For those of you keeping up with housing prices in the GTA’s real estate market, you may have come across an article in the Globe and Mail recently about the steady climb in both high-rise condo and low-rise house prices, and the reason for this.
Interestingly enough, the two kinds of housing rose in price for two dramatically different reasons. Sales for high-rise condos were topping the numbers for the last five years, while sales for low-rise houses were the lowest in five years. One thing to consider, however, is that the amount of unsold low-rise houses for sale was one-third of what it usually was.
According to the rules of supply and demand, both these circumstances drive prices up. On one hand, having a huge demand for high-rise condos gave their price a nice boost, and on the other hand, having a low supply for low-rise houses drove their prices up through competition. Understanding the basic laws of supply and demand obviously comes in handy for anyone hoping to understand trends in real estate.
The interesting second side to this story lies in the reasons why there is such a low supply of unsold low-rise houses. As explained in the Globe and Mail article, experts say that builders are not investing in low-rise projects as much in order to keep up with what municipal governments want – high population density. High-rise projects are given top priority, and with the huge amounts of money at stake in a building project, it’s no wonder developers are sticking to what they know will be successful.
You can read the full article at: http://www.theglobeandmail.com/real-estate/slowdown-of-2008-is-hitting-home-now/article1489495/
