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Record year for GTA’s new homes market

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Record year for GTA’s new homes market

(CNW) — In the GTA new homes market, 2016 was a record-setting year for low inventory, high prices and highrise condo sales, the Building Industry and Land Development Association (BILD) announced January 26, 2017.

There were 29,186 new highrise units sold across the GTA in 2016, more than in any previous year on record and 30 per cent more than in 2015 according to Altus Group, BILD’s official source for new home market intelligence. Sales were up in every region in the GTA, particular in Durham where sales were more than double those of 2015.

Overall in 2016, there were 47,161 new homes sold in the GTA, 62 per cent were highrise units and 38 per cent (17,975 units) were lowrise homes.

The year that saw the most new homes ever sold in the GTA was 2002. That year there were 53,660 units sold of which 72 per cent were lowrise and 28 per cent were highrise.

“The decline in lowrise sales in 2016 was due to the lack of product available to purchase, not softer demand,” said Patricia Arsenault, executive vice president of research consulting services at Altus Group. “The fact that new product is being quickly absorbed, despite rising prices, shows there is continued buyer interest in purchasing new ground-oriented homes in the GTA.”

The number of new homes available to buyers in builders’ inventory across the GTA reached an unprecedented new low at the end of last month, while prices for all types of new homes in the GTA broke records.

At the end of December 2016, there were 13,670 new homes available for purchase, less than half of the 30,400 homes that were available in builders’ inventories a decade ago. New highrise supply reached a 10-year low, falling to 11,792 units last month. Meanwhile lowrise supply was 1,878 homes, of which only 742 were single-family detached homes.

Ten years ago there were 12,871 highrise units available to purchase and 17,529 lowrise units of which 11,602 were single-family detached homes.

“We have a shortage of housing supply in the GTA that is approaching crisis levels,” said BILD president and CEO Bryan Tuckey. “Housing is selling as quickly as the industry can bring it to market and the lack of developable land that is serviced with infrastructure, excessive red tape, out-of-date zoning and NIMBYism are hindering our ability to bring more to the market.”

The lack of supply is forcing prices up across the board. The average price of available new lowrise homes, which includes detached and semi-detached houses and townhomes, was $995,116 in December 2016, and for new single-family detached homes in the GTA the average was $1,264,604. The average price of new detached homes increased by more than $273,000 in the past 12 months.

Prices for new highrise homes also reached an all-time high in 2016. In December, the average price of condo units in the GTA was $507,128. In December 2006 it was $321,353. The average size of a condo suite in the GTA grew to 826 square feet last month while the average price per square foot increased to $614. A year ago the average price per square foot was $584 while the size of an average suite was 775 square feet.

December New Home Sales by Municipality:

December ’16

Low Rise

High Rise

Total

Region

2014

2015

2016

2014

2015

2016

2014

2015

2016

Durham

153

94

75

37

45

47

190

139

122

Halton

53

84

50

75

43

48

128

127

98

Peel

215

197

119

59

67

89

274

264

208

Toronto

82

17

30

678

1,040

1,408

760

1,057

1,438

York

520

226

278

88

152

344

608

378

622

GTA

1,023

618

552

937

1,347

1,936

1,960

1,965

2,488

Jan-Dec

18,005

19,552

17,975

21,908

22,484

29,186

39,913

42,036

47,161

Source: Altus Group

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Average GTA home price jumped 20% in 2016

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Average GTA home price jumped 20% in 2016

Toronto Real Estate Board President Larry Cerqua announced that 2016 was the second consecutive record year for home sales. Greater Toronto Area realtors reported 113,133 home sales through TREB’s MLS dystem, up by 11.8 per cent compared to 2015. The calendar year 2016 result included 5,338 sales in December – an annual increase of 8.6 per cent.

The strongest annual rate of sales growth in 2016 was experienced for condominium apartments followed by detached homes.

“A relatively strong regional economy, low unemployment and very low borrowing costs kept the demand for ownership housing strong in the GTA, as the region’s population continued to grow in 2016,” Cerqua said.

“It is important to point out that the strong demand that we experienced in 2016 was very much domestic in nature. TREB recently commissioned Ipsos to survey its members with regard to the level and type of foreign buying activity within the GTA,” Cerqua said. “The results of the survey suggest that the level of foreign buying activity is low in the GTA. Only an estimated 4.9 per cent of GTA transactions, in which TREB members acted on behalf of a buyer, involved a foreign purchaser. In the City of Toronto, the share of foreign buyers was 5 per cent.”

The methodology of the Ipsos research involved an online survey of the TREB membership hosted on the Ipsos platform. A total of 3,518 surveys were completed between October 6 and October 21, 2016. The margin of error is ±2 percentage points 19 times out of 20. TREB will be releasing the full results of the Ipsos survey dealing with foreign buyers on January 31, in conjunction with its Market Year in Review and Outlook Report and related media event.

The annual rate of growth for the MLS Home Price Index (HPI) in the TREB market area accelerated throughout 2016 – from 10.7 per cent in January 2016 to 21 per cent in December 2016. The overall average selling price for calendar year 2016 was $729,922 – up 17.3 per cent compared to 2015. The pace of the annual rate of growth for the average selling price also picked up throughout the year, including a climb of 20 per cent in December.

“Price growth accelerated throughout 2016 as the supply of listings remained very constrained. Active listings at the end of December were at their lowest point in a decade-and-a-half,” said Jason Mercer, TREB’s director of market analysis. “Total new listings for 2016 were down by almost four per cent.

“In 2016, we saw policy changes and policy debates pointed at the demand side of the market. If we want to see a sustained moderation in the pace of price growth, what we really need is more policy focus on issues impacting the lack of homes available for sale.” TREB’s Market Year in Review and Outlook Report will include an expert panel and related submissions on the foundations of the housing supply issue in the GTA and possible solutions.

With continued strong rates of price growth, housing affordability is a growing concern. However, the City of Toronto’s budget committee is considering an increase to the Land Transfer Tax that could see buyers of average-priced homes pay another $750, which would represent a 7 per cent increase to the $11,000 that they already pay as an upfront Land Transfer Tax closing cost. This would be on top of the $12,000 that is also paid to the province.

First-time buyers could end up paying $475 more, or, at best, be no better off, even though the province recently doubled their first time buyer LTT rebate.

“The last thing people need is to dish out another $750 on top of the $11,000 that they already pay city hall, Cerqua said. “The city should be looking for ways to make housing affordability better, not worse.

“The budget committee should stop this proposal in its tracks and instead enhance the rebate for first-time buyers.”

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