Dwindling inventories of existing homes in Toronto is driving sales of pricier newly built housing, another sign of tightening in Canada's largest real estate market.
The number of new homes sold in Toronto jumped 45% last year to 36,471 units, the Building Industry and Land Development Association and Altus Group reported Thursday. That’s well above the 13% increase in transactions of existing homes. The increase in sales of new homes was driven by single-family units, which jumped 157% last year to 9,523.
Growing demand for pricier new construction reflects a willingness to pay up for increasingly scarce supply. A recent correction in prices for new single-family homes also helped sales in that segment.
"The improvement in new single-family home sales in 2019 was aided by the narrowing of the price gap between new single-family homes and new condominium apartments, as well as fewer competing options in the resale home market as inventories were whittled down," Patricia Arsenault, executive vice president of data solutions at Altus, said in the report.
Newly built single-family homes still represent the most expensive segment of Toronto's residential real estate market, and have been one of the most volatile in recent years. After surging between 2015 and 2017, prices have dropped considerably since 2017 and are almost 20% below their peak after a 5% drop last year.
Prices for new condominium units, however, have been on an uninterrupted march higher, recording a 15% gain in 2019, as square footage continues to increase. The benchmark price for a new single-family home in the Greater Toronto Area was C$1.09 million ($830,000) at the end of last year, versus C$917,000 for condos.
