January 28, 2005

President of GTHBA predicts 2005 will be ‘reasonable’

Sales down but 2004 still good year for new homes and condos in GTA

By Grant Cameron

staff writer

The number of new homes and condominiums sold in the Greater Toronto Area (GTA) last year de- clined slightly from 2003.

However, Julie Di Lor- enzo, president of the Greater Toronto Home Builders’ Association (GT- HBA), says 2004 was still a relatively good year.

“This is the fifth consecutive year where new home sales have exceeded 40,000 units, which is a remarkable bull run by any standard,” she said.

There were 1,964 new homes and condominiums sold in the GTA in December, bringing the final total for 2004 to 41,724 units — a 2.5-per-cent decline from the number sold in 2003.

The top five municipalities in the GTA for 2004 were Toronto (11,989), Brampton (5,461), Mississauga (3,641), Markham (3,143) and Richmond Hill (2,282).

The highrise condominium market surged ahead by 16 per cent in 2004 to claim a 33-per-cent share of total new home sales compared with 28 per cent in 2003.

Meanwhile, the lowrise housing market declined by 9.5 per cent during 2004.

‘The same house you could have bought in January last year would have cost you $50,000 more if you waited until December’

Julie Di Lorenzo

Di Lorenzo attributes the decline in lowrise sales to the early impact of cost escalation and uncertainty arising out of provincial land supply restrictions.

She says lowrise builders are simply running out of land and the scarcity has resulted in higher prices, which naturally leads to declining sales.

The RealNet New Home Price index for lowrise homes spiked dramatically in December, rising 5.7 per cent in just one month and 15.4 per cent year over year.

“Basically, the same house you could have bought in January last year would have cost you $50,000 more if you waited until December,” Di Lorenzo said.

On the other hand, the index for highrise condos was up a modest one per cent in December and 6.9 per cent or $17,500 over the course of the year.

The GTHBA expects condo prices to rise more rapidly in 2005 due to cost pressures, including much higher development charges in the city of Toronto.

The RealNet New Home Price index is essentially the average asking price of all the remaining new homes and condos currently available for sale, as calculated by RealNet Canada Inc., the GTHBA’s independent source of new home market information.

The index is based on currently available new home offerings, weighted by remaining inventory, for projects of 15 or more units, excluding ultra-luxury product across the GTA.

Looking ahead, Di Lorenzo is forecasting a reasonable year for new home sales.

“Low mortgage rates and strong continued net migration to the GTA will partially counteract the impact of restrictive provincial land supply policy,” she said.

The GTHBA has more than 1,300 members from the residential construction industry in the GTA.

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