Cranes by Colin Whittaker
According to the data released by the Canada Mortgage and Housing Corporation (CMHC), housing starts in the Greater Toronto Area (GTA) went down in the second half of 2010 after a decent improvement in the first half of the year which came after the dip in early 2009. Overall housing starts rose by 13 per cent compared to 2009 and finished at just 5 per cent lower than the seasonally-adjusted annual rate (SAAR) of housing starts post-recession high of 31,000 in the Q2 of 2010. In spite of the recovery, the SAAR has still been a quarter down from the average 40,000 units recorded over the last decade.
Getting over the hurdle
High rise starts were weak in the summer of 2010, but improved since then, mainly thanks to the strongest November numbers recorded for this housing type. Given the great amount of condominium sales over the past 18 months, the construction starts were rather depressed, even as the builders are busy with a queue of projects that started their sales campaigns before the recessionary slump in late 2008.
Furthermore, the single-detached houses SAAR level plummeted by 40 per cent from the beginning of 2010, seeing better days in the past. The inventory of ready-for-development-lots, falling to an average of 5,000 in 2010 from a supply twice as big in 2005, alongside with a significant decrease in single-detached sales in 2010 are held responsible for this situation. The inventory of completed and unoccupied units was on its 20-year low at the end of 2010, so the average prices kept rising to a level of $600,000 for a single-detached house in the GTA.
The resale market seems to hold to its longer term trends, finishing at 85,000 units of seasonally adjustable resale transactions in the fourth quarter of 2010, which is 15 per cent higher than the previous quarter. Good lending environment with low interest rates led to an expansive buyer’s market while a 9 per cent increase in average home prices accounted significantly to an all time high dollar volume of home sales at the level of $38 billion, 6 per cent up from the previous record from 2007. 2010 was also the best year for condominium apartment sales, representing one-quarter of all home sales in GTA, partly due to strong interest from first-time buyers, investors and down-sizing parents with adult children.
