Greater Toronto real estate is barely recognizable after the sudden market shift. Data from Altus Group shows new home sales fell in June as no single-family homes were sold in the city. Not one. At the same time, inventories made a small rise but a big improvement with declining sales.
GTA new home sales plummet
Demand for new construction in the GTA has plummeted in recent months. Only 175 new single-family homes were sold in June, down 85% from last year. Condominium apartments fell to 1,519 sales, down 44% over the same period. Rising rates have strangled demand, especially among investors.
Sales of new homes in the City of Toronto have been the hardest hit. Not a single single-family home sold in the city, compared to 13 last year. In contrast, the February craze saw 45 single-family units purchased in the City. Condominiums did a little better with 717 units sold, down 16% from last year.
Greater Toronto’s new home inventory is growing, but falling demand has released more pressure
The stock of new homes in the Greater Toronto Area is increasing significantly. There were 11,639 units for sale in June, up 1.6% from a year ago. It’s not a huge increase, but the drop in home sales reduces competition (and stress) on supply.
Pre-construction inventories have risen sharply from record lows just a few months ago. There were 6,256 pre-construction units for sale in June, a 46.2% increase from the December 2021 low. That’s a recovery and close to 2018 levels. Still a long way to go to reach 2019 levels, but it’s getting there.
The big story, and the reason for the drop in demand, is the sharp rise in rates. Having a market flooded with virtually free money has boosted demand, especially among investors. Rising rates make it harder to make a profit, and we know investors have been a major demand segment. As they retire, more people will play with their own money. This generally means much less robust growth, since credit has grown much more easily than income.