Sales and prices continued to rise across the Greater Toronto Area in August, indicating the region’s housing market is absorbing previous cooling measures, and could even be on track to overheat once more.
The latest data from the Toronto Real Estate Board (TREB) reveals a total of 7,711 homes changed hands over the course of the month, up a robust 13.4% year over year. However, that was paired with a -3% decline in new supply, tightening market conditions and putting pressure on both buyers and home values; the average price ticked up by 3.6% year over year to $792,611, along with 4.9% growth on the MLS Home Price Index, which measures the overall value of homes sold.
Demand Continues to Bounce Back
TREB President Michael Collins says that while today’s market is subdued in comparison to the record-breaking conditions seen in 2016 and 2017, it’s evident that demand is bouncing back, especially for the higher-priced single-family home segment, which was hardest hit following the Ontario Fair Housing Plan and OSFI mortgage stress test. However, condos for sale in Toronto continue to lead the market in terms of price growth, followed by high-density low-rise homes such as townhouses.
“GTA-wide sales were up on a year-over-year basis for all major market segments, with annual rates of sales growth strongest for low-rise home types including detached houses. This reflects the fact that demand for more expensive home types was very low in 2018 and has rebounded to a certain degree in 2019, albeit not back to the record levels experienced in 2016 and the first quarter of 2017,” he stated. “The OSFI mortgage stress test continues to keep some would-be home buyers on the sidelines.”
Lack of Supply is a Growing Concern
That the market is starting to tighten up again in terms of supply is causing concern that prices could resume the ferocious upward trajectory that defined the 2016 – 2017 market, especially as new housing creation continues to fall short. TREB points out that year-to-date sales have well outpaced the supply of new listings, which is putting increased pressure on home buyers. As a whole, the GTA can now be considered a sellers’ market with a sales-to-new-listings ratio of 65%.
That’s only slightly cooler than conditions within the City of Toronto, which saw a total of 2,553 homes change hands in August, a 5.1% increase. The supply of new listings stayed fairly flat in the 416, dipping just -0.6%, while the average home price rose 4.2% to $818,715. Overall, the city has an SNLR of 68%.
“This year’s market through August has been characterized by receding listings and increasing sales relative to 2018,” stated Jason Mercer, TREB’s chief market analyst. “Competition between buyers has increased, which has led to stronger annual rates of price growth, most notably during this past spring and summer. Right now, the overall pace of price growth is moderate. However, if demand for ownership housing continues to increase relative to the supply of listings, the annual rate of price growth will accelerate further.”
He adds, “This underpins the importance of solving this region’s housing supply issues, which will go a long way to insuring a sustainable pace of price growth over the long term.”
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 August: