New home prices more than double as supply dwindles: Report

By TESS KALINOWSKIReal Estate Reporter

Fri., July 22, 2016

The cost of a new low-rise home in the Toronto region has more than doubled in the last decade to $887,543 in June, up from $393,398 in 2006 — a trend that is being fed by a record low supply within the same period.

A report on housing trends over the last decade from the Building Industry and Land Development Association (BILD) shows that the price on new low-rise homes, including detached, semi-detached and townhouses, has risen more than $100,000 in the last year alone.

The building and renovation industry has been raising concerns about the provincial land use policies since they were introduced in 2006.

But with Queen’s Park expected to launch new higher intensification targets in the fall, BILD wants the province to look at the potential impacts.

“We’re just starting to feel the effects of their existing policies in terms of price and supply. We’re encouraging them to take a hard look at the numbers and to understand the effects of their current policies before they increase numbers,” said Michelle Noble, vice-president of marketing and communications.

Consumers also need to be part of the discussion because millennials still want to buy detached homes, she said.

“It’s really important for people to enter in on this conversation about what do they want their housing choices to be. We see they change as your life changes and you age but we’re being forced to build housing supply that doesn’t always take that into account,” said Noble.

Despite the region’s growing population, the inventory of new homes has actually dropped in the last 10 years by about 11,500 units.

BILD statistics released Friday showed that the cost of a high rise condo has also risen by 6 per cent in the last year alone.

Noble said the industry has been very responsive in adapting to Ontario’s new denser land use policies, creating products like stacked townhomes and innovative condo layouts.

“We’re following policy and every year we build fewer and fewer low-rise homes, especially detached homes, so all that exist become more valuable,” she said.

That has led to tough competition at sales centres with consumers lining up to buy and some developments selling out within hours or release.

But environmentalists, who support higher density targets for the Greater Golden Horseshoe, say there is enough land to provide housing development at existing rates through 2031.

“There’s no evidence to show there’s a lack of land for building new homes, either the low-density stuff that BILD likes or high density stuff that would be better,” said Tim Gray of Environmental Defence.

Proximity to urban amenities, not land supply, is driving prices, he said. “The real issue is what kind of housing future are we going to have. Are we going to have more diverse housing styles that actually meet the needs of our population? Are we going to grow our population in a way that means it’s dense enough for transit; that we leave our farmland in a state that we can continue to grow food; that we have walkability and higher quality of life?”

By the numbers

18,427: Inventory of new homes in the GTA in June 2016, including 2,064 low-rise units — townhomes, semis and detached houses

29,968: New home inventory in June 2006, including 16,363 low-rise homes

4,166: New homes sold in the GTA in June — 22 per cent fewer than last June

31%: Decline in number of new low-rise home sales in June year over year

14%: Reduction in the number of new condo sales in June over last year

Risk of speculation in Toronto condos mitigated by presales: CMHC

ANDREA HOPKINS

OTTAWA — Reuters

Published Tuesday, Jul. 19, 2016 9:25AM EDT

Most Toronto condominium projects do not begin construction until 70 per cent of units are sold, curbing the risk of speculation, Canada’s housing agency said on Tuesday in a report that suggested overbuilding fears may be overdone.

A prolonged Canadian housing market boom, particularly in the two major markets of Toronto and Vancouver, has sparked fears of a bubble. Condo construction has jumped in both cities to meet the demand of buyers priced out of more expensive detached homes.

But the Canadian Mortgage and Housing Corp report noted 79 per cent of projects begin construction after reaching 70 per cent presale threshold, and that current unsold inventory is largely concentrated in downtown Toronto and the suburb of Markham, where condo markets are more active.

“Inventory management therefore continues to be necessary to make sure that condominium units currently under construction do not remain unsold upon completion,” the report said.

The CMHC, which has played down the likelihood of a national bubble while flagging what it sees as overbuilding and overvaluation in some cities, said condos account for about 50 percent of residential construction in Toronto.

Some 43,860 units were under construction across Toronto in the first quarter of 2016, and 1,373 units were completed and unsold. The unabsorbed inventory rate was 5.8 per cent, the lowest level in the past two years.

“The current inventory level is low compared to the highs witnessed during the early 1990s and has eased from a slight increase in 2015,” the report noted.

Toronto’s last housing bubble burst in the late 1980s, fueled by huge speculative investment in the condo market, but the CMHC said the same risks were not seen in the current market.

It said more conservative underwriting by most lenders have increased presales to the 70 per cent threshold.

Still, some speculation was occurring, either in small projects, in projects by large-scale reputable developers who have more equity available, or in multi-phase projects with high or full absorption in their early phases, it said.

The average absorption rate in Toronto was unchanged at 94 per cent, while the average project size has increased to 280 units in the first quarter of 2016 from 205 units in the first quarter of 2014, the report showed.

Home Prices in Canada’s Biggest City Gain Most Since 1989

by Bloomberg14 Jul 2016

by Erik Hertzberg

May was the biggest month for Toronto new home prices in 27 years.

Prices in Canada’s largest metropolitan area rose 1.9 percent in May, and were up 6.4 percent from a year earlier. Nationally, home prices rose 0.7 percent in May, the largest monthly increase since 2007, Statistics Canada reported Thursday.

The data adds to evidence that Toronto’s housing market may be overvalued. Policy makers including Bank of Canada Governor Stephen Poloz have warned price gains there and in Vancouver are unsustainable.

Builders cited market conditions and the higher cost of land as reasons for the gains in Toronto, where new house prices have been rising for 16 consecutive months, Statistics Canada said.

New house prices in Vancouver also recorded large gains in May, rising 1.1 percent in the twelfth consecutive monthly gain. Prices in the west-coast city are up 5.1 percent from a year earlier.
Nationally, new home prices rose 2.7 percent from a year earlier, the largest increase since 2010.
Economists were expecting a national increase of 0.2 percent in May and 2.2 percent from a year earlier, according the median estimate in a Bloomberg survey.

Statistics Canada’s new home price index doesn’t include condominiums or apartments, which comprise about a third of the new real estate market.

Bloomberg News

Toronto-area home prices climb 16.8% in June

By TESS KALINOWSKIReal Estate Reporter

Wed., July 6, 2016

The average price of a home in the Toronto region rose to $746,546 in June, up 16.8 per cent from the same month last year, as the supply of housing continued to decline, according to monthly statistics issued by the Toronto Real Estate Board (TREB) on Wednesday.

The board is planning to release additional research this year to contribute to the escalating discussion about housing prices in the city.

“As the federal, provincial and local levels of government discuss housing policy in the coming months, issues affecting the lack of supply in the GTA should be of paramount importance,” said TREB president Larry Cerqua.

“There is no doubt that demand is at a record level, but would-be home buyers continue to face an uphill battle against a constrained supply of listings,” he said.

While TREB recorded 7.5 per cent more sales, 12,794 in all in June, the number of new listings was down 3.8 per cent.

The real estate board has said that the low supply is, in part, a result of homeowners being reluctant to sell their properties because of the high price of finding another home. Many homeowners are renovating rather than moving.

In the city of Toronto, home prices rose to $775,400 on average in June from $682,489 the same month last year.

Across the region, detached homes rose in price about 20 per cent over last year. Semi-detached homes, which have been in particularly short supply this year, rose 16.4 per cent and townhomes increased 14.9 per cent. The average price of a condo rose 7.7 per cent in the same period.

The federal government has recently announced a provincial working group to look at policy options for cooling the climbing Toronto housing market. It has also promised to look more closely into the extent that foreign investment is fueling the high prices here and in the Greater Vancouver area.