New homes inventory in GTA at ‘crisis levels’

If your client is looking for a new home in the Greater Toronto Area (GTA), she might be out of luck. And if she does find a property that meets her criteria, she should prepare herself for sticker shock — even by Toronto standards.

That’s because the number of new homes available across the GTA reached an unprecedented low in December 2016, while prices of new homes in the area broke records, reports the Building Industry and Land Development Association (BILD) in a release that cites data from Altus Group.

Inventory down, prices up

At the end of 2016, there were 13,670 new homes available for purchase, fewer than half of the homes available a decade ago. New high-rise supply reached a 10-year low, falling to 11,792 units. Meanwhile low-rise supply was 1,878 homes, of which only 742 were single-family detached homes.

Ten years ago, there were 12,871 high-rise units and 17,529 low-rise units available for purchase. Of the latter, 11,602 were single-family detached homes.

“We have a shortage of housing supply in the GTA that is approaching crisis levels,” says BILD president and CEO Bryan Tuckey, in a release. “Housing is selling as quickly as the industry can bring it to market, and the lack of developable land that is serviced with infrastructure, excessive red tape, out-of-date zoning and NIMBYism are hindering our ability to bring more to the market.” (NIMBY means “not in my backyard.”)

The lack of supply pushed prices to new highs across the board.

The average price of new low-rise homes, which include detached and semi-detached houses and townhomes, was $995,116 in December 2016. For new high-rise homes, the average price was $507,128.

Read: Beware rising housing prices: CMHC

For new single-family detached homes in the GTA, the average was $1,264,604. The average price of new detached homes increased by more than $273,000 in the past 12 months.

High-rise sales higher than ever

The GTA’s new homes market also set a record in 2016 for high-rise condo sales.

There were 29,186 new high-rise units sold across the GTA in 2016, more than in any previous recorded year — 30% more than in 2015. Sales were up in every region in the GTA, particularly in Durham where sales were more than double those of 2015.

Read: Foreign vs. domestic condo buyers: who’s more active in GTA?

Of the 47,161 new homes sold in the GTA in 2016, 62% were high-rise units and 38% were low-rise homes.

The most new homes ever sold in the GTA was 53,660 units in 2002. Of those, 72% were low-rise and 28% high-rise — the reverse of 2016’s stats.

“The decline in low-rise sales in 2016 was due to the lack of product available to purchase, not softer demand,” says Patricia Arsenault, executive vice-president of research consulting services at Altus Group, in the release. “The fact that new product is being quickly absorbed, despite rising prices, shows there is continued buyer interest in purchasing new ground-oriented homes in the GTA.”

Also read: CMHC hiking mortgage loan insurance premiums for homebuyers