The new housing market definitely felt vibrant last year but the recent revelation that it was the second-best year on record caught me by surprise.
Of course, the million-dollar question on everyone’s mind is not what happened last year, but what’s going to happen this year. I’ll get to that, but first a look at 2007 by the numbers.
There were 44,784 new homes and condos sold in 2007, second only to 2002, when an astounding 53,669 units were snapped up.
Based on the strength of a 34-per-cent spike in sales of new highrise condominium suites, total new homes sales rose a solid 15 per cent in 2007 versus 2006. Lowrise new home sales held steady last year compared with the year prior.
While the 34-per-cent increase in highrise sales is noteworthy, what’s even more impressive is the fact the 23,234 condos sold last year represents a record high, by far, leading us to call 2007 “the year of the condo.”
You know times are changing when highrise sales take a majority share of the market, but that’s exactly what happened last year – 52 per cent of all new home sales were highrise. To put that number into perspective, back in record-setting 2002, a mere 28 per cent of all sales were highrise.
To add some additional perspective, sales of single-detached homes in 2002 represented 46 per cent of the market. Last year, singles took less than a third of the market – 30 per cent to be precise. Looked at another way, seven out of every 10 units homebuilders are delivering to the market today are multiple in form – semi-detached, townhomes but primarily highrise condos. Drilling down a little further on the highrise numbers, 80 per cent of those sales were in the City of Toronto with most of the remaining 20 per cent concentrated in Peel Region, primarily Mississauga, and York Region, primarily Markham.
Going forward, I expect to see more highrise development in the 905 communities, but I also expect the highrise market share to decline. While the condo buyer profile is broadening, many buyers are also backing into the condo market based solely on affordability as provincial government policy has driven up the cost of lowrise homes relative to highrise.
So, what lies in store for 2008? There are certainly lots of positives including momentum, low interest rates, low unemployment and our responsible mortgage lending practices.
We have also seen slow but steady price appreciation in this market, which means we have never blown a bubble begging to be burst. If anything, tight land policies and low inventory levels will preserve, if not enhance values, going forward and the condo market will continue to be the beneficiary.
Don’t forget the GST dropped to 5 per cent, effective Jan. 1. Those pennies you are saving here and there amount to thousands on a new home purchase, not to mention the full GST new housing rebate on homes priced below $350,000. As for the negatives, my concerns are more indirect and more mid- to long-term.
Our provincial government can’t take the housing industry for granted as an economic engine and has to watch regulatory-driven cost increases. I would also argue that our municipalities need help in the form of provincial uploading and federal infrastructure funding focused on the GTA.
All things considered, while I don’t see any more records falling this year, I do foresee the positive momentum carrying forward at healthy, yet sustainable levels.
Michael Moldenhauer is president of the Building Industry and Land Development Association. His column appears Saturdays in New in Homes. The views expressed are those of the president. Email: email@example.com