Greater Toronto real estate is doing some soul-searching after soaring mortgage costs. Data from Altus Group and group of developers BILD GTA show that new home sales collapsed in March. Demand fell in all segments, but so did inventory. Despite the scarcity of inventory, prices for single-family homes still saw the benchmark price drop.
Single-family home prices in Toronto fall, but condominiums rise
The price of a single-family home in the Greater Toronto Area has fallen by tens of thousands in one month. The benchmark price slipped to $1,838,400 in March, down 1.09% ($20,300) from the prior month. That’s just off the record and over 27% more than last year, so few buyers would have transpired. However, this drop with tight stocks is an interesting dynamic that we will come to in a second.
New condominium apartments are experiencing the reverse market, seeing prices soar once again. The benchmark price for a new condo reached $1,252,500 in March, up 6.34% ($74,800) from the previous month. This represents a new all-time high for the segment, with prices up 17.7% compared to last year. Apparently the detached buyers didn’t pass the note on to the exuberant condo buyers.
GTA new home sales fell 21%, ending this year’s boom
Sales of new homes are down sharply in the Greater Toronto Area. In March, only 4,115 new homes were sold, down 21% from last year. Broken down, single-family homes accounted for 838% of sales, down 50% from a year earlier. Condominium apartments fell to 3,277 units, down 7% from a year ago. This is a sudden and rapid downturn, especially considering the start of the year.
March GTA New Home Sales
Total new home sales in the GTA for the month of March.
Source: Altus Group; BILD; Live better.
Year-to-date home sales (YTD) highlight the sudden drop in March. March year-to-date sales were 10,974 new homes, down just 2% from a year ago. Even with single-family units halved and condos down 7%, sales this year are only 2% lower than last year’s numbers. The March decline was brutal, to say the least.
GTA New Home Inventory Very Tight, Despite Falling Single-Family Home Prices
Greater Toronto real estate still claims low inventory, but this time it’s for real. There were just 8,050 new home listings in March, the lowest being at least 2013. Single-family and condominium apartments saw their inventories plummet.
There were only 830 single-family units in inventory at the end of March. That roughly halves last year’s numbers, but it’s also up 50% from last January’s multi-decade low. It’s relative, there’s a lot less inventory than last year, but if you’ve only been browsing since January, it might seem like more. Either way, it’s a very tight inventory, which makes the price drop for the segment a bit odd. Tight markets generally lead to higher prices, not lower prices.
As for condominium apartments, there were only 7,220 units, down nearly a third from last year. This was the lowest number of units available since 2011 and the 10th consecutive decline. Only nine projects were launched in March with many projects, however. They may have been waiting for the recently released federal budget or the provincial election in a few weeks. They may also have been busy with the possible labor disruption that is brewing. Or they could just press pause until costs stabilize. It’s hard to say and unlikely to be clear for a few weeks.
New home sales are experiencing a sudden drop in demand and developers have less inventory. A variety of factors complicate both sourcing and buying, including volatile inflation and rising mortgage rates. At the same time, home buyers are seeing their budgets shrink rapidly. In other words, it’s a less than ideal time to be a developer selling new homes.