It was a slightly quieter October for Toronto-area home sales, as the seasonally typical market chill took hold amid darker evenings and dropping temperatures. However, while the pace of year-over-year growth may have been smaller than the previous month’s, it still marks a significant improvement in activity from 2018. With 8,491 transactions, sales were up 14% from last October, as per the latest numbers released by the Toronto Real Estate Board.
Transactions for all home types experienced an upward shift year over year, and home values also continued to rise, marking a 5.5% increase in the average home price to $852,142. The MLS Home Price Index, which is a measure of the overall value of homes sold, experienced a 5.8% increase year over year, resulting in the strongest annual growth rate since December of 2017. This suggests that higher-priced homes, such detached houses, are accounting for a greater proportion of sales.
A Consistently Widening Gap Between Supply and Demand
TREB analysts highlight a number of factors which are contributing to the increase in home prices, however the main issue is the lack of new housing supply, as the number of newly-listed homes fell 9.6% in October. This drop widened the gap between supply and demand and further fueled competition between home buyers. With a sales-to-new listings ratio of 65%, which is up from a balanced ratio of 51% a year ago, the Greater Toronto Area, which includes a variety of property types in a number of regional markets such as houses for sale in Scarborough, is currently a tight sellers’ market.
Michael Collins, TREB’s president, conveyed concern that due to this growing imbalance, as well as consistent migration to the area, the market may return to unsustainable price growth, similar to that of the peak in 2016- early 2017. He stated, “A strong regional economy obviously fuels population growth. All of these new households need a place to live and many have the goal of purchasing a home. The problem is that the supply of available listings is actually dropping, resulting in tighter market conditions and accelerating price growth.”
Jason Mercer, TREB’s Chief of Market Analysis, mentions that home prices will continue to rise quickly, as long as there is a continued disconnect between sales and new listings.
“As market conditions in the GTA have steadily tightened throughout 2019, we have seen an acceleration in the annual rate of price growth. While the current pace of price growth remains moderate, we will likely see stronger price growth moving forward if sales growth continues to outpace listings growth, leading to more competition between buyers,” he stated.
Largest Sales Growth Seen Within the 905
The greatest increase in activity could be seen within the 905 region which includes the Oshawa, Brampton and Halton real estate markets. Sales surged by 17% with 5,196 transactions, with the average price increasing 5.2% to $805,623. The region is also being impacted by the lack of new supply, with new listings dipping -11.7%, creating a tight sellers’ market with a ratio of 64%.
Activity for homes for sale in Toronto rose by 9.4% to 3,295 transactions. The average home price within the city increased 6.3% to $925,498 and, due to a -5.9% decrease in new listings, the sales-to-listings ratio now sits at 66.5 %, keeping the city in a steep sellers’ market.
Condos Head Up Market Price Growth
This sustained rise in price growth has consistently been seen within the most affordable part of the market, as unit prices for condos increased 9.6% year over year to an average of $617,429. This is well above other home types as semi-detached house prices rose to an average of $852,669, an increase of 4.2%, while the average townhouse price rose 3.1% to $676,802. The average detached home price increased 3%, staying above the $1 million mark at $1,049,300.
Continually increasing demand for single-family homes caused detached sale to rise dramatically by 19.6%. However, townhouses saw the largest increase at 21.3 %, which suggests that buyers are continuing to seek out low rise housing at the lowest possible price point. Condos saw an increase in sales of 5.1% while semi-detached house saw a rise of 5.9%.
Take a look at the infographics below to see how sales and prices have changed across all home types in the 416 and 905 markets:
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