Moving couch

Bricks & Sticks

by Desi Auciello

Desi Auciello is the 2006 GTHBA President, and is also president of Cachet Estate Homes.

GST cut, merger, condos, define 2006

Date: December 29, 2006

As this is my last column as president of GTHBA-UDI, I thought I would review some of the highlights of 2006.

From an external standpoint, the first thing that comes to my mind is the Harper government's 1 per cent cut to the goods and services tax. While a one per cent cut in the tax rate on such a big ticket item as a new home is a story in itself, two other factors made this announcement more than just a significant tax cut.

The fact that finance minister Jim Flaherty made the tax cut effective the day of the budget on May 2, compared with July 1 for all other goods and services, showed the federal government's respect for the tremendous economic impact of the residential construction industry. 

The further fact that the Harper government extended the tax reduction to pre-sales, whether a day, week, month or year before the budget, by way of a one per cent transitional rebate, represents a windfall gain on closing for thousands of GTA new home buyers closing after July 1 of this year and throughout 2007 or even later in the case of many condo projects.

GTHBA-UDI merger

From an internal standpoint, the big news story was the merger of the Greater Toronto Home Builders' Association with the Urban Development Institute/Ontario. This is something that the two parties had begun quietly discussing in the Fall of 2005, and by the Fall of 2006, the merger became a reality. The result: a bigger, stronger, better-resourced industry association which can now more effectively advocate for the interests of the industry and our home buyers.

The market

At the beginning of the year, I predicted that new home sales for 2006 would meet or slightly exceed 37,000 units, putting me among the more bullish forecasters. Turns out we were all too pessimistic.

With eleven months of data available, new home sales for 2006 are pushing 38,000 units, and the only question that remains is whether sales will exceed 40,000 units for the seventh consecutive year. We will have that answer around the middle of January, and my bet is that we will indeed hit the magic 40,000 mark once again.

I was right about one market aspect. I said that any decrease in housing sales would be more at the expense of the low-rise market than the high-rise market. Through the first 11 months of 2006, high-rise sales were up two per cent over 2005 while low-rise sales were down 10 per cent, netting out to a five per cent decline from 2005, but still a fantastic year by any standard.

The most notable market trend of 2006 was the continued rise in market share of high-rise condominium suites, increasing from an average of 33 per cent in 2004 to 42 per cent in 2005 and rising further to 45 per cent in 2006. For the first time in market history, monthly high-rise sales exceeded a 1:1 ratio with low-rise sales, peaking at 60 per cent (six out of every ten sales being high-rise) in June.

A notable sub-trend within the general "condo craze" was the increase in high-rise condominium sales in the 905 regions of the GTA, particularly Peel (Mississauga) and York (Markham).

Market outlook

As for 2007, I will leave that forecast to my successor as president of GTHBA-UDI, Bob Finnegan of Heathwood Homes and The Heron Group, to whom I turn over this column and the relentless weekly deadline. Kidding aside, it has been a privilege to communicate with Sun readers in this way and I am grateful to the Toronto Sun for its support of our association and industry.

Many thanks

My final words as the leader of our industry association during 2006 are words of thanks.

Thanks to the more than 1,500 members of GTHBA-UDI for your support and encouragement.

Thanks to my board of directors for your direction and guidance. And special thanks to my executive committee for your hard work
and conscientious efforts to move the association forward in what turned out to be a turning point year.  

Thanks to the wonderful staff at the GTHBA-UDI for supporting me every step of the way particularly, Stephen Dupuis, chief executive officer, without whom, a volunteer president would not survive.

Sincere thanks to every employee at Cachet Estate Homes for picking up any slack I might have left this year.

And last, because their first in my heart, thanks to my family for indulging me on this journey - I couldn't have done it without you.