Greater Toronto Area home sales remained seasonally chilly throughout the month of May, with the Toronto Real Estate Board reporting 7,834 transactions, a 22.2-per-cent decline from sales activity the same time last year. The average home price was down 6.6 per cent, to an average of $805,320.
However, this is the smallest decrease recorded over the last three months, indicating the gap in sales that has persisted since the implementation of the Ontario Fair Housing Plan is starting to narrow, and in line with realtor forecasts that the market would pick up in the second half of the year.
Check out the infographic below for year-over—year and month-over-month May sales trends for the City of Toronto and Greater Toronto Area:
Buyers Challenged by Lack of Choice
Part of the slower activity is due to hesitant sellers who are discouraged by generally lower prices – polling conducted by TREB reveals selling intentions have declined considerably since the fall, as those who can afford to wait out softer market conditions are choosing to do so.
This has resulted in less inventory for buyers to choose from, with new listings down 26.2 per cent. Jason Mercer, TREB’s director of market analysis, says this has increased competition between home shoppers, and will put upward pressure on prices.
“Market conditions are becoming tighter in the Greater Toronto Area and this will provide support for home prices as we move through the second half of 2018 into 2019,” he says. “There are emerging indicators pointing toward increased competition between buyers, which generally leads to stronger price growth.” He adds that, in the City of Toronto, homes of all types sold either at, or above, asking throughout May.
The region also continues to feel squeezed by a lack of “missing middle” housing, says TREB, as would-be downsizers and move-up buyers alike remain in unsuitable housing, further reducing the supply of available homes for sale.
“Unfortunately, many home buyers are still finding it difficult to find a home that meets their needs,” says TREB President Tim Syrianos, who points to Canadian Centre for Economic Analysis research that finds the majority of Ontarians are over-housed, with five million extra bedrooms throughout the province.
“These people don’t list their homes for sale, because they feel there are no alternative housing types for them to move into,” Syrianos says. “Policy makers need to focus more on the ‘missing middle’ – home types that bridge the gap between detached houses and condominium apartments.”
Condos See Strongest Sales and Price Growth
As has been the pattern over the last 12 months, condos were the only housing type to post a year-over-year increase in prices, up 5.7 per cent to an average of $562,892 throughout the total TREB region. Price growth and demand was even stronger in the City of Toronto, where values rose 6.5 per cent to $602,804, while rising a moderate 1.2 per cent to an average of $455,413 in the 905 region.
Toronto condos also saw the smallest annual sales decline, down 13.8 per cent from last May, and down 19.9 per cent in the 905. Sales are up briskly from April, however, with gains of 7.8per cent throughout TREB, and prices remaining relatively flat at an increase of 0.6 per cent.
Single-family homes continued to experience the greatest year-over-year declines, with detached home sales down 28.5 per cent, and semi-detached homes by 29.4 per cent throughout the TREB markets.
However, while prices have tumbled, the average house will still set buyers back by over a million; detached homes throughout the TREB region averaged $1,045,553 (-8.2 per cent), and $1,426,094 (-9 per cent) in the 416. Those on the market for a house will find the lowest prices in the 905 municipalities, where the May average price clocked in at $929,401. Compared to April activity, detached and semi-detached sales are down -3.1 and -9.3 per cents, respectively, while prices have modestly improved by 1.4 and 2.9 per cents.
Townhouses posted the smallest annual sales decline at -13.4 per cent, though activity was up 1 per cent from April, with prices falling 2.5 per cent to an average of $640,543 – a month-over-month decrease of 0.7 per cent.
May Market Remains Balanced
Market conditions remain balanced in nearly every TREB-tracked region, with a sales-to-new-listings ratio of 41 per cent for the area as a whole. (This ratio, which is calculated by dividing the number of sales by the number of new listings over a specific time frame, is used by the Canadian Real Estate Association to determine the level of competition within a market. A ratio between 40 – 60 per cent is considered balanced, with levels below and above that threshold indicating buyers’ and sellers’ markets, respectively.)
The City of Toronto maintained its balance at 49 per cent, as did Halton and Peel regions, at 43 and 44 per cents. Buyers’ conditions prevail, however, in York, Durham, and Simcoe regions, with ratios of 27, 38, and 31 per cents.
Housing Affordability to Impact Provincial Election
TREB also took the opportunity to highlight how the issue of housing affordability will be front and centre in the provincial election on June 7, releasing poll results that show 25 per cent of Ontarians rank housing affordability as the top two most important issues (of a list that includes government spending / balancing the budget, taxes, energy costs, economy, transportation / traffic, environment / climate change, and enhancing social programs).
TREB’s poll reveals 69 per cent of respondents agree that a party’s platform on housing will influence the way they vote, while 56 per cent agree government policies should focus equally on both increasing the supply of housing, while decreasing market demand.
A total of 77 per cent of respondents also indicated they are strongly in support of reducing provincial land transfer tax, with 68 per cent calling to repeal it entirely. This has long been a contested political issue, especially in Toronto, where residents are double taxed both at the municipal and provincial levels. Councillors are currently pushing for the ability to implement an MLTT in York region, which has been hotly opposed by both TREB and the Ontario Real Estate Association.
“Housing and real estate issues are top of mind for many Ontario and GTA voters, and they often turn to their Realtor for opinions on these matters,” says Syrianos. “That’s why we think it’s more important to help shine the spotlight on these issues during the provincial election campaign.”