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:
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.
The Ryerson City Building Institute and Urbanation recently published a terrific report called: Bedrooms in the Sky. Is Toronto Building the Right Condo Supply?
Here is a quick synopsis: The 35-44 year old age bracket in this city will see significant growth over the next decade; single family homes are really expensive; and we’re not building enough family-friendly condo units.
When Urbanation looked at the data for all condo units currently under construction they found that the unit mixes still skewed toward 1-bedroom units, but that the number of 3-bedroom units is starting to trend upward. That feels right.
The report also talks about the affordability gap between condos and houses. The average condo in the Greater Toronto Area costs about $511,000, while the average detached house costs $1,134,000.
However, this isn’t exactly an accurate comparison because the average condo is smaller in size than the average house. I think a better metric is to look at price per square foot.
Also, houses give you the flexibility of a secondary suite. Right now that usually means a basement apartment, but pretty soon it’ll likely include a laneway suite. That creates an additional income stream and helps with overall affordability.
In any event, up until maybe recently, houses generally looked cheaper on a per square foot basis. And my view – which I have written about extensively on this blog – was that as soon as houses become “more expensive”, we’ll see an uptick in larger family-oriented condos.
A few weeks ago I went to an open house in a desirable area of Toronto. It was for a 1,300 sf semi-detached house with good bones, but in need of a full gut. Basement was low, only suitable for humans around 5′ tall. It sold for $1 million.
Let’s say that house needs $300,000 to bring it up to the level of a new condo. If that doesn’t include some sort of extension, now you’re in for $1.3 million or about $1,000 per square foot. You can still find a condo for less than that.
Which is one of the reasons why I think we’re now starting to see an uptick in larger/family units. (We are trying to do it at Junction House.)
But like all things in real estate, these things move slowly. The condos under construction today were designed years ago. Changes take time to work themselves through the system.
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:
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.
The Ryerson City Building Institute and Urbanation recently published a terrific report called: Bedrooms in the Sky. Is Toronto Building the Right Condo Supply?
Here is a quick synopsis: The 35-44 year old age bracket in this city will see significant growth over the next decade; single family homes are really expensive; and we’re not building enough family-friendly condo units.
When Urbanation looked at the data for all condo units currently under construction they found that the unit mixes still skewed toward 1-bedroom units, but that the number of 3-bedroom units is starting to trend upward. That feels right.
The report also talks about the affordability gap between condos and houses. The average condo in the Greater Toronto Area costs about $511,000, while the average detached house costs $1,134,000.
However, this isn’t exactly an accurate comparison because the average condo is smaller in size than the average house. I think a better metric is to look at price per square foot.
Also, houses give you the flexibility of a secondary suite. Right now that usually means a basement apartment, but pretty soon it’ll likely include a laneway suite. That creates an additional income stream and helps with overall affordability.
In any event, up until maybe recently, houses generally looked cheaper on a per square foot basis. And my view – which I have written about extensively on this blog – was that as soon as houses become “more expensive”, we’ll see an uptick in larger family-oriented condos.
A few weeks ago I went to an open house in a desirable area of Toronto. It was for a 1,300 sf semi-detached house with good bones, but in need of a full gut. Basement was low, only suitable for humans around 5′ tall. It sold for $1 million.
Let’s say that house needs $300,000 to bring it up to the level of a new condo. If that doesn’t include some sort of extension, now you’re in for $1.3 million or about $1,000 per square foot. You can still find a condo for less than that.
Which is one of the reasons why I think we’re now starting to see an uptick in larger/family units. (We are trying to do it at Junction House.)
But like all things in real estate, these things move slowly. The condos under construction today were designed years ago. Changes take time to work themselves through the system.
BILD (the Building Industry and Land Development Association) just released its June 2017 data for the Greater Toronto Area’s new housing market. You can read the full release here. But I would like to point out a couple of things:
About 91 percent of the 6,046 new homes sold last month were multi-family condo apartments in high-rise and mid-rise buildings and stacked townhomes, while only nine percent were low-rise single-family homes.
The average price of available new condo apartments continued to rise with an increase of more than $22,000 from May. June’s $627,000 average price marked a 34 percent increase from a year ago. The average available unit was 845 square feet with an average price per square foot of $742. A year ago, the average price per square foot was $587.
From this, it’s once again clear that Toronto is in the midst of an incredible transformation from a low-rise city to a more vertical city. New supply on the low-rise side of the market is heavily constrained.
I get the sense sometimes that many people in this city, and others, believe that access to a low-rise detached house should be a right. Go to school. Get a good job. And then buy that house with a backyard.
The data speaks to a very different reality.
Photo by Victoria Heath on Unsplash
BILD (the Building Industry and Land Development Association) just released its June 2017 data for the Greater Toronto Area’s new housing market. You can read the full release here. But I would like to point out a couple of things:
About 91 percent of the 6,046 new homes sold last month were multi-family condo apartments in high-rise and mid-rise buildings and stacked townhomes, while only nine percent were low-rise single-family homes.
The average price of available new condo apartments continued to rise with an increase of more than $22,000 from May. June’s $627,000 average price marked a 34 percent increase from a year ago. The average available unit was 845 square feet with an average price per square foot of $742. A year ago, the average price per square foot was $587.
From this, it’s once again clear that Toronto is in the midst of an incredible transformation from a low-rise city to a more vertical city. New supply on the low-rise side of the market is heavily constrained.
I get the sense sometimes that many people in this city, and others, believe that access to a low-rise detached house should be a right. Go to school. Get a good job. And then buy that house with a backyard.
The data speaks to a very different reality.
Photo by Victoria Heath on Unsplash
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