Total housing starts in the Toronto Census Metropolitan Area (CMA) declined in February. Construction began on 1,539 homes, representing a 33 per cent drop from the same month in 2005. On a seasonally adjusted basis, the annual rate of housing starts dipped to 28,300 versus the January rate of 46,300.
The major factor contributing to February’s sharp decline was the complete absence of new condominium apartment construction. Condominium apartment starts are volatile, because they reflect the laying of foundations for entire multiple unit buildings at one time.
OWNERSHIP DEMAND REMAINS STRONG
February starts of the other lower density housing types decreased by a much smaller amount. New footings for single-detached, semidetached and town (row) houses were down by only 4.6 per cent. New home construction will remain well above average in 2006. The demand for ownership housing remains strong due to steady growth in employment and real wages coupled with very low borrowing costs. Households remain confident in their ability to purchase and pay for a home over the long term.
Conclusion
However, due to the expected increase in the share of condominium apartment construction, starts will not be uniformly distributed throughout the year. Rising average prices have shifted home buyer demand away from single and semi-detached houses toward less-expensive town homes and condominium apartments. Year-to-date, the average price of a completed and absorbed single-detached home in the Toronto CMA rose to almost $457,000. This price point is arguably too high for most first time buyers and many move-up
buyers as well. From CMHC Market Analysis Centre - Toronto 2006
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