They say hindsight is 20/20. For the new homes market in the GTA, a look back at 2012 does provide some clarity — but only if you look at what happened in the highrise and lowrise sectors together across the GTA.
Together, close to 33,000 new homes were purchased, according to the year-end report released last week byRealNet Canada, the Building Industry and Land Development Association’s (BILD) official source of new-home market intelligence. When compared to last year’s banner year of 46,000 new homes, it’s a 29 per cent drop, but let’s look back a few more years. In 2010, 37,000 new homes were sold and in 2009, the year-end tally was just over 33,000.
The GTA is expected to grow by approximately 100,000 annually as people choose to make this vibrant, economically-viable and diverse region their home. To provide homes for this growing population, the building industry meets the challenge of selling and building an average of 35,000 to 40,000 new homes every year.
If we use hindsight again, we can take a closer look at why our 2012 year-end tally turned out to be lower than the average and what it means for future homebuyers in the GTA.
In the first six months of 2012, we were on track to have a more normal year of new home sales. Not quite the 2011 numbers we had reached, but closer to our 10-year average. Then in the summer, the federal government made changes to financing regulations. As expected, it was mainly first-time homebuyers who were shut out by the new mortgage rules. The resulting drop in consumer confidence was unexpected and there was a decline in new home sales for the remainder of the year.
The analysis also shows that 57 per cent of the new homes purchased were in highrise communities and 43 per cent were in lowrise developments across the GTA. Last year was the fourth highest year for highrise sales since 2000, but in the lowrise sector it was the second lowest.
The decline in lowrise sales is a direct result of provincial public policy that has encouraged intensification in existing communities and constrained land supply in the regions surrounding the City of Toronto.
So, what does it all mean for future homebuyers?
Choice and affordability in the lowrise market is diminishing. There is an imbalance and it needs correction so that those who want a detached, semi-detached or townhouse in the next few years will be able to find one.
For more on BILD’s 2012 year-end analysis, visit bildgta.ca to find background material.
Bryan Tuckey is the president and CEO of the Building Industry and Land Development Association (bildgta.ca) and can be found on Twitter @bildgta,Facebook, YouTube and BILD’s blog (bildblogs.ca). The views expressed here are those of BILD.
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