Condo sales surge 108% going into crisis — but new home building is now largely on hol
New-construction home sales were heading into what should have been a roaring year, with the second strongest March in 20 years, apart from the overheated month in 2017.
But the head of the home builders’ association said he expects April will tell a far different story.
“Those (March) numbers are reflective of activity prior to the current stay-at-home requirements,” said David Wilkes, CEO of the Building Industry and Land Development Association (BILD).
Sales of new GTA homes rose 67 per cent year-over-year last month, based largely on condo transactions that soared 108 per cent year-over-year. Single-family homes — a category that includes detached, semi-detached and town homes — rose only 3 per cent in the same period.
Prices on single-family homes also remained flat at a $1.12-million benchmark. But condos sold for 26 per cent more year-over-year, bringing the benchmark to $983,133.
Altus Group, which tracks the new-construction home industry, did not have data on sales activity following the enforcement of COVID-19 restrictions in the middle of the month, said Patricia Arsenault, executive vice-president.
But, she said, March sales were a result of the launch in February of 4,100 units in 15 condo projects — the strongest February for new openings since 2000. Eight of those projects were launched in the last 10 days of February, so the sale of those condos wouldn’t have been recorded as firm until March.
But only two projects launched in March, both in the first week of the month, said Arsenault. By the middle of the month, builders were offering online appointments only or suspending sales.
“Given the above, we believe that the first half of March would have been much stronger than the second half,” she said.
Sales data for April is not yet available. But those numbers are expected to be “much lower,” Arsenault said.
It is hard to say how the closures will affect project launches and sales for the rest of the year, she said.
“Probably people will take a bit of a wait and see. That is certainly what we saw in totally different circumstances during the recession in the latter 2000s. There weren’t a lot of projects being launched for several months,” Arsenault said.
The dearth of new launches in March brought the inventory of available homes down by 3,266 units available in pre-construction projects and those in progress or completed — to 13,933 from 17,199 last year.
Wilkes said the home-building industry is working with the Ontario government to try to prevent the COVID-19 health crisis from becoming a housing crisis.
The province is allowing some construction to continue on homes close to occupancy as long as work sites maintain strict safety measures.
There are growing concerns, however, about delays in newer housing projects — the underground work in highrises, the grading of sites, laying of pipes and infrastructure for subdivisions.
Those foundational aspects of home-building are the priorities when the province allows people to get back to work, he said.
“The delays will be felt down the road and the nature of that work is very seasonal. If we lose these key weeks and months, it will have a compounded effect,” Wilkes said.
He would not speculate on the long-term impacts on housing prices from the economic fallout of COVID-19.
But, he noted, there was strong housing demand going into the crisis.
“What we, along with every other industry, will be monitoring, is consumer confidence coming out of this freeze on the economy,” Wilkes said.
“Part of the demand that was fuelling the GTA growth was internal migration to urban areas, as well as immigration. Right now, with the restrictions on travel, we’re not seeing any immigration, so that will be another factor we’ll be monitoring very carefully.”