Urbanation, the Greater Toronto Area’s (GTA) most trusted source for new condo statistics, has released its first quarter results for 2016, announcing record activity in the 905 and a tightening of supply on the market.
In the first quarter of 2016, there were 5,615 sales of new condo units in the GTA, which is a 32% year-over-year increase and just shy of the 2012 record of 5,680 sales. Unsold inventory in new developments was down 16% compared to last year, declining to 15,587 units. Unsold inventory in the City of Toronto (416) dropped 22%.
As of the end of March, there were about 8.5 months of supply in the condo market, which is a significant drop from the 11.5 months of supply that was available a year ago. The amount of standing unsold units dropped 15% to 1,482.
While standing unsold units decreased, the percentage of pre-sold units hit a new record high of 86%. In the preconstruction phase, developments are about 70% sold on average. For developments under construction, they are approximately 89% sold on average, and recently completed buildings are 96% sold on average.
“The inventory shortage experienced for low-rise housing has spread into the high-rise segment,” explains Shaun Hildebrand, Urbanation’s Senior Vice President. “More and more buyers priced out of the single-family home market are looking for alternatives in the condo market, providing a clear opportunity for new development.”
There is obviously a very strong demand for condo units in the GTA. Last year, many prospective purchasers found themselves priced out of the detached home market, so they turned to semis and townhomes. This year, all new low-rise homes in the GTA are surging in price, so people are getting priced out of the low-rise market all together! It didn’t help that there was a decline in openings compared to the first quarter of 2015.
In the 416, only four condo projects launched for a total of 718 new units. The 905 actually hit a new record high in the first quarter with 2,112 sales thanks to 11 new projects launching, bringing 2,343 units to the market. Of the new units to hit the market, 61% of them sold by the end of March.
In the resale condo market, price growth increased 8% to $467 per square foot, which is slightly more aggressive than the 3% price growth in the new condo market ($582 per square foot). Urbanation is calling it a seller’s market with resale activity up 21% and listings down 5%. The average selling price in the first quarter was $411,000, which is based on the average size of 880 square feet.
What does the rest of the year hold? Will condo prices start rising quicker due to low supply?