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New high-rise home prices up 39.5% year-over-year

February data (2018) for the new home market in the Greater Toronto Area was released this past week by BILD and Altus. I seem to have gotten into the habit of writing about this every month.

The benchmark price for new low-rise single-family housing was down slightly from January to $1,219,874, but still up 12.8% from a year prior.

The benchmark price for new high-rise housing was up a whopping 39.5% year-over-year to $729,735. But part of this is being driven by an equally dramatic increase in average unit sizes.

Here is the relevant graph:

image

The story continues to be about tight supply, historically low developer inventories, and a lack of affordable low-rise product. 

As I have argued many times before on this blog, I believe these factors — and in particular the last one — are, at least partly, driving this recent pop in high-rise pricing. People are priced out and now searching for substitutes.

So my prediction continues to be that we will see a convergence (i.e. diminishing spread) between new low-rise and high-rise pricing.

That will also bring about design and product changes on the high-rise side.

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