Upgrading from a condo to a single-family house in Greater Toronto just got $100,000 more expensive.
In May of last year, the price difference between a new condo and a new low-rise home in the GTA was $237,301, according to data from Building Industry and Land Development Association (BILD). This past May, the gap had grown to $343,492.
That’s because prices for new low-rise homes (single-family homes, semi-detached houses and townhomes) jumped by 16 per cent over the past year, while the much better-supplied condo market saw prices stay flat.
The average price of a new low-rise hit a record high of $783,955. Condo prices were largely unchanged at $440,463.
“The rapidly widening price gap is an indication that demand is far outpacing supply in this part of the market," BILD CEO Bryan Tuckey said in a statement. "As the price of ground-related housing continues to grow at a record pace, it's becoming increasingly difficult for GTA residents to afford a low-rise home."
BILD’s data shows that low-rise homes account for only 20 per cent of new home inventory in Greater Toronto, indicating that, going forward, only one in five homebuyers in the region can expect to buy a low-rise home.
Tuckey added that the "effect of new-home pricing is also trickling down to resale homes.” According to the Toronto Real Estate Board, the average price of a resale single-family home in Toronto passed the $1 million mark this spring.
Condos: A Totally Different Story
The city’s condo market appears to be cooling somewhat. Sales of new condos are down 7 per cent in the first five months of the year, compared to the same period in 2014, BILD says. Sales were down 12 per cent in May, compared to May of last year.
The new condo market has seen an unusually large build-up of inventory, thanks to a building boom that began in 2012.
The prohibitive cost of upgrading to a larger home is beginning to have an impact on households’ home-buying decisions. A recent Toronto Star article profiled a family that chose to move to the Kitchener-Waterloo area in order to afford a much larger home than they could in the GTA.
BILD’s Tuckey suggests the solution is building more low-rise homes.
"As inventory borders on record low level, we need an adequate supply of low-rise homes to ensure healthy levels of housing choice that are necessary to accommodate the needs of our expanding region," he said.
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