‘Still on the sidelines’: Sales of new GTA homes and condos continue to slide
Sales of new GTA homes and condos continued to fall year-over-year in March, according to new numbers released Monday by the Building Industry and Land Development Association (BILD).
People are still on the sidelines," said David Wilkes, the CEO of BILD, as buyers remain cautious in the new, higher interest rate, uncertain economic climate.
In March, the pause that we had been seeing in new home sales continued, sales were down significantly from a year ago, inventory has remained tight," Wilkes added.
There were just 384 sales of new single-family homes in the region, down a whopping 57 per cent from last March, and 893 new condo sales, down 73 per cent.
Altus Group, BILD's source for market analysis, also found in the new report that the total new home inventory in March was 14,479 units, down slightly from February, but up from last year's all-time low in March. This includes 12,887 condos and 1,592 single-family units, or about 10 months and six months of inventory, respectively.
Inventory fell during the low interest rate, high demand period, and takes times to build back up, according to BILD. A balanced market has about 9 to 12 months of inventory.
Prices, meanwhile, seem to be flatlining after a drop. The seasonally adjusted benchmark price for both new single family homes, including detached, linked, and semi-detached houses and townhouses, increased slightly from last month to about $1.8 million, down 2.1 per cent year-over-year.
The benchmark price for new condos also increased a bit from February, to about $1.12 million, down 10.8 per year-over-year. These small price increases have at least partially been attributed by realtors and builders to the ongoing lack of supply. With so few homes on the market, there is sometimes stiff competition for the ones that are available.
The Bank of Canada's eight interest rate hikes in a row after historic lows, did dampen demand," Wilkes said. But he's concerned about what will happen when the market adjusts and that demand comes back. The Bank hit pause at its last two announcements, holding the overnight rate at 4.5 per cent.
The reason that prices have gone down (annually) is not a structural fix to supply and demand, but a temporary decrease in demand that has resulted in prices going down," Wilkes said.
Demand will be back due to population growth, argued Wilkes. The market will continue to be out of balance, which is why we're so focused on making sure we make the necessary changes to deliver more supply to the market."
This week, Toronto's chief planner released a long-awaited report calling for huge changes to Toronto's zoning laws, legalizing multiplexes in every neighbourhood. The current rules only allow single-family homes in a large swaths of the city. It's measures like this that are needed, Wilkes said.
We are so well below what we need to be delivering," he added.
This market is far from fixed."
May Warren is a Toronto-based housing reporter for the Star. Follow her on Twitter: @maywarren11