Toronto’s new single-family home market recovering faster than condos

New single-family homes sold by developers across the Toronto region in June beat new condo units sold during the same period by a wide margin.

Last month’s data, published today by the Building Industry and Land Development Association (BILD), signals that the market for new detached and semi-detached homes and townhouses is recovering faster than new condos.

There were 1,160 new single-family homes sold in June, the best result for the month since 2016 despite it being 12 percent below the 10-year average.

BILD’s data partner, Altus Group, said that during the same period, 744 new condo units were sold, down 73 percent from June 2019 and 70 percent below the 10-year average for the month.

“Single-family demand recovered more quickly as buyers returned and new supply started to come back into the market,” said Altus Group Vice President Matthew Boukall, in a media release.

“Given the challenges around COVID-19 restrictions, we’ve seen developers adopt new strategies to reach consumers and have seen success in the lower density segments,” he added.

The total number of new homes sold in June, at 1,904, was down 43 percent over the previous year. BILD was quick to point out, however, that the monthly total was a major improvement from May and April’s results. Both months were severely affected by restrictions in place to combat the spread of COVID-19 and saw new home sales totals well below 1,000.

“The June new home sales numbers are encouraging, though much remains to be seen as the GTA re-opens and begins recovery,” said BILD President David Wilkes.

“Now is the time to implement what we learned about facilitating the delivery of housing during the pandemic, to address our long-standing housing supply and affordability challenge while stimulating the local economy. Our industry is working with all three levels of government to help achieve these goals,” he continued.

Even with the ongoing slowdown in new condo sales, prices remained resilient. According to BILD and Altus Group, the benchmark price for a new condo was $999,228 in June, up nearly 25 percent from the previous year. The benchmark price for new single-family homes also saw an annual increase, rising nearly 4 percent to $1,141,848 in June.

As for the relative weakness of the new condo market, there are several explanations that are likely all contributing to the sluggish sales numbers.

For one, new condo sales rely more heavily on property investors who are reluctant to jump into the market with such an uncertain economic outlook prevailing. There is now emerging data-backed evidence that some investor-owners in downtown Toronto condos are beginning to sell their investment units. It is unclear how widespread this is and whether it will last through the fall, but it surely had an impact on the June sales numbers.

Secondly, there are simply far fewer new condo projects being brought to market by home builders. The spring months, which typically see the highest volume of new condo launches, saw only six projects hit the market this year. This pales in comparison to the 40 projects brought to market in the Toronto region during the same time in 2019.

Finally, there is a similar trend being observed in the resale housing market. Condo resales in the City of Toronto saw a 21 percent decline over the previous year in June while the region as a whole only saw a 1.4 percent decline in overall home resales. Meanwhile, sales for detached homes and townhomes in the Toronto region’s suburban markets saw a 10 percent year-over-year increase.