Experts warn shockingly low home sales in Toronto will lead to housing supply problems

The status of Toronto's real estate market has been worrying stakeholders for months, especially because it hasn't led to any substantial price decreases that could help spur more activity (and fulfill the unattainable dream of home ownership for more residents, of course).

Another report has just come out that bemoans the state of things, this one from the Building Industry and Land Development Association (BILD), which is citing remarkably low movement of new houses and condos in the area.

No one can afford to buy*

— Synthetic Animals (@moodyangela) June 6, 2024

The volume of new home sales across the GTA in May, the group says, was an astonishing 71 per cent lower than May 2023 figures, and also 71 per cent below the 10-year average for the springtime month. 

The condo segment drove these stats down, with only 539 units going to new owners, which marks a 75 per cent decrease from both the same time last year and the 10-year average for condo sales in May.

This is all amid what BILD calls "an exceedingly high inventory level."

"The continuing record lows in new home sales is a flashing check engine light on the dashboard. Today's sales are tomorrow's starts. It is inevitable that we are entering further tight supply conditions in the next two to three years," the organization warns.

"Not only are high interest rates keeping buyers on the sidelines, but higher rates are making financing for new projects more difficult and expensive. When combined with higher construction costs, land costs and material costs and increasing government fees and taxes, the new home industry in the GTA is slowing down precipitously."

It blames not just high interest rates for this continuing trend, but also the region's exorbitantly high prices — combined, they've pushed developers to offer all sorts of buyer incentives and put entire complexes on hold.

In some cases, projects have even gone into receivership as those behind them are unable to complete them or recover debts through pre-sales. And yet, affordability is at an all-time low in Ontario at large, with surging mortgage delinquency rates and record-high mortgage debt.

Builders are unable to build at these elevated retail market prices. Tells you a lot about the state of housing in Canada.

— Keeping it real (@Patrick30042459) April 24, 2024

"Despite the rate drop earlier this month, additional relief will be required to coax prospective buyers back into the market," BILD says.

"To avoid future lack of supply-driven price appreciation, we need all parties... to sit down and arrive at collaborative solutions that will support those seeking to call the GTA home."