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Over the past 5 years or so, real estate headlines in the Greater Toronto Area have often focused on the rapid appreciation of low-rise housing. High-rise housing simply wasn’t appreciating at the same rate – at least in aggregate terms.
But 2017 has brought a different story.
If you look at BILD’s “New Homes Monthly Market Report” (data provided by Altus Group as of July 2017), you can see that high-rise pricing is now on a similar trajectory to low-rise pricing.
Here is that graph:
This sharp uptick in pricing is also apparent when you look at the average price per square foot of new high-rise inventory. As of July, it was $764 psf across the GTA. See below.
At the same time, average unit sizes have also jumped up to 871 square feet. So not only are new high-rise homes becoming more expensive on a normalized basis, they are also getting bigger, which further increases prices.
I recognize that we’re only seeing data up to the end of July, but, from the looks of it, 2017 is shaping up to be an extraordinary year for the condo.
Of course, part of the reason this is happening is because remaining inventory for both low-rise and high-rise product is hitting 10-year lows. We’re back to the topic of supply.
If you’re curious how some of these numbers have changed from the month prior (June 2017), check out this post.
One aspect of the Toronto housing market that I’ve been paying close attention to is the adoption of multi-family dwellings by both long-term end-users and families.
I’ve written about this before (here and here, over a year ago) and have argued that here in Toronto we are at an inflection point. Multi-family dwellings – both rental and condo – are evolving to now target these new customer segments. Whereas previously, the new construction multi-family housing market was heavily geared towards investors and first-buyers. And often it was simply a stepping stone towards a single family home.
Now, every city and real estate market is different. And I have heard many people in U.S. cities say that Millennials are simply deferring what we saw with previous generations. At the end of the day they (or we, I’m a Millennial) are going to move to the suburbs and buy that car. The current trends we are seeing around city living and reduced driving are just that – short-term current trends.
But I think it’s worth reiterating: I do not believe that the status quo is what’s happening right now in Toronto. And I’m sure it’s also happening elsewhere. Time and time again I speak to developers in this city who are starting to shift at least some, and in some cases all, of their focus towards end-users, families, and larger units – particularly for new mid-rise product in the “neighborhoods.”
And if you think about it, this makes perfect sense.
The average price of a detached single family house in Toronto is well north of a million dollars. So when a developer brings to market a 1,200 sf family sized apartment at $600 psf ($720,000) or even at $700 psf ($840,000), that home now becomes a relatively “affordable” option in many desirable areas of the city. Particularly if you value location amenities and your time (i.e. shorter commutes) over raw quantity of space. I know I certainly do.
I know this isn’t going to appeal to everyone. But there is a big market here. Get ready.
What are you seeing in your city? Let us know in the comment section below.
Recently it has been in the news that BuzzBuzzHome.com – the new construction real estate site – will be launching a “buy now” feature in the new year (2016).
This will allow people to buy condos and homes online with their credit card, which means that people will be able to pay the $5,000 deposit online and process all the paperwork that today happens within a sales office.
This is huge.
If you’re somebody who has used a computer and the internet before, the process today feels archaic. Typically you go online to register for a project and then somebody will call you to arrange an appointment. If you ask them to email you the price sheet and floor plans ahead of time, they’ll almost always tell you that they can’t do that and that you’ll need to come into the sales office for an appointment.
But what about if you end not liking the floor plans and you’re about to waste a few hours of your time? Too bad. The sales funnel requires you to be present in person. This is nothing against the many talented sales professionals working in new construction; it’s just that if I can design and price out a car online and if Mark Cuban can buy a $40 million jet online, then I should be able to shop for a new condo online.
BuzzBuzzHome has been chipping away at the current model for years and they’ve managed to get a lot more information online than was previously available. When Matthew and Cliff first launched BuzzBuzzHome in the late 2000s it was almost unheard of for developers to put any sort of pricing and floor plans online. Now they at least have some of that on their site. I’m glad they stuck with it.
Because what’s equally exciting about what BuzzBuzzHome is doing is that in order to offer a “buy now” feature, they also need to have an accurate account of all developer inventory on hand. And so alongside this “buy now” feature they’re also building out a full cloud-based inventory management system for developers.
This means that BuzzBuzzHome will soon be managing the supply-side of the new construction marketplace. Think of the data and analytics you can extract from a platform like this. It’s going to bring much greater transparency to this industry.
But if your business is in any way connected to the new construction real estate market, I would take this morning and think about how the above innovations could impact your business model. I can think of a few winners and losers.
Some of you might be thinking that people aren’t going to make the biggest purchase of their life online. But I would bet the farm that many people will. I know I would.
Over the past 5 years or so, real estate headlines in the Greater Toronto Area have often focused on the rapid appreciation of low-rise housing. High-rise housing simply wasn’t appreciating at the same rate – at least in aggregate terms.
But 2017 has brought a different story.
If you look at BILD’s “New Homes Monthly Market Report” (data provided by Altus Group as of July 2017), you can see that high-rise pricing is now on a similar trajectory to low-rise pricing.
Here is that graph:
This sharp uptick in pricing is also apparent when you look at the average price per square foot of new high-rise inventory. As of July, it was $764 psf across the GTA. See below.
At the same time, average unit sizes have also jumped up to 871 square feet. So not only are new high-rise homes becoming more expensive on a normalized basis, they are also getting bigger, which further increases prices.
I recognize that we’re only seeing data up to the end of July, but, from the looks of it, 2017 is shaping up to be an extraordinary year for the condo.
Of course, part of the reason this is happening is because remaining inventory for both low-rise and high-rise product is hitting 10-year lows. We’re back to the topic of supply.
If you’re curious how some of these numbers have changed from the month prior (June 2017), check out this post.
One aspect of the Toronto housing market that I’ve been paying close attention to is the adoption of multi-family dwellings by both long-term end-users and families.
I’ve written about this before (here and here, over a year ago) and have argued that here in Toronto we are at an inflection point. Multi-family dwellings – both rental and condo – are evolving to now target these new customer segments. Whereas previously, the new construction multi-family housing market was heavily geared towards investors and first-buyers. And often it was simply a stepping stone towards a single family home.
Now, every city and real estate market is different. And I have heard many people in U.S. cities say that Millennials are simply deferring what we saw with previous generations. At the end of the day they (or we, I’m a Millennial) are going to move to the suburbs and buy that car. The current trends we are seeing around city living and reduced driving are just that – short-term current trends.
But I think it’s worth reiterating: I do not believe that the status quo is what’s happening right now in Toronto. And I’m sure it’s also happening elsewhere. Time and time again I speak to developers in this city who are starting to shift at least some, and in some cases all, of their focus towards end-users, families, and larger units – particularly for new mid-rise product in the “neighborhoods.”
And if you think about it, this makes perfect sense.
The average price of a detached single family house in Toronto is well north of a million dollars. So when a developer brings to market a 1,200 sf family sized apartment at $600 psf ($720,000) or even at $700 psf ($840,000), that home now becomes a relatively “affordable” option in many desirable areas of the city. Particularly if you value location amenities and your time (i.e. shorter commutes) over raw quantity of space. I know I certainly do.
I know this isn’t going to appeal to everyone. But there is a big market here. Get ready.
What are you seeing in your city? Let us know in the comment section below.
Recently it has been in the news that BuzzBuzzHome.com – the new construction real estate site – will be launching a “buy now” feature in the new year (2016).
This will allow people to buy condos and homes online with their credit card, which means that people will be able to pay the $5,000 deposit online and process all the paperwork that today happens within a sales office.
This is huge.
If you’re somebody who has used a computer and the internet before, the process today feels archaic. Typically you go online to register for a project and then somebody will call you to arrange an appointment. If you ask them to email you the price sheet and floor plans ahead of time, they’ll almost always tell you that they can’t do that and that you’ll need to come into the sales office for an appointment.
But what about if you end not liking the floor plans and you’re about to waste a few hours of your time? Too bad. The sales funnel requires you to be present in person. This is nothing against the many talented sales professionals working in new construction; it’s just that if I can design and price out a car online and if Mark Cuban can buy a $40 million jet online, then I should be able to shop for a new condo online.
BuzzBuzzHome has been chipping away at the current model for years and they’ve managed to get a lot more information online than was previously available. When Matthew and Cliff first launched BuzzBuzzHome in the late 2000s it was almost unheard of for developers to put any sort of pricing and floor plans online. Now they at least have some of that on their site. I’m glad they stuck with it.
Because what’s equally exciting about what BuzzBuzzHome is doing is that in order to offer a “buy now” feature, they also need to have an accurate account of all developer inventory on hand. And so alongside this “buy now” feature they’re also building out a full cloud-based inventory management system for developers.
This means that BuzzBuzzHome will soon be managing the supply-side of the new construction marketplace. Think of the data and analytics you can extract from a platform like this. It’s going to bring much greater transparency to this industry.
But if your business is in any way connected to the new construction real estate market, I would take this morning and think about how the above innovations could impact your business model. I can think of a few winners and losers.
Some of you might be thinking that people aren’t going to make the biggest purchase of their life online. But I would bet the farm that many people will. I know I would.
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