The Greater Toronto Area (GTA) new home market saw a sluggish start to the year, according to a recent press release from the Building Industry and Land Development Association (BILD).
Altus Group, BILD’s official source for new home market intelligence, reported that there were only 567 new home sales in January. This was a significant decrease of 81 per cent from January 2022 and 70 below the 10-year average. It was also the lowest number of new homes sold in January since Altus Group began tracking in 2000, according to BILD.
Sales of single-family homes particularly slow
Sales of single-family homes, which include detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses), were particularly slow.
Only 186 were sold in January, a decrease of 70 per cent from January 2022 and 78 per cent below the 10-year average. It was also the lowest level of single-family home sales for January since tracking began.
Condo sales at lowest level in 14 Years
Condos, including units in low, medium, and high-rise buildings, stacked townhouses, and loft units, accounted for 381 units sold in January. It was the lowest level for January in 14 years, down 84 per cent from January 2022 and 64 per cent below the 10-year average.
Edward Jegg, research manager at Altus Group, said in a news release, “New home sales started 2023 on a very quiet note. Developers, particularly in the condominium apartment sector, continue to bring new units to the market though buyers remain largely hesitant.”
Developers launch new condo projects despite hesitant buyers
Despite the slow sales, two large condominium apartment projects were launched in January, increasing the total new home remaining inventory to 13,490 units, the highest level in two years.
This included 11,869 condominium apartment units and 1,621 single-family units, representing 7.5 months and 4.8 months of inventory, respectively, based on average sales for the last 12 months. A balanced market would have 9-12 months of inventory.
Prospective home buyers sitting on the sidelines
Dave Wilkes, BILD president & CEO, noted, “We are seeing a modest increase in inventory due to prospective home buyers sitting on the sidelines as a result of current monetary policy. But given the rate at which the population of the GTA and the province is growing, we need to build 1.5 million new homes in Ontario in a decade. We are committed to working with all levels of government to implement the changes necessary to meet this ambitious goal.”
The benchmark price for new single-family homes decreased in January compared to the previous month to $1,730,359, down 2.3 per cent over the last 12 months.
The benchmark price for new condominium apartments decreased in January compared to the previous month to $1,127,192, which was down 2.0 per cent over the last 12 months.
It’s a double-edged sword really, as the SELLERS are way more reluctant these days to put their property on the market.
As a full-time Realtor since 2005, I have seen this happen before, and I am in no way feeling “surprised” to see it happening again! Of course there is always death, divorce, change of employment, and a few other factors that dictate the selling of a property during a slower market, but the majority of owners will wait for the activity to pick up again before they list their place for sale.
Even in today’s slower market, we are seeing some properties get sold for more than asking price, because there is a lack of inventory and those who can afford to buy now, are not going to wait for the market to get hot again. There is no doubt that nobody can predict the future with absolute certainty, so all the talk from the economists, various news articles, etc. can never be 100% reality. In my own experience however, people will normally panic and buy high, or panic and sell low.