This is different from the summer’s busy construction season, apparent across the GTA, because the homes under construction today were likely sold to new homebuyers two or three years ago. Now that those projects have completed the planning and development proposal process, they are in the construction phase.
So when we talk about the summer slowdown, what we’re talking about is the sales of not-yet-built new homes. In the summer months, sales centres see a drop in visits (compared to the spring and fall) and there aren’t many new project launched to stir up excitement and activity.
In July, we noticed a slight drop in sales when the numbers were compared to the 10-year average for that particular month. Earlier this week, I received the sales figures for August and there were a total of 1,242 new homes purchased across the GTA last month. It’s the lowest monthly sales since 2009 and the lowest August of the last decade.
One month does not represent a trend. We have to consider the total sales for the year, which amounted to 24,301 new homes purchased so far, according to RealNet Canada Inc., BILD’s official source of new home market intelligence. The year-to-date total is lower than the long-term average but we are still experiencing the third highest year-to-date high-rise sales on record.
It is essential that the importance of our industry to the national, provincial and local economy be recognized to ensure continued resilience. In attempt to reduce household debt levels across the nation, the federal government recently adjusted mortgage lending rules. August was the first full month with the new rules in place and it appears these regulations have affected consumer confidence, resulting in significantly reduced sales of new homes.
As BILD Chair Paul Golini Jr. said in a press release recently, “confidence in the new homes market is crucial to a healthy economy in the GTA. This industry employs more than 193,000 people, making it one of the largest contributors to economic growth in Ontario.”
The lack of housing supply and choice for consumers as a result of the Province of Ontario’s emphasis on intensification is also a factor and the new home industry has seen pricing for low-rise homes limit choice in options and affordability for many homebuyers.
Over the next quarter, BILD will be carefully monitoring new homes sales to see if a decline in sales continues because people will continue to choose the GTA and they need a place to call home.
– Bryan Tuckey is President and CEO of the Building Industry and Land Development Association (BILD) and can be found on Twitter (twitter.com/bildgta), Facebook (facebook.com/bildgta), Youtube (youtube.com/bildgta) and BILD’s official online blog (bildblogs.ca).