Supply issues have plagued the Toronto real estate market for years, and the Toronto Real Estate Board (TREB) cites it as one of the primary reasons home prices continue their seemingly irrepressible growth.
Last November saw a surge of inventory – 14,349 new listings amid a rush to capitalize on the buying frenzy resulting from the new mortgage lending rules hitting the province in January.
This increase in properties dampened prices from November 2016 by 2 per cent.
But this November new listings fell over 26 per cent to 10,534 – almost exactly back to levels from November 2016. At the same time, sales fell only 14.7 per cent to 6,251.
Few Listings Squeeze Buyers
As long as sales are more robust than inventory, or in other words, demand exceeds supply, prices will continue to rise.
Indeed, home prices edged up 3.5 per cent to $788,345 across the Greater Toronto Area.
TREB already predicted this during the summer: Jason Mercer, director of market analysis said in TREB’s August report that, “We only have slightly more than two-and-a-half months of inventory in the TREB market area as a whole and less than two months of inventory in the City of Toronto. This means that despite the fact the sales remain off the record highs from 2016 and 2017, many GTA neighbourhoods continue to suffer from a lack of inventory. This could present a problem if demand continues to accelerate over the next year, which is expected.”
Toronto Still a Balanced Market
Still, Toronto remains balanced, but it could easily tip toward sellers’ territory soon. When that happens, we are likely to see more bidding wars, less conditions included in offerings and stressed out prospective buyers.
Many neighbourhoods in the City of Toronto now show a sales-to-new listings ratio above 60 per cent, the cut-off where a market turns from balanced to sellers.
Already, the popular, family-friend neighbourhoods of High-Park, Junction and Roncesvalles show sales-to-new listing ratios above 70 per cent – heavily advantaged toward the seller.
Only a single Toronto neighbourhood is advantaged toward the buyer, Lawrence Park North and St. Andrew-Winfields in North Toronto, with a ratio of 32 per cent.
If we don’t see heavy increases in supply soon, either through development or listings, prices are likely to continue to rise through 2019. The average price of condos for sale in Toronto hit $595,678, up 7 per cent from last November.
Want to see price and sales details for each property type across the GTA? Check out the infographic below.
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