‘Big Chill’ Is About To End. Buyer Incentives Should Help to Heat Up the Market
The Saturday Sun, February 9, 2019
Martin Slofstra, Editor’s Note
So, how to explain the big chill in the housing market?
The overall numbers do tell a story. Exluding condos, there were “only” 3,831 single-family homes sold in 2018 in all of the GTA, including detached, linked, and semi-detached houses and townhouses (not stacked townhouses). This is down 50 per cent from 2017 and down 74 per cent from the 10-year average, according to recent numbers supplied by BILD and the Altus Group.
And it’s the lowest total number in 20 years since Altus Group started tracking the market in 2000. (These figures do not include the sale of 21,330 condo units, which may sound like a lot but is also below the 10-year average.)
Mortgage stress test/higher interest rates were brought in to cool and overheated market, and it has had an effect. “A number of factors combined to produce the drop in GTA new home sales in 2018,” says Patricia Arsenault, Altus Group’s executive vice-president, Data Solutions. “More stringent mortgage stress testing, rising interest rates and lack of single-family product affordable to a broader range of buyers all played a role.”
These things are, of course, all relative. Any perceived slowness in the new home market has to be weighed against that the fact that the real estate sector got ridiculously hot in 2017, and things were bound to slow down.
Regardless of the up and down cycles, the GTA is on track for explosive growth over the next 20 years. (Just look at Ontario’s Growth Plan population numbers for the GTA and surrounding communities.)
And despite any softness in the market, don’t be fooled, expect things to heat up again shortly.
New home buyers tend to stay away from sales offices in the winter, but not always. Mattamy Homes, for one, reported robust January sales results from the release of new lots in its Hawthorne South Village Sixteen Mile Creek community in Milton. The Creekside Collection sold out all 180 lots released for sale on January 19 (113 sales) and January 26 (67 sales).
Furthermore, we’ve been playing close attention and builders are responding with some rather creative promotional pricing and incentive plans.
• Pratt Homes’ offer of three years of mortgage-free living should entice buyers, and it will be interesting to see the results of the their Grand Opening in Alliston starting today. (See also story and sidebar facing page.)
• Southside Townhomes in Brampton (I2 Developments Inc.) is only requiring a 5% deposit up front until move-in date in September of this year when the remaining minimum of 20% will be due. Prices start at $679,900.
• Harbour Ten10 in Whitby (Castle Group Developments) is only requiring 5% within 30 days and 3% every six months until occupancy for a total of 20% down. As well, they’re offering free above-ground parking. Prices start at $399,900.
• Link Condos + Lofts (Adi Developments) located at Appleby Line and Dundas in Burlington, is offering a “pre-spring incentive” for their last remaining suites, only 5% down and up to 3 years free maintenance for a limited time only. Units start at $399,900.
The winter chill, it always melts away. So too, will any perceived slowness in the new home and condo market. It should make for an interesting spring.