Early spring home sales are proving to be flat, if stable, in the Greater Toronto Area – according to the latest data released by the Toronto Real Estate Board (TREB), March sales are nearly identical to activity during the time last year, with 7,187 homes changing hands, compared to 7,188 in 2018. For the first quarter of 2019 as a whole, sales are down -1%.
Average home prices have also kept an even keel, up 0.5% year over year to $788,335, while the benchmark rose 2.6% indicating a slight uptick in the value of homes sold. Average home prices skewed slightly higher in the City of Toronto proper at $830,043 (+1.5%), while the 905 markets saw price small gains of 2.6% to $765,469, reflecting a 5.3% pickup in sales, compared to a -8.5% slowdown in the 416.
Too Few Homes to Choose From
However, the market as a whole continues to be defined by a lack of new home listings which fell -5.1% throughout the GTA. This continues to put pressure on buyers and keep market conditions on the tighter end of balanced; the sales-to-new listings ratio for all markets tracked by TREB is 51%, with conditions steeper in the 416 at 56%, and slightly softer in the 905 at 49%. This ratio, which measures the level of competition in the market, is calculated by dividing the number of sales by the number of new listings over the course of the month. A ratio between 40 – 50% is considered balanced, with above and below that threshold indicating sellers’ and buyers’ markets, respectively.
Mortgage Borrowers Continue to be Stressed by TestTREB continues to point to the cooling effect of the national stress test as the impetus behind slowing sales activity, as well as municipal policies that stifle the development of gentle density housing such as townhomes, rather than the influx of Toronto condos that have clustered neighbourhoods with development-friendly zoning. Currently, large chunks of the city are deemed to be within the “yellow belt”, zoned only for single-family Toronto houses.
“The OSFI stress test continues to impact home buyers’ ability to qualify for a mortgage. TREB is still arguing that the stress test provisions and mortgage lending guidelines generally, including allowable amortization periods for insured mortgages, should be reviewed,” said TREB President Garry Bhaura.
“The supply of listings in the GTA also remains a problem,” he adds. “Bringing a greater diversity of ownership and rental housing online, including ‘missing middle’ home types, should be a priority of all levels of government.”
Jason Mercer, TREB’s chief market analys, says that despite slower sales activity, buyers continue to feel the heat, especially in some of the 416’s most competitive neighbourhoods, due the lack of inventory coming to market.
“Market conditions have remained tight enough to support a moderate pace of price growth. Despite sales being markedly lower than the record levels of 2016 and early 2017, the supply of listings has also receded,” he stated. “This means that in many neighbourhoods throughout the GTA, we continue to see competition between buyers for available listings, which provides a level of support for home prices.”
Check out how home prices have changed year over year in March in the 416 and GTA, in the infographic below: