By: Zoocasa

The start of summer is typically a slower time for real estate, but that trend reversed in June & with 8,082 homes sold, the month ushered in the first year-over-year sales increase since December, according to the latest numbers from the Toronto Real Estate Board.

While sales were up just 2.4% since June 2017, this is still a reversal from double-digit declines between 20-30% recorded in the first half of the 2018.

This turnaround is partly attributed to the market now aligning with conditions after the Fair Housing Plan, rather than the record highs that defined it in 2016 and 2017. The average price also saw a moderate uptick, increasing 2% from 2017 and 3.3% from May to $807,871.

Volatility Remains in the Market

The first half of 2018 has been a turbulent time in the Toronto market as new mortgage regulations, Fair Housing Plan, and rising interest rates simultaneously came into effect. However, despite rocky month-over-month performance, there’s positive sentiment for the future. TREB’s incoming President Garry Bhaura appears optimistic about the fundamentals of the market and warns of potential overheating, as supply remains a persistent challenge.

“Home ownership has proven to be a positive long-term investment. After some adjustment to the Fair Housing Plan, the new Office of the Superintendent of Financial Institutions (OSFI) stress test requirement and generally higher borrowing costs, home buyers are starting to move back into the market, with sales trending up from last year’s lows,” he says.

“Market conditions appear to be tightening, with sales accounting for a greater share of listings, as new listings have dropped compared to last year.”

The transaction volume for detached and low-rise homes have also increased, accounting for more sales this month. This is possibly due to the decline in price we have seen in detached homes over the last couple of months, as the average detached home price in the TREB region remains 1.9 per cent lower than 2017, at $1,033,574.

The low-rise market, with its sky-high prices, were hit the hardest last year, with sales and prices falling 38.2% and 11.2% respectively to date. This can signal a return of buyers into the low-rise market.

The Supply Challenge

According to TREB, new MLS listings inToronto fell 18.6% from last year, to 15,933 homes. This translate to a sales-to-new-listings ratio of 50.7%, well within a balanced market.

However, the City of Toronto remains in a seller’s market, with a 59% sales-to-new-listings ratio. This ratio is generally used to gauge the level of buyer competition within a given time frame in the market and a ratio of 40%-60% indicates balanced conditions. If the ratio rises above the threshold, this indicates a sellers’ market and vice versa.

That hints at tighter market conditions to come, according to Jason Mercer, TREB’s director of market analysis and service channels. “The expectation is to see improvement in sales over the next year. Over the same period, however, it is likely that issues surrounding the supply of listings will persist,” he stated.

A lack of homes for sale in the GTA has prompted buyers to look to further markets in recent years. For examples, homes for sale in London, Ontario, have surged in popularity due to their comparable affordability, as well as the Ottawa and outer Greater Golden Horseshoe regions.

Sales and Prices By Home Type

Detached: The 5.5% improvement can be seen all throughout the GTA; sales were up 5.9% to 885 in the 416 area, and 5.3% to 2,704 in the 905 area. The average year-over-year gap is narrowing, down 8.2% through the TREB region, compared to -9% in May. Prices were down 2.4% this month in the 416, at an average price of 1,354,429 and down 1.8% in the 905, at $928,560.

Semi-Detached: This category saw the largest gain across the board, with sales up 8.4% in the 416 to 279, 7.9% in the 905 to 519, and up 8.1% in total in the TREB region. Prices followed, rising 1.4% in the 416 to $999,754, 1.8% in the 905 to $665,606, and 1.7% to $787,227 throughout the entire TREB region.

Townhouses: This segment of low-rise homes also saw a moderate growth in price and sales. In the City of Toronto, 308 units traded hands, a 5.1% increase, and up 5.4% to 1,332 units in the total TREB region. Prices correspondingly rose 5.6 per cent in the 416 to an average of $736,963, 2.4% to $608,566 in the 905 and 3.2% to $638,566 in the total TREB region.

Condos: High-rise homes had a slower month, but still posted improved year-over-year declines from May; sales were down 5.3%in the TREB region, compared to 15.5 per cent just last month, at 2,234 units sold. The decrease was slightly sharper in the 416, down 6% at 1,593 units, and down 3.6% in the 905, at 641 units.

For prices, condos are still posting some of the strongest gains across all segments, up 9.5% to an average of $605,530 in the City of Toronto, 3.4% to $450,672 in 905, and 7.9% to $561,097 in TREB total.

Check out the infographic below to see how GTA sales performed in June:

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