At the end of January 2016, there were just 4,066 unsold single-detached, semi-detached and townhouses across the Greater Toronto Area according to market research firm RealNet Canada Inc. This record low level of low-rise inventory has resulted in an increase in the average price of a new home of 15.8% annually, to approximately $822,000.
Having literally visited thousands of new home sales offices in the Toronto and Dallas-Fort Worth areas during my career in Canada and the US, I have spoken with a ton of builder sales reps, and numerous potential new home buyers. My observation: people love buying new. There is just something special about picking your ideal lot, the floorplan you want, the custom upgrades, the flooring, cabinets, countertops, and paint colours – everything perfectly matches your taste. You get to be the first one to live in this home, it is fully covered by a warranty, and for many of the single-family homes built in the GTA, you’re moving into a community of young families just starting out.
However, if you want all of these desirable features, it comes at a hefty cost. When you’re making a significant financial commitment like buying a new home, you want to feel comfortable that the housing market is sound, and the neighbourhood you are buying into will appreciate in the future.
I’ve identified five markets for new low-rise homes that are hot right now, and that I anticipate will appreciate well in the coming months and years. I looked at the last 12 months of new homes sales, the remaining unsold inventory, and the months-of-supply for each municipality. I ranked them by highest sales, and lowest months-of-supply, to see which markets where experiencing high demand, but also had limited product availability. Prices typically rise in high demand and low supply situations.
Based on my calculations, the fifth hottest new home market is Caledon, with over 1,000 low-rise sales over the past 12 months. There are just 1.1 months of supply in the municipality. Buyers will continue to seek out affordable homes in this town located north of Brampton.
Next on the list is Oakville, with over 1,500 sales from February 2015 to January 2016. There is just 1.4 months of new home supply available in the town. This is even more impressive given the average absorbed single-detached and semi-detached home in Oakville sold for $1.47 million in 2015!
Aurora is the 3rd hottest market, with over 1,000 sales over the past year, but only 46 unsold homes in this York Region municipality. Milton placed second with similar results as Aurora, nearly 1,200 sales and only 63 remaining units, or just half a month of supply.
The hottest new low-rise housing market in the GTA is East Gwillimbury. The 1,627 sales over the past 12 months was the second highest municipal total, and there is just 1.3 months of supply available. The average price of a home was approximately $610,000 in 2015, and the boom in activity was aided by the extension of Highway 404. There are just two completed and unsold singles or semis in the area according to CMHC. Young families can’t get enough of this burgeoning market.
Honourable mentions go out to Brampton, Pickering and Richmond Hill – another three hot housing markets in early 2016. Good luck with your home search this year, but keep in mind that there is not much out there to buy, so don’t wait too long!
About the Author: Ben Myers is the Senior Vice President of Market Research and Analytics for Fortress Real Developments