The Greater Toronto Area real estate market ended 2019 on a particularly strong note, reflecting a sustained improvement from last year’s softer conditions and setting the stage for increased price growth in 2020, reports the latest numbers from the Toronto Real Estate Board.
The number of home sales rose 17.4% from last December over the course of the month with 4,399 transactions; meanwhile, home sales for the year as a whole clocked in at 87,825. That’s up by 12.6% from the decade-low experienced in 2018, and roughly in line with the median for annual sales over the last 10 years.
Number of New Listings Couldn’t Keep Up with December Sales
December sales were so strong, in fact, that they outpaced the number of newly-listed homes over the course of the month entirely: just 3,531 came to market, also marking a -18% plunge from the same time last year. As a result, GTA holiday real estate could be considered a steep sellers’ market with a sales-to-new-listings ratio of 124.5% – more than double the percentage required to classify it as such.
That helped fuel price growth of 11.8% across the region, with the average coming to $837,788. The MLS Home Price Index – which measures the general value of homes sold – was also up strongly, by 7.3%.
Steep Sellers’ Markets Found Throughout the GTA
Steep sellers’ market conditions were also found in the City of Toronto, which saw a 14.3% uptick in sales, -5.1% decline in new listings, and price growth of 16% to an average of $885,132.
Sales growth was actually strongest in the 905, which is made up of the Halton, York, Peel, Durham, and Simcoe markets, including Newmarket real estate, Oshawa real estate and homes for sale in Whitby. There, sales experienced a 19.4% increase; combined with a -24.4% decline in new listings, home prices were pushed up by 9.1% to $808,732.
Slower Sales in the Rear View
It’s a sharp turnaround from the sluggish conditions at the end of 2018, when the market struggled to absorb the impact from the federal mortgage stress test as well as provincial regulations designed to cool home buyer demand. TREB notes that the historically low interest rates that were available throughout 2019 helped restore buyer presence, as did the GTA’s generally strong economy.
“We certainly saw a recovery in sales in 2019, particularly in the second half of the year,” stated Michael Collins, TREB’s president. “As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining mortgage rates over the course of the year.”
Lack of Supply Could Set Stage for Too-Hot-to-Handle Price Growth
However, the defining theme for the 2019 market, and a growing concern heading into 2020, is the lack of supply in comparison to buyer demand. TREB notes that the total number of newly-listed homes this year fell by -2.4% compared to 2018; should this gap persist it will only put a boil under price growth and lead to the same unsustainable levels that led to government intervention in 2017 and 2018.
“Over the last 10 years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policymakers, research groups of varying scope, and other interested parties have acknowledged that the lack of diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA,” stated Jason Mercer, TREB’s chief market analyst. “Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front.”
Check out the infographics below to see how sales and prices have increased across all home types in the 905 and 416 markets in December: