impacts of mortgage rule changes and new development charges contributed to a decline in project launches and lower sales to start the year. Sales and project launch activity have increased in the back half of the year, but year-to-date sales remain down by almost 50 per cent compared to 2017.

While sales have been lower, pricing for new condominium apartment product in the downtown area has remained fairly stable with overall average prices trending towards $800,000.

New single-family sales continued to decline in 2018. Although availability of product to purchase has increased, it remains beyond the reach of most buyers.

Hamilton and Kitchener-Waterloo

Markets outside of the GTA have continued to benefit from their relative affordability compared to Toronto, particularly in Kitchener-Waterloo, where the new supply of condominium apartment product experienced strong demand in 2018. Both markets benefit from markedly better pricing compared to the GTA, where lower average prices for both new condominium apartment and single-family housing makes it a much more buyer-friendly market.

Promised improvements to transit, which will take several years to implement, will enhance commuting options throughout the Greater Golden Horseshoe, thus providing greater opportunities to live in markets outside of the GTA.

Montreal

Montreal saw a strong increase in new home sales over the past three years and continues to experience robust demand for new condominium apartment homes. Given the growth in sales, many of the challenges seen in the other large markets have started to impact Montreal – rising costs, elevated inventories of under construction product and increased investment activity. Despite the challenges, year-to-date sales activity remains strong and is trending slightly higher than last year.

Edmonton

The Edmonton market has been facing challenges from elevated inventory levels, a large stock of completed and unsold new homes and the impact that weak energy prices is having on housing demand. Consumers’ mortgage qualification has become a more significant challenge for new home projects, resulting in a year-over-year decline in sales levels by almost 50 per cent for both townhouse and condominium apartment product. The slow pace of sales has also meant that several projects have shifted to purpose-built rental.

While the market has been slow, there are some bright spots with development in the Ice District experiencing reasonably strong demand, along with well-priced townhouse developments in the suburban markets.

Calgary

The Calgary market is performing stronger in 2018, with increased sales of both new condominium apartment and townhouse product on a year-over-year basis. This growth has been exclusively in the suburban markets where new condominium apartment and townhouse sales have exceeded 2017 numbers.

While sales in the suburbs are tracking higher, the inner city and downtown markets are seeing weaker demand and lower sales volumes with higher office vacancy and lower downtown employment impacting housing demand near the core. Conversely, the strongest new home sales in the suburbs have been occurring in regions near employment centres.

Vancouver

Leading into 2018, the Vancouver market was the tightest of the markets examined, in terms of available new homes with only 1.8 months of inventory. This year, new project launches, particularly along transit lines and in the Fraser Valley, have added much needed inventory and boosted the supply to 3.3 months of inventory – although this remains the lowest in the country.

The frenzied pace in the market has softened with the sales rate at launch moderating, while price growth has stopped and even pulled back in certain segments of the market. A key challenge that has become more apparent as of late has been the price sensitivity of consumers, with higher-priced projects, or those priced above the competition, experiencing below average sales rates.

2019 Outlook

The outlook for housing demand in 2019 remains positive across the country with elevated immigration levels, continued demand from first-time homebuyers and tight rental vacancies and elevated rents encouraging homeownership. The key pressures that Altus Group sees continuing to impact the new home market in 2019 are higher interest rates and housing affordability constraints, rising construction costs and development charges impacting developers, and weaker economic growth potential in certain regions constraining demand.

Across the major markets in Canada, Altus Group believes the markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019 given the depth of the decline in 2018 and building off of the sales recovery noted in the back half of 2018.

Calgary and Edmonton will continue to be impacted by the weaker economy, but are not forecast to experience a material decline in overall sales volumes given the current levels of activity in each market.

The two markets that may see a decline in sales activity in 2019 are Montreal and Vancouver – but for very different reasons. Montreal had a strong sales year in 2018 and 2019 volumes are expected to decline as the market returns to more normal conditions. The Vancouver market, which is currently exhibiting the most potential for downside risk, is expected to see a modest decline in sales volumes as consumers react to higher borrowing costs and developers react to escalating construction costs in the face of lower revenue opportunities. With that said, the sales volumes in 2019 are still anticipated to be at or close to the 10-year sales average for the market.

altusgroup.com


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Condos Oct web

GTA new home market gains further momentum in October

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GTA new home market gains further momentum in October

 Condos Oct web

The GTA new home market saw a relatively active month for new condominium apartment and single-family home sales and openings in October, according to the Building Industry and Land Development Association (BILD).

There were 2,805 condominium apartments in low, medium and highrise buildings, stacked townhouses and loft units sold in October, down 44 per cent from October 2017 but only one per cent less than the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence. Single-family home sales, with 491 detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) sold, were even with last October and down 64 per cent from the 10-year average.

With 21 condominium apartment projects and 14 single-family home projects opening in October, remaining inventory increased to 16,283 units, comprised of 10,982 condo apartment units and 5,301 single-family units. Remaining inventory includes units in preconstruction projects, in projects currently under construction and in completed buildings.

October best month

“The pickup in interest from builders and home buyers that started to emerge in the GTA new home market in September gained momentum in October,” says Patricia Arsenault, Altus Group’s executive vice-president, Data Solutions. “October was the best month we’ve seen this year not only in terms of sales – for both single-family homes and condominium apartments – but also new project openings. And for both sales and new openings, the increases from last month were stronger than the typical seasonal pattern.”

David Wilkes, BILD president and CEO, says the new home market’s gradual return to more typical activity levels was an encouraging sign. “It’s clear that when we are able to bring on more supply and give new home buyers more product to choose from, they get excited and motivated about making that choice. That’s why we are especially heartened by the new provincial government’s commitment to increasing housing supply through its Housing Supply Action Plan.”

Benchmark prices

The benchmark price for both condo apartments and single-family homes decreased slightly in October, compared to the previous month. The benchmark price for condo apartments was $775,537, which was still up 14.5 per cent over the last 12 months. The decrease in the benchmark price of condo apartments from September can be accounted for by the smaller benchmark size of units available to purchase. The benchmark price for single-family homes was $1.11 million, down 8.4 per cent over the last 12 months.

October new home sales by municipality

October 2018 Condominium Apartments Single-family Total
Region 2018 2017 2016 2018 2017 2016 2018 2017 2016
Durham 79 19 96 55 207 323 134 226 419
Halton 328 162 375 78 69 515 406 231 890
Peel 169 110 203 148 48 177 317 158 380
Toronto 2,133 4,085 1,478 74 28 14 2,207 4,113 1,492
York 96 613 336 136 139 621 232 752 957
GTA 2,805 4,989 2,488 491 491 1,650 3,296 5,480 4,138

 Source: Altus Group

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Townhomes

Pent-up demand for townhomes building in the GTA

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Pent-up demand for townhomes building in the GTA

Townhomes

Condos may be the choice for many in the increasingly expensive GTA, but not everyone wants to live in a box in the sky. More and more new home buyers are looking for affordable lowrise options such as townhomes. Emphasis on the word affordable.

The problem? The supply just isn’t there – and the pent-up demand is growing.

Appealing especially to young families, townhomes provide more space and flexibility than condos, and generally are far more affordable than single-family homes.

“Both stacked (townhomes) and (row) townhouses form a key component of the Missing Middle – the built forms between high-density condo and low-density single-family housing,” Matthew Boukall, vice-president, product management, Data Solutions at Altus Group, told Homes Publishing.

Altus recently studied the sector for one of its regular housing reports, surmising that townhomes play an increasingly important role in in the new home sector, not just in the GTA but across Canada.

In the GTA, new townhouse sales have plummeted in the past two years – both in absolute terms and as a percentage of total new home sales (to just seven per cent of the total in the first half of 2018), Altus says.

GTA Starts

Affordability and availability remain an issue.

In the GTA, the key challenge to supplying this built form has been finding land with the right entitlements to allow and support this construction, Altus reports. Much of the land along Toronto streets support higher density condo product or is priced at a level which encourages rezoning to support this density.

“What can support more townhouse development is allowing rezoning of the land between the existing single-family communities and the corridors for more mid-density development,” Boukall says.

Although townhouse land (medium density) sales in 2017 were actually up over 2016, they are trending lower in 2018. Part of the problem is a lengthy approval process. “Year to date in Toronto, we have only tracked five approved townhouse projects, representing less than 350 units,” says Boukall. “Obviously, we need more product to meet the market demand. The positive note is that developers are proposing more product, with almost 1,500 new units applied for in 2018.”

GTA Townhouse sales

STACKED TOWNHOMES

Stacked townhouses, in which one row of townhouse units is stacked on top of another, provide a more affordable option to single-family homes, given higher densities. They also offer many of the appealing aspects of condominiums, but without living in a highrise environment.

However, they still play a relatively smaller role than traditional townhouses in the overall townhouse arena, Altus says.

In the Vancouver market, for example, new stacked townhouse units accounted for slightly more than 200 sales on average per year in 2015-17 – about six per cent of all new townhouse sales.

GTA Stacked

In the GTA, where stacked townhouses have made a larger dent, they remain a niche segment, accounting for about one in five new townhouse sales in recent years.

Part of the challenge with stacked townhouses versus rowhomes are those similar to condominium apartments – longer planning and construction timelines, and other residences adjacent on all sides

Both housing types will play an important role throughout the GTA in the future, but stacked townhouses are expected to become more popular given the better affordability provided by the higher density housing type.

“That said,” Boukall adds, “traditional row townhouses are the more common housing type in the GTA and as such, account for more sales compared to the stacked townhouse product. Row townhouse product has been accounting for a growing share of the single-family new homes sales in the GTA, currently accounting for 42 per cent of the total single-family sales activity in the GTA.”

WHERE IN THE GTA?

So, prospective GTA new home buyers, which areas hold the most promise in terms of future townhome availability?

While townhouses are expected to remain a popular housing option throughout the GTA, both Toronto and the York region share the most medium density land activity in the region, and should see increased development activity as a result in 2019 and beyond.

“The Peel region, most notably Brampton, is the most active for stacked and row townhouse sales in 2018 and should continue to see demand supported by an available land supply and comparably affordable prices,” says Boukall.

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