Pre-construction sales of single-family homes in Toronto fell 58% in 2017, while new condo sales broke records according to a Globe and Mail report. When Altus Group compared 2016 and 2017 sales numbers of single-family homes the contrast was stark.
After collecting construction sector data they found builders only sold 7,700 single-family homes in 2017 versus 18,365 the previous year. This number was based on the sale of pre-construction homes that included detached, semi-detached and town homes.
“Matthew Boukall, senior director of residential products at Altus Group, said builders are facing lower demand for single-family homes as prices have climbed and more buyers are turning toward the condominium sector as the affordable alternative. The benchmark price of a new single-family home sold in the GTA climbed to $1.2-million in 2017 from $650,000 four years earlier, he said.”
Developers are looking to pause construction on these low-lying homes until demand ramps up again. Another problem could be the enormous price tag that accompanies new-builds; they’re looking at lower-cost options to entice new buyers.
Next, Altus looked at the condominium sector, which broke the 2016 sales record of 29,132 new units sold. In 2017, 36,429 new units were sold while the majority were sold during pre-construction.
This tally wasn’t restricted to Toronto either; sales levels rose sharply in York Region and Peel Region too.
"We are anticipating it will be a challenge for the market to surpass 36,000 condo sales in 2018," Mr. Boukall said. "We think there's excess demand to absorb 36,000 homes again. It's just a function of whether the market can afford it."
As we previously reported, millennials are reaching home buying age across Canada. A lot of them are looking at condominiums as their starter homes instead of single-family houses. Baby Boomers are also looking to downsize from those single-family homes and enter the condominium market in style.