The long-awaited spring market is finally making itself felt in the Greater Toronto Area, as home sales enjoyed a 16.8% increase from the previous year; a total of 9,042 transactions took place in April, also marking a month-over-month increase of 11.3% from March.
It’s the strongest pace of growth experienced thus far this year, according to the Toronto Real Estate Board, as the market has struggled to absorb the impacts from new housing policies including the nationally-mandated mortgage stress test.
Home Prices Up Throughout TREB Area
The average GTA home price also rose modestly by 1.9% to $820,148, while the MLS Home Price Index increased by 3.2%, indicating a larger mix of higher-value homes trading hands. However, fewer new MLS listings in Toronto and the surrounding region has prompted TREB to warn of potentially heating market conditions; a total of 17,205 homes were brought to market in April, an increase of just 8%. The overall sales-to-new-listings ratio for all markets tracked by TREB hit 52% – still well within
TREB Warns Too-Short Supply Could Overheat Market
“The strong year-over-year growth in sales is obviously a good news story and likely represents some catchup from a slow start to the year,” stated Garry Bhuara, TREB’s president, adding that the board’s overall sales outlook for 2019 is improved from last.
“It should be noted, however, that growth in new listings is not keeping pace with sales. This points to an ongoing supply issue in the GTA.”
Mortgage Stress Test Still Point of Concern
Jason Mercer, TREB’s chief market analyst, says that while the April numbers are an improvement over the short term, the impact from the aforementioned stress continues to felt throughout the market, pointing out that activity remains below the 10-year trend. He voices the board’s frustration that no action has been taken by policy makers to adjust the stress test’s criteria, despite shifting economic trends, and an easing interest rate environment.
“Many potential home buyers arguably remain on the sidelines as they reassess their options in light of the OSFI-mandated two-percentage-point stress test on mortgages,” he stated. “Longer-term borrowing costs have trended lower this year and the outlook for short-term rates, for which the Bank of Canada holds the lever, is flat to down this year. Unfortunately, against this backdrop, we have seen no movement toward flexibility in the OSFI stress test.”
Check out the infographics below to see how sales and price trends have changed year over year in both the City of Toronto and total TREB area in April: