A first: Condos outselling houses- High prices propel sales above 50% of total deals

Toronto Star Dec 21, 2007 by Tony Wong, Business Reporter

A single-family detached house has long been the ideal dream for Canadian homebuyers.

But, in case you couldn’t already tell by all the construction cranes dotting Toronto’s ever more crowded skyline, 2007 has become the year of the condo.

New condominium sales in the Toronto area officially passed the 50 per cent mark for the first time, outselling new low-rise homes, according to November figures to be released today by the Building Industry and Land Development Association.

“This is really unheard of. Low-rise homes were always the preferred choice, but it shows you how much the market has changed,” Stephen Dupuis, chief executive of the association, said in an interview.

The average new condo price is now $347,207, up 8.6 per cent from last November. Low-rise homes saw a price increase of 6.8 per cent to $429,673, according to a copy of the report obtained by the Toronto Star.

Historically, from one-quarter to one-third of all new homes sold were condos, Dupuis said. But over the years, that ratio has risen sharply, with condos taking the lead in November, making up 52 per cent of all new homes sold in the 11 months.

With one month left to go, builders expect that ratio to stay above 50 per cent to close 2007.

“When condo sales were 45 per cent of the market last year, we thought we’d never see another year like that,” Dupuis said.

In the first 11 months of this year, 22,059 condos were sold, smashing the previous annual record of 17,561, set in 2005.

Analysts say affordability is one of the main drivers of the condo market, as buyers priced out of the single-detached segment set their sights on something more financially manageable.

“The $82,000 difference in price between an average low-rise home and a condo goes a long way to explaining the highrise market strength,” Dupuis said.

“The suburban type home with the big lot has gotten so expensive, people are backing into the condo market.”

Thanks to the strength of the condo market, overall new-home sales, which were forecast to be 10 per cent less this year than last, will likely be 10 per cent higher, said association president Bob Finnigan.

“New condos are selling like hotcakes, it’s as simple as that,” said Finnigan.

This week has seen a string of good news for realtors, in stark contrast to the capsizing U.S. housing market, which has seen prices implode.

On Wednesday, the Toronto Real Estate Board reported that, during the first two weeks of December, home resales in the Toronto area topped the 90,000 mark for the first time.

Nationally, the Canadian Real Estate Association this week said home resales broke the annual record in the first 11 months of the year, with one month to go.

Despite the strength in sales, analysts say next year will see fewer sales of homes and more moderate price appreciation.

Housing firm Royal Lepage Real Estate Services expects the average resale home to appreciate by 3.5 per cent in 2008.