While the traditionally hot spring market took a hiatus, that slowing trend reversed in June – with 8,082 homes sold, it’s the first year-over-year sales increase in the books since December, reveals the latest numbers from the Toronto Real Estate Board.
While numbers are up a modest 2.4 per cent since June 2017, that’s a sharp turnaround from the double-digit declines between 20-30 per cent recorded in the first half of the year.
A good part of this growth can be attributed to an evening playing field – the market is now aligning with post-Fair Housing Plan conditions, rather than pitted against the record highs that reigned prior to April 2017 – but strong month-over-month gains of 17.6 per cent indicate the market is indeed tightening in the short term.
The average price also saw modest improvement, increasing 2 per cent from 2017 and 3.3 per cent from May to $807,871.
Related Read: Sunnier May GTA Sales Indicate Recovering Market
A Time of Volatility
TREB notes it has been a turbulent first half of the year, as a combination of new housing policies including the Fair Housing Plan, new mortgage qualification rules, and rising interest rates, have led to volatile month-over-month performance. However, the board’s incoming president Garry Bhaura appears optimistic, saying demand fundamentals remain strong while supply challenges persist. In fact, he cautions, the market is poised to reheat as long as the latter remains unaddressed.
“Home ownership has proven to be a positive long-term investment. After some adjustment to the Fair Housing Plan, the new Office of the Superintendent of Financial Institutions (OSFI) stress test requirement and generally higher borrowing costs, home buyers are starting to move back into the market, with sales trending up from last year’s lows,” he says.
“Market conditions appear to be tightening, with sales accounting for a greater share of listings, as new listings have dropped compared to last year.”
The mix of home types changing hands is also shifting, with detached and low-rise homes making up a greater proportion of sales. This is perhaps due to a slightly lower price point, as the average detached home price in the TREB region remains 1.9 per cent lower than in 2017, at $1,033,574.
As detached home prices were hardest hit following last year’s policy changes, with sales and prices down 38.2 and 11.2 per cents to date, that this segment is recovering could indicate a greater return of move-up buyers to the low-rise market.
Lack of Supply Still a Challenge
As noted by Bhaura, inventory is lower than at the same time last year with 15,933 listings coming to market in June, an 18.6-per-cent decrease. This leaves the TREB region with a sales-to-new-listings ratio of 50.7 per cent, which is well within balanced territory.
This is also the case in the 905, at 46 per cent, while the City of Toronto hinges on seller’s market conditions, at 59 per cent. This ratio, which is calculated by dividing the number of sales by the number of new listings during a specific time frame, gauges the level of buyer competition within a given market. A ratio between 40 – 60 per cent indicates balanced conditions, while above and below that threshold indicates sellers’ and buyers’ markets, respectively, according to the Canadian Real Estate Association.
That hints at tighter market conditions to come, according to Jason Mercer, TREB’s director of market analysis and service channels. “The expectation is to see improvement in sales over the next year. Over the same period, however, it is likely that issues surrounding the supply of listings will persist,” he stated.
Sales and Prices By Home Type
Detached: The 5.5-per-cent improvement seen throughout the GTA is reflected both in the 416 and 905; sales were up 5.9 per cent to 885, and 5.3 per cent to 2,704, respectively. The average year-over-year price gap is also narrowing, down 8.2 per cent throughout the TREB region, compared to -9 per cent in May. Prices were down 2.4 per cent in the 416, at an average of $1,354,429, and down 1.8 per cent in the 905, at $928,560.
Semi-detached: This segment saw the strongest gains across the board, with sales up 8.4 per cent in the 416 to 297, 7.9 per cent in the 905 to 519, and up 8.1 per cent in total throughout the TREB region.
Prices followed suite, rising 1.4 per cent in the 416 to $999,754, 1.8 per cent in the 905 to $665,606, and 1.7 per cent to $787,227 throughout the total region.
Townhouses: Low-rise multi-family homes also saw decent growth in prices and sales. In the City of Toronto, 308 units traded hands, a 5.1-per-cent increase, and up 5.4 per cent to 1,332 units in the total TREB region. Prices correspondingly rose 5.6 per cent in the 416 to an average of $736,963, 2.4 per cent to $608,566 in the 905 and 3.2 per cent to $638,566 in the total TREB region.
Condos: High-rise homes had a slower month, but still posted improved year-over-year declines from May; sales were down 5.3 per cent in the TREB region, compared to 15.5 per cent just last month, at 2,234 units sold. The decrease was slightly sharper in the 416, down 6 per cent at 1,593 units, and down 3.6 per cent in the 905, at 641 units.
However, condos continue to post the strongest price gains, up 9.5 per cent to an average of $605,530 in the City of Toronto, 3.4 per cent to $450,672 in the 905 region, and 7.9 per cent to $561,097 in TREB total.