It was brought to our attention that the difference in the information presented in the Bank of Canada report and the data we presented in our blog post last week was due to the difference in timing.
We apologize for that oversight, but as such we decided to run some numbers.
At the end of Q3-2012 we had about 10,260 units of unsold supply in pre-construction projects in the Toronto CMA. Let's assume in Q4-2012 that NONE of these projects went under construction, and the lowest absorption rate among existing projects (projects that did not launch in that quarter) was 4% (which was recorded in the middle of the global economic meltdown in Q4-2008). So let's use that 4% absorption rate as a low level estimate of what was sold for these pre-construction units this quarter.
So 10,260 - 410 units = 9,850 unsold units.
There have been approximately 5,100 units launched in Q4-2012, with 363 already under construction (One Park Place). So lets say approximately 4,750 new pre-construction units added in the 4th quarter.
If we include the sales for just two of the 20 plus sites that launched in Q4-2012, we already have 1,000 sales!
So 4,750 - 1,000 = 3,750.
Add 9,850 + 3,750 = 13,600 (still not 14,000).
We obviously know that several projects have started construction in Q4-2012, we know that the absorption rate among these projects will be higher than the quarter depressed by the global recession, and we know that the other 20 sites launched in Q4-2012 will have more than 0 sales.
So again we conclude that the number of unsold units in pre-construction has not doubled this year.