New homes lead October spurt
November 20, 2009
Tony Wong
BUSINESS REPORTER
New home sales in the Greater Toronto Area in October more than doubled last year's figures, while hitting heights not seen in more than 24 months, according to a report to be released Friday.
There were 4,150 sales of new homes and condominiums last month, a 107 per cent increase over October last year, according to the Building, Industry and Land Development Association.
"The turnaround in new home sales has been nothing short of remarkable," said Stephen Dupuis, head of BILD. "It looks like total new home sales in 2009 will end up far higher than anyone could have anticipated earlier in the year."
At the start of 2009, desperate builders were slashing prices and giving away incentives to buyers ranging from plasma television sets and trips to Paris to even new cars.
But the turnaround in the market, stoked by low interest rates, has seen consumers plow back into the market. Analysts caution, however, that October 2008 was the starting point for the global financial crisis. Even so, October 2009 was still the best sales month since July 2007, according to the association.
"October is typically a good month for sales, but (4,150 deals) is a very robust number," said housing economist Will Dunning.
Prices on new homes were also up, with an average low-rise fetching $451,455 compared to $438,078 a year ago, an increase of 3.1 per cent.
An average high-rise unit is now going for $401,519, an increase of 3.2 per cent from last year.
New homes have been lagging behind the existing home market, with many buyers unwilling to wait for builders to finish. But sales have started catching up.
Existing home sales in the Toronto area in the first half of November were up by 84 per cent over that period last year, according to figures released Wednesday. At $415,066, average price of an existing home was up by 10 per cent year over year.
In the new home market, half-November sales of low-rise homes were up by 173 per cent. High-rise condos were up 77 per cent.
Total new-home sales are now running 2.5 per cent ahead of 2008.
Dunning expects sales to slow next year as unemployment, which is nearing 10 per cent in the Toronto area, takes a toll.
"Don't forget we have been in a recession and fewer people are going to be in a situation where they're able to buy a home. Job creation is still key for home buyers."
The stimulus of low interest rates won't be long lasting, he says.
Home sales up 84% in first half of month.
Toronto Star