Drop in the condo market impacted new home sales to record lows across the GTA

New home sales across the GTA — driven largely by plummeting condominium sales — hit record lows last month, the worst March for sales since 2000.

 

This follows a trend of slumping sales in 2024 that fell below expectations, according to new figures from the Building Industry and Land Development Association (BILD).

 

Sluggish demand for condos resulted in fewer units sold last month than any March in the past decade. Justin Sherwood, BILD’s senior vice-president of communications and stakeholder relations, said buyers are struggling with affordability and high interest rates, which are now expected to come down from five per cent in June.

 

“Condominiums are almost the new starter home,” said Sherwood. “You’ve got a higher degree of first-time buyers that are looking to get into the condo market, and they’re the ones that are typically really challenged with a higher (interest) rate.”

 

There were 1,125 new homes sold last month — a 10-year low for March.

 

Single family homes saw a 38 per cent increase in sales, however, from March 2023, with 524 homes sold last month at a benchmark price of $1,594,951. Sherwood says it was the third-worst March for single-family home sales since 2000, beating even the 2008 housing crash.

Condo sales fell 38 per cent, with only 601 units sold at a benchmark price of $1,054,906.

 

Since home prices peaked in 2022, Sherwood says that new home prices have fallen 15-18 per cent.

 

This month, the Liberal government announced that first-time homebuyers will be able to take out a 30-year mortgage on a new-build home.

 

While some real estate experts have been critical of this new policy’s impact on affordability and the housing crisis, Sherwood feels it could have some benefits for first-time homebuyers in allowing them to spread out their mortgage repayment over a longer time period.

 

However, Sherwood feels the most significant factor that will allow buyers to return to the market is interest rates.

 

He had hoped for a hot spring market brought on by falling interest rates — but now he, like many homebuyers, has found himself waiting on the Bank of Canada to make its move.

 

“I’m sick of predicting,” he said. “What I’ll tell you is if someone’s looking for a new, a pre-construction home, now’s the opportunity.”

 

If buyers put a deposit on pre-construction homes now, Sherwood said, they can benefit from the low housing prices without having to pay the current interest rates, as they wouldn’t be closing on the home until it’s completed which can be a year or two later.

It could also be beneficial to buyers worried about supply, as he says the current housing stock could be strained to keep up with demand once interest rates start to fall. All levels of government have started to try to address supply issues, but Sherwood says there is only 13 months of supply available at present demand levels — or eight months, at the 10-year demand level.

 

A shortage of skilled labour also prolonging construction times and impacting supply, according to a report last month from the Canada Mortgage and Housing Corp. The industry has struggled to replace labourers lost during the pandemic, when many opted to retire early or change industries.

 

“I think I think it’s going to be challenging, to be blunt,” he said. “If we start returning to the ten year average, we find ourselves back in reasonably tight market conditions … (but) you’ve got some builders and developers who have been delaying their projects until such time as there’s more favourable conditions to, to go to market.”

 

 

 

This article was first reported by The Star