Fewer low-rise homes could mean record-setting year for high-rise homes

If the current trend continues, 2016 will be a record year for sales of new high-rise homes in the Greater Toronto Area (GTA), according to Building Industry and Land Development Association (BILD).

As of August 31, 17,949 new high-rise homes had been sold in the GTA, a record for this point in the year. While August is typically a slower sales month, sales this year were unprecedented with 1,880 high-rise units sold according to Altus Group, BILD's official source for new home data. Records were also set in August for the lowest available supply and highest prices of low-rise homes.

"Demand and prices of high-rise homes are also starting to climb as more people are priced out of the low-rise market," said BILD president and CEO Bryan Tuckey in a statement.
The average price of new high-rise homes in the GTA in August was a record $480,914. This is a seven per cent increase from August 2015.

"For much of the last decade, condo prices remained stable because units were getting smaller," Tuckey said. "The price per square foot for condos has been steadily increasing. In the last few months, we have been seeing marked increases in condo prices because average unit size stopped decreasing."

In August the average size of new high-rise units in the GTA was 808 square feet and the average price per square foot was $595. In June 2006, when the Growth Plan was introduced, the average unit size was 913 square feet and the average price per square foot was $344.

High-rise supply was also down in August, with 14,600 units available for purchase in builder inventories. The decline was mainly in homes in the pre-construction stage due to limited new projects being launched, which is standard for this time of year.

While the majority of August's high-rise sales were in the City of Toronto, a significant amount came from the 905 regions, particularly Peel and York.
"Our industry is building to government intensification policy and we are building at least as many high-rise homes as low-rise homes," Tuckey said. "The supply of low-rise homes – especially single family detached homes – has plummeted in the years since the Growth Plan was introduced, but demand for those types of homes has not diminished. As a result, prices have increased dramatically."
There were just 491 new low-rise homes sold in August, down 44 per cent from August 2015 and marking a 10-year low. Meanwhile low-rise homes in the first eight months of the year recorded 12,956 sales, down nine per cent from August 2015.

The average price of a new low-rise home, which includes single family detached as well as semi-detached homes and townhomes, was $931,506 in August — a 16 per cent increase from August 2015 and an even larger increase from the $393,398 average of June 2006.

As of August 31, there were just 1,379 new low-rise homes available to purchase across the GTA in builders' inventory, another new record low. This is less than a tenth of the 16,560 that were available for purchase on June 30, 2006. The average price of new single family detached homes in the GTA was $1,166,005 in August, compared to June 2006, when a new single detached home was $442,420.

At the end of June 2006, there were 10,823 single family detached homes available for purchase in the GTA. On August 31, this year across the GTA, there were only 592 available for purchase in builder inventories.
August New-Home Sales by Municipality:*
August '16 Low Rise High Rise Total
Region 2014 2015 2016 2014 2015 2016 2014 2015 2016
Durham 202 113 212 16 72 38 218 185 250
Halton 139 93 59 73 57 178 212 150 237
Peel 359 378 84 53 74 112 412 452 196
Toronto 62 12 11 948 687 1,395 1,010 699 1,406
York 389 282 125 200 188 157 589 470 282
GTA 1,151 878 491 1,290 1,078 1,880 2,441 1,956 2,371
Jan-Aug 12,322 14,163 12,956 13,842 13,743 17,949 26,164 27,906 30,905

Source: Altus Group

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