GTA May Home Sales Up by Nearly 20%, Though Still Below Average: TREB

May ushered in more promising data for the Greater Toronto Area real estate market, with robust double-digit growth in sales recorded for the second month in a row. A total of 9,989 homes traded hands, up 18.9% from the same time period last year, and an increase of roughly 10% from April’s activity.

However, while the uptick in sales could indicate the policy-induced correction that has plagued the market over the last two years could be coming to a close, the Toronto Real Estate Board’s report emphasizes they’re still below the 10-year trend for the month, which typically sees over 10,000 homes sold.

A Lack of Listings Keeps Market Competitive for Buyers

The GTA also continues to struggle with a supply and demand imbalance, as the number of homes brought to market in May remained roughly flat on a yearly basis at 19,386 listings. That supply remains on par with 2018 levels, when the market slumped at a 15-year-low, indicates sellers are less motivated to list than they have been in the past.

As a result, prices have experienced a steady year-over-year increase of 3.6% to an average of $838,540 – a pace TREB deems to be sustainable. The Home Price Index, which measures the overall value of homes sold, rose by 3.1%.

In the City of Toronto proper, sales rose by 13% with 3,715 transactions, well outpacing the 6,648 new listings brought to market and marking a 4% increase year over year. That’s put upward pressure of 7.8% on the average price in the 416, which rose to $937,804.

Similar price growth was experienced throughout the Greater Golden Horseshoe with values for Burlington homes for sale clocking in at $770,151, and Oakville real estate at $994,736.

Seller Gridlock Could Heat Prices

TREB President Garry Bhaura says that the market continues to be supported by the region’s strong economic foundation, and that the impacts from the Fair Housing Plan and federal stress test are likely being absorbed. 

“After a sluggish start to 2019, the second quarter appears to be reflecting a positive shift in consumer sentiment toward ownership housing. Households continue to see ownership housing in the GTA as a quality long-term investment as population growth from immigration remains strong and the regional economy continues to create jobs across a diversity of sectors,” he states.

“However, sales activity continues to be below the longer-term norm as potential home buyers come to terms with the OSFI mortgage stress test and the fact that listings continue to be constrained relative to sales.” 

The main risks to the market continue to be a lack of supply, according to TREB’s Chief Analyst Jason Mercer. While price growth is currently stable, he points out that should supply and demand imbalances persist, that will contribute to heating prices. It also causes buyer gridlock, as sellers fear being able to move up at a reasonable price point after selling their existing home – a trend observed in the build-up to the market’s peak in 2016 and early 2017.

“We are experiencing annual rates of price growth that are largely sustainable right now in the GTA – above the rate of inflation, but in the single digits,” he states. “If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate. Many households are not comfortable listings their homes for sale because they feel that there are no housing options available to better meet their needs.”

The pace of sales growth was strongest for detached and semi-detached houses, which rose 25% to 3,469 transactions and 27.9% to 1,019, respectively. Demand for townhouses rose 22.8% with 1,656 sold in May, while condo sales increased by 6.4% with 2,542 sold. 

Condos See Strongest Price Growth

However, price growth was strongest for multi-family housing, indicating the affordability gap is closing as demand persists for the most affordable home types in the GTA. The average condo price rose 4.9% to $590,876, while townhouse prices rose 3.2% to $665,969. Detached and semi-detached houses were up by a more moderate 1.1% and 1.9% to averages of $1,042,218 and $827,250, respectively.

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 May: