The September housing market has set the stage for a strong autumn buying season, with the latest data from the Toronto Real Estate Board revealing robust year-over-year sales and price growth recorded across all home types.
A total of 7,825 homes traded hands across the Greater Toronto Area over the course of the month, marking a 22% increase from the same time period in 2018. The average home price ticked up by 5.8% to $843,115, while the MLS Home Price Index – a measure of the value of homes sold – also rose by 5.2%. It’s a promising sign that the market continues to rebound following regulations that limited demand and mortgage qualification over the last two years, though TREB notes that sales remain roughly 20% below the market’s September 2016 peak.
Sales and sold prices in Toronto also saw strong improvement, with 2,995 homes selling in September, up 22%, at an average of $843,115 (+5.8%). A total of 4,830 sold in the 905, up 21.6%, at an average of $799,721, up 5.9%.
Home Sales Continue to Outpace New Listings
As sales demand surges, however, so too do concerns of enough supply to go around. The number of new listings brought to market shrank by 1.9% last month, with 15,611 hitting the MLS. As this is developing into a long-term trend, TREB’s analysts worry that it will prime the market once again for unsustainable price growth.
Stated the board’s September report, “We have experienced multiple months this year wherein the annual rate of sales growth outpaced the annual rate of new listings growth, resulting in the overall number of active listings at month-end being well-below last year’s levels. This speaks to tightening market conditions and an accelerating annual rate of price growth.”
TREB President Michael Collins says that creation of new supply must be a priority for policy makers, in addition to previous efforts that have focused on easing affordability and reducing mortgage borrowing risk.
“Demand for ownership housing increased throughout the spring and summer of 2019 compared to the very slow pace of sales experienced in 2018. That being said, many first-time buyers are still experiencing difficulty finding an affordable home,” he states.
“Federal parties vying for seats in the October election have pledged to alleviate affordability issues hampering first-time buyers with a variety of proposals. While these demand-side proposals are important, it is also important that all levels of government remain focused on promoting a sustainable supply of different housing types moving forward.”
Demand is Returning for Detached Houses
One sign that buyers are returning with larger budgets is the uptick in demand for single-family detached houses, which led the GTA market in terms of sales growth. Combined sales growth for 905-area and Toronto houses rose 28.9%, while prices ticked up 4% to an average of $1,050,421. Sales for semi-detached houses also saw strong growth, up 15%, with the average price rising 5.1% to $833,790. Meanwhile, townhouse sales were up 5.7% across the GTA, with prices rising 6.8% to $677,387, and condo sales were up 5.9%, with the average price up 4.2% to $595,073.
“It is interesting to note that market conditions for detached houses have tightened over the past year. In many of the regions surrounding the City of Toronto, detached price growth was above the rate of inflation on an annual basis,” stated Jason Mercer, TREB’s chief of market analysis. “Consumer polling conducted for TREB over the past few years has pointed out that many intending home buyers are still focused on ground-oriented housing. This points to a need for a greater diversity of housing types to bridge the gap between detached houses and condominium apartments.”
TREB also points out that strong population growth is fueling demand for housing throughout the region, with the most recent data from Statistics Canada recording the highest 12-month increase ever, which will contribute to pressure on rental and ownership housing.
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 September: