Toronto’s Housing Market
Previous data from Toronto Real Estate Board (TREB) shows a decline in home sales, the lowest it has been in 15 years. While the housing market as a whole seems stable, Toronto has borne the brunt of low number of sales and home values this April compared to the same period in 2017.
The hectic spring season brings in a lot of buyers as the market recovers from the slower winter months. However, this is not the case with the GTA which has recorded close to 8000 sales, a 32% decline from the 11470 units sold in the same period last year. The last time sales were this low was in 2003 where only 7000 houses were sold. The number of new listings according to TREB fell 10% compared to March 2017 and went down three percent in comparison to the last 10 years.
The decline is being seen on two fronts, lower sales, and reduced home values. This has been attributed to measures taken by the province to cool the market from the highs it recorded last year. New OSFI rules that make it harder to qualify for mortgage and curbs on foreign purchases are measures the federal and municipal governments are using to tame the housing prices that rose steeply last year.
Although property prices have gone down by 12.4%, the number of units sold has dropped by 38.4%. Jason Mercer attributes this to high inventory level. Whilst in 2017 inventory levels were less than a month, in 2018, they are between two to three months. Detached homes have seen the worst drop of 14.4% selling at an average of $1M. Luxury homes valued at $2 million and more only account for 5% of the property sales compared to 10% in 2017.
In retrospect, condos have seen an increase in sales for the same period with recorded 3.2% rise in price averaging $560,000. They are slightly affordable than the other housing types, but still, the number of sales went down by 26%. In 2017 April the average cost of a house (detached, townhouses and condos) was $890,000 while in April 2018 the price recorded to be slightly lower at $780,000.
According to Jason Mercer, TREB’s Director of Market Analysis, the second half of the year is predicted to get better with condos selling faster than other home types. The positive outlook in the housing market is attributed to getting through a policy based volatile season. A sustainable growth rate in the local economy and a population increase is expected to stabilize the housing market.
The election should pave way for a strong housing debate which Tim Syrianos, TREBs President urges all parties to take part in. Issues of tax relief in regards to land transfer taxes both provincial and Toronto land transfer tax will aid in increasing the middle housing segment to fill the gap between single family and the high-end houses. Once the new regulations get approved by the provincial government, Toronto’s housing market is predicted to make a comeback with increased sales and housing prices.