As of 2012, we are privy to an array of real estate themed statistics, all of which play a very important role in assessing the current state of the market. Ones that I personally find to be the most important, however, are sales, starts and completions.
New home sales represent the amount of pre-construction homes sold in a given time. This figure is usually released at least 10 days after the Agreement of Purchase and Sale is signed. That takes care of the 10-day “cooling off period” often associated with pre-construction purchases.
For example, there have been 26,392 new home and condominium “sales” in the first nine months of 2012. This number should not be confused with transactions in the resale market, although it follows similar market trends such as land supply, infrastructure, etc.
One of the main differences is the fact that in most cases, new home buyers don’t move into their homes right after purchasing. This is particularly true in the high-rise sector, where the builder must first sell the majority of the units (about 70%) in a project before breaking ground. Add in all the additional factors like construction and registration, and you have approximately four years before you can move in.
The most recent statistics show that there are currently 57,760 high-rise units under construction in the GTA at the end of September 2012. These are 88% sold and scheduled to be completed over the next four years.
This means that the cranes you see as you commute through the GTA are not necessarily a reflection of a hot 2012 for the condo market, but rather an indicator of the success in high-rise sales over the last four or five years. Given the success of that sector in 2011, you can expect to see a lot more cranes going up in the next year or so.
The low-rise market operates differently when it comes to the construction phase. New home buyers are able to move in to their homes rather quickly compared to their condominium counterpart.
While the land acquisition and development processes carries on for approximately 10 years before the sales office is put up, a typical low-rise home usually spends about one year in construction. The complete community, however, could easily take a full decade as it gets built out in phases over time.
The final statistic I look at is completions. This is the final step, when the home is delivered to the new home buyer.
Every year, our industry delivers approximately 15,000 new home completions in the high-rise sector alone! That’s 15,000 new condominiums for families, first-timer buyers and aging downsizers who rely on us to provide them with quality, affordable place to live, work and play.
Of the three, it’s definitely my favourite stat.
– Bryan Tuckey is president and CEO of the Building Industry and Land Development Association (BILD).