In August, sales and prices across the GTA continued to increase. This suggests that the efforts to cool the region’s housing market have been absorbed, allowing for the potential reoccurrence of overheating within the market.
The latest numbers reported by TREB show that a total of 7,711 homes changed hands over the course of the month, at an increase of 13.4% year over year. Market conditions steepened and pressure was placed on both buyers and home values as a result of a -3% decline in supply. There was a 3.6% increase in the average price year over year to $792,611. As well on the MLS Home Price Index, a tool utilized to measure the overall value of homes sold, 4.9% growth was documented.
A Continued Increase in Demand
In comparison to the record-breaking numbers seen in 2016 and 2017, current market conditions are more tempered. However, buyer demand is returning, particularly for higher priced single-family homes as highlighted by TREB President Michael Collins. The renewed increase for demand in the single-family home sector follows the significant hit it experienced from the Ontario Fair Housing Plan and OSFI mortgage stress test. Growth in the prices for condos for sale in Toronto leads the market. Toronto townhouses and other high-density low-rise homes follow condos in regard to their price growth.
“GTA-wide sales were up on a year-over-year basis for all major market segments, with annual rates of sales growth strongest for low-rise home types including detached houses. This reflects the fact that demand for more expensive home types was very low in 2018 and has rebounded to a certain degree in 2019, albeit not back to the record levels experienced in 2016 and the first quarter of 2017,” he stated. “The OSFI mortgage stress test continues to keep some would-be home buyers on the sidelines.”
Lack of Supply Creates Concern over Rising Prices
There is cause for concern that prices may rise dramatically, in a manner similar to that of the rise of 2016-2017, as a result of the lack of the supply in the market as well as the lack of new housing creation. TREB notes that there is increasing pressure being put onto home buyers as the number of year-to-date sales has significantly outgrown the supply of new listings.
Within the City of Toronto, there has been a 5.1% increase in the number of homes which changed hands in August, a total of 2,553 homes. The number of new listings remained relatively unchanged in the 416, with a slight downward shift of -0.6%. The average home price increased 4.2% to $818,715. The City of Toronto has a 68% SNLR overall.
“This year’s market through August has been characterized by receding listings and increasing sales relative to 2018,” stated Jason Mercer, TREB’s chief market analyst. “Competition between buyers has increased, which has led to stronger annual rates of price growth, most notably during this past spring and summer. Right now, the overall pace of price growth is moderate. However, if demand for ownership housing continues to increase relative to the supply of listings, the annual rate of price growth will accelerate further.”
He adds, “This underpins the importance of solving this region’s housing supply issues, which will go a long way to ensuring a sustainable pace of price growth over the long term.”
Take a look at the infographics below to see the August year-over-year changes in sales and price trends for the City of Toronto and TREB area: