How did the Greater Toronto Area housing market fare in February? The latest numbers from the Toronto Real Estate Board (TREB) show a sharp drop from last year’s record activity, with sales plunging 34.9 per cent. However, month-over-month data show a much cheerier picture, indicating the market is well on track for a busy spring season.
A Move-Up Buyers’ Market
“The numbers continue to show that if you’re focusing only on year-over-year growth, you’ll miss the boat on a rising market,” says Lauren Haw, Broker of Record at Zoocasa Realty. “We’re in line with other hot markets, like in February 2016 where the average Toronto home price was $719,843 versus $806,494 now. We’re right in line with where a market like Toronto should be.”
She adds, “It’s a good time to sell a condo and buy a house in the GTA – we know that the condo market was fairly flat in terms of price appreciation for many years, but the gap has narrowed and we’re seeing more of a ‘move-up’ market. There was a $432,584 gap between the average condo and semi-detached price in February 2016, and it’s now down to $415,627.”
Available inventory is also up from last year’s levels, with 465 homes available for sale throughout the region.
While February marks the third consecutive year-over-year decline (sales fell in January and December compared to 2017, at 22 and 18.3 per cents, respectively), TREB President Tim Syrianos says the slower activity is entirely in line with what the board forecasted for the early 2018 market, as new housing and mortgage rules are absorbed.
“When TREB released its outlook for 2018, the forecast anticipated a slow start to the year compared to the historically high sales count reported in the winter and early spring of 2017,” he stated in the board’s release. “Prospective home buyers are still coming to terms with the psychological impact of the Fair Housing Plan, and some have also had to re-evaluate their plans due to the new OSFI-mandated mortgage stress test guidelines and generally higher borrowing costs.”
TREB also points out that this month’s price levels are still 12 per cent higher than those of February 2016, “which represents an annualized increase well above the rate of inflation for the past two years.”
Price Growth Still Historically Strong
The average home price softened 12.4 per cent year over year to $767,818, with the only positive annual price increase experienced in the condo segment, which rose 10.1 per cent to an average of $529,782. Detached homes saw the greatest price decrease at 17.2 per cent to $1,000,736. Semi-detached and townhomes both saw single-digit price declines of 8.6 and 2.9 per cent, to $756,894 and $638,691, respectively.
While the Ontario Fair Housing Plan, coupled with OSFI’s new mortgage requirements, have dampened sales and prices by double digits since last April, conditions are now much more balanced across the GTA. The sales-to-new-listings ratio for the region is currently 49 per cent, well within balanced territory for buyers and sellers. In comparison, the ratio in February 2017 was a whopping 81 per cent, indicating an extremely competitive sellers’ market, which fueled both rampant price growth and buyer anxiety.
Check out how February home sales have changed year over year and month over month in the infographic below:
On Track for Strong Spring
As revealed in Zoocasa’s mid-month February report, it’s evident month-over-month demand is picking up as the busy spring season approaches, with notable recovery in the more expensive detached home section, with relatively flat price growth across all home types, with the exception of condo townhouses.
Jason Mercer, TREB’s director of market analysis, concurs that the market will bounce back as temperatures rise. “As we move further into the spring and summer months, growth in sales and selling price is expected to pick up relative to last year. Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments.”
“That said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability.”
TREB also stated that lack of supply and “missing middle” housing continue to be the largest contributors to unsustainable price growth, and that it is “encouraging” the federal government did not introduce further measures to stem demand in its most recent budget.
Penelope Graham is the Managing Editor at Zoocasa, and has over a decade of experience covering real estate, mortgage, and personal finance topics. Her commentary on the housing market is frequently featured on both national and local media outlets including BNN Bloomberg, CBC, The Toronto Star, National Post, and The Huffington Post. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods, travelling abroad, or in the dance studio.