How come new low-rise home sales in the GTA in July dropped almost to mid-recession levels?
How come the volume of resale home sales in July fell 34 per cent from the same month last year and new listings dropped to the lowest level for the month of July since 2002?
How come the biggest chunk of new high-rise sales moved from the City of Toronto to the 905 communities in July?
And finally, how come, despite all this disturbing news, prices for the average new and resale home – both high- and low-rise – kept ticking solidly upwards?
George Carras, president of RealNet Canada Inc., which tracks the GTA’s housing market, says he doubts if anyone can yet unravel all the factors at play in today’s housing market. There is no easy-to-identify single or multiple factors that can be directly linked to such dramatic swings.
We had a late winter and spring full of bright hope as thousands of people flocked to high-rise and low-rise sites and snapped up product. We had a double-digit jump in resales.
Now just three months later it is all change at Charing Cross.
“The three biggest factors I can see affecting the market are lack of consumer confidence, a continuing lack of understanding about the HST and rising prices,” he says. “But each of those catch-all categories has its own set of factors at play that could keep you talking for weeks,” he says.
Down to the numbers. Low-rise sales in July stood at 678 units, which is just about 100 more than in January when everyone was blaming the recession for poor sales. And yet the average price rose 9.2 per cent from last July to $489,088.
In the resale market the Toronto Real Estate Board says 6,564 homes changed hands in July, 34 per cent fewer than the same month last year. At the same time new listings dropped to 10,825, the lowest level for July since 2002.
The average price for July transactions was $420,482 or 6 per cent higher than the same month last year. Tucked away in the July statistics, however, is an interesting number. July’s average resale price is almost $12,000 down from the average selling price for the first seven months of this year ($432,253).
Finally high-rise sales for the month stood at 1,900 units making July the second worst month for sales after January. But just like low rise, prices were up. RealNet says the average high-rise condo price stood at $430,782 that month, up 10 per cent from the previous month.
Again, however, there is a statistic buried among the facts and figures that is worth noting. While traditionally sales of condos in the 416 area have far outstripped high-rise condo sales in the 905 area, July saw a dramatic turnaround.
That month 905 sales were 63 per cent of the month’s total with those outside major urban concentrations like Mississauga City Centre playing a big role.
So, to finally make a point, what do all these statistics suggest? Kind of a no-brainer really. Affordable homes – new high-rise, new low-rise and resale – are what buyers are looking for.
That is likely why the average resale price in July is well below the seven-month average. That is why 905 condos outside major urban areas are selling. Cheaper land means cheaper condos. That is why builders are able to move their lower-priced detached homes but not their higher-priced ones.
If you need a few examples, Mr. Carras suggests taking a look at Daniels Corp.’s First Home Brampton project north of Sandalwood Parkway, west of Bramalea Road. This is a 150-unit, stacked townhouse project, which went on sale for $251 a square foot and sold out within days.
Park 570, a four-storey midrise by Vandyk Properties north of Dundas Street and west of Mississauga Road had 180 units for sale at the start of July, priced at $328 a square foot. By the end of the month it had sold 137 of them.
In low rise, he cites Upper Village Wismer Commons by Greenpark Homes north of 16th Avenue and west of Markham Road. The company offered detached homes from $466,990 and townhouses from $355,990. Of the 22 sales in July, 17 were the much cheaper townhouses.
“The funny thing is all builders are reporting strong traffic through presentation centres. It is just that people are looking but not buying,” he says.
And if they do buy it is a home well down on the price ladder even if they have to live in an area well away from an urban centre.
Mr. Carras also raises an interesting point. He wonders if builders would have been better off showing prices without HST.
“That way people could clearly see the impact it has on prices and focus any anger where it belongs – on the province and not on the builder,” he says.
Terrence Belford
Globe and Mail ,Sep. 02, 2010
