The data is staggering, and the Toronto housing market is a backwater! A large number of off-plan projects have gone bankrupt, and experts are very worried: sooner or later something will go wrong
The current state of Toronto's real estate market has worried stakeholders for months, especially since [the rate cuts] have not brought about any substantial price reductions, which could have spurred more market activity and fulfilled the elusive dream of more residents owning homes.
This state of affairs is again lamented by another just-released report, this one from the Building Industry and Land Development Association (BILD), which cites a significant downturn in new and existing home sales in the region.
The Building Industry and Land Development Association (BILD) announced today that new home sales in the Greater Toronto Area stood at 936 units in May, down 71% from May 2023 and 71% below the 10-year average.
Sales in the first five months of year-to-date for January-May 2024 are also at an all-time low, 39% lower than January-May 2009.
Edward Jegg, research manager at Altus Group, said: "New home sales across the GTA continued to be subdued throughout May under pressure from rising home prices and high interest rates. ”
"Despite the decline in interest rates in early June, additional relief is needed to lure potential buyers back into the market."
The Greater Toronto Area sold a total of 936 new homes in May, with condos (including Condo units, stacked townhouses and LOFT penthouse units in low-rise, mid- and high-rise buildings) selling 539 units in May, down 75% from May 2023 and 75% below the 10-year average.
While 397 low-rise single homes were sold, including detached and semi-detached houses, and Free Hold townhouses.
Benchmark prices for both low-rise and high-rise apartments decreased in May compared to the previous month.
The benchmark price for newly built apartments is C$1,043,861, down 5% in the last 12 months.
The benchmark price for new low-rise homes is C$1,612,515, down 7% over the past 12 months.
Currently, the total remaining inventory of new homes in the Greater Toronto Area has increased to 20,427 units. These include 16,845 apartments and 3,582 single-family homes.
Based on the average sales volume over the past 12 months, this means that the total inventory level will take 14.5 months to sell out, which is still an extremely high inventory level.
Justin Sherwood, senior vice president of BILD, said: "New home sales continue to hit record lows, like a flashing engine failure light on the dashboard, where today's sales are tomorrow's starts. In the next two to three years, we will inevitably enter a tighter supply situation. ”
"Not only are high interest rates discouraged by buyers, but higher interest rates are also making financing for new development projects more difficult and expensive. Coupled with higher construction costs, land costs, and material costs, as well as increasing government fees and taxes, the new home sector in the Greater Toronto Area is slowing dramatically, and the supply of new homes during the 2025-2027 period will reflect this.
"To avoid future shortages that lead to higher house prices, we need all parties, all levels of government, CMHC and industry to sit down and come up with collaborative solutions to support those who want to call the Greater Toronto Area home."
The group blames the ongoing trend on high interest rates and exorbitant prices in the area — a combination that has prompted developers to offer various buyer incentives and delay development of entire developments.
In some cases, many off-the-plan projects have even gone into bankruptcy proceedings because developers are unable to complete the projects or are trying to repay debts through pre-sales. However, Ontario's affordability is at an all-time low, with mortgage delinquencies surging and mortgage debt at an all-time high.
"Despite the decline in interest rates earlier this month, further mitigation is needed to lure potential buyers back into the market." BILD said.
"To avoid future price increases due to lack of supply, we need all parties to sit down and work together to develop solutions to support those looking to settle in the GTA."