August 25, 2016
Families Turn to Condos as Average Low Rise Home Price Hits $900,000
It’s becoming extra pricey to live on the ground floor in the Greater Toronto Area – in fact, access to a yard or lawn could come at a nearly $1-million price tag according to the latest report from the Building Industry and Land Development Association (BILD). While Toronto real estate has long been far from cheap, the association has found the average price for newly-built detached and semi-detached houses and townhomes now exceeds $900,000 in the GTA.
That’s a 12% increase from last year, and a price jump of over $100,000, says Altus Group, BILD’s intelligence source. Semi-detached homes have seen the biggest appreciation since last 2015, rising nearly $200,000 to an average of $771,530, as buyers, priced way out of detached home options, snatch up what ground access they can.
Townhomes now cost an average of $758,434, and single detached homes a whopping $1,095,910 in the region.
Families Increasingly Forced Into Condos
Such steep price increases mean more buyers have turned to condo purchases – including families who typically need more space than the average strata can offer. Developers are starting to respond to this growing market with larger suite sizes, which in turn has bumped up the average price per square foot to $594 – also a record high.
Bryan Tuckey, CEO and president of BILD, says it’s a turnaround from the strategy most developers typically take when building condos. “In previous years, many builders were focusing on offering smaller and more affordable units to help first-time buyers enter the market,” he stated in a release. “Recent months have seen the introduction of larger suites to meet the demands of the growing range of buyers who have been priced out of the low-rise market.”
In fact, only 1,568 of the homes sold so far this year are ground related – half of what was available last July. Meanwhile, demand for homes in 2016 is the highest in a decade with 28,208 home sold so far. Of those, 15,852 are high rise units.
This exodus into condo living isn’t just occurring in the six; BILD finds buyers are also turning to condos in places like Mississauga and Brampton real estate markets, as outlined in the chart below:
July New-Home Sales by Municipality:
|July ’16||Low Rise||High Rise||Total|
Related Read: Why Millennials Are Moving to Mississauga
Developers Face Land Crunch
Tuckey adds that in addition to blistering buyer demand, there are a number of reasons for the lack of low-rise homes for sale in the GTA.
“New low-rise home prices have grown exponentially due to limited supply,” he says. “Provincial intensification policies, delays in the approvals process and a lack of serviced developable land in the GTA has reduced the amount of new homes coming to the market.”
BILD reports that the amount of newly-built inventory has hit a 10-year low, with only 17,213 homes available for sale – a 41% decrease from a decade ago, when 29,238 homes hit the market.
How to Get Ahead in a Crowded Market
Rampant demand and tight supply can prove tough for anyone pursuing homeownership. In markets like Toronto and Vancouver, it’s especially important to have expert advice and a knowledgeable team. An experienced agent with access to every nook and cranny of your desired nieghbourhood is crucial to finding your foothold in today’s market. Also be sure to understand your affordability before starting your home search – knowing your budget can help you target your nieghbourhood and plan a strategy with your agent. Check out resources like these great mortgage calculators and today’s best mortgage rates.
What do you think about rising home prices in the GTA? Tell us in the comments!