The resale housing market in the Greater Toronto Area recorded another strong month, showing that the market is still rebounding. Home sales went up 13.9 per cent and prices soared 11.3 per cent compared to November 2012. Market experts' opinions differ. Some say this is a sign of the market’s health, while others warn of an inflating housing bubble.
Toronto at Night by Ian Mackenzie
The number of home sales recorded through the TorontoMLS system this November reached 6,391. This was an increase of 13.9 per cent compared to November 2012, according to the latest figures released by Greater Toronto Area REALTORS®. On the other hand, new listings on the Toronto MLS last month declined 4.4 per cent, and month-end active listings went down 12.1 per cent. Dianne Usher, Toronto Real Estate Board president, noted,
Growth in sales was strong for most home types in the Greater Toronto Area. Sales growth was led by the single-detached market segment followed by condominium apartments. Together singles and condos accounted for almost three-quarters of total GTA transactions.
Some market observers commented that Toronto experienced a pre-holiday influx of buyers wanting to use the last chance of the season to purchase their dream house. There were quite a lot of buyers who weren’t able to get a deal in spring or summer who have been unsuccessfully trying to buy a house throughout the fall, and who felt that it was a now-or-never situation in November. Interest rates were low, and supply was decreasing — especially in neighbourhoods with good locations and schools. This tightened market conditions even more.
There has been a growing demand for lowrise homes in established GTA neighbourhoods, which highly exceeds their supply. Sales of detached homes in the GTA went up by 18.5 per cent in the GTA, followed by condos with an increase of 13.1 per cent, townhouses with an increase of 9.1 per cent and semi-detached homes with an increase of 4.9 per cent despite a 1.1 per cent decrease in the 416 region. Usher remarked,
With National Housing Day having just passed, housing affordability is top of mind in the GTA and indeed nationally. Despite strong price growth and an uptick in borrowing costs this year, monthly mortgage payments on the average priced home remain affordable for a household earning the average GTA income.
Is the GTA Housing Market Overheating?
The average price of a home sold in the GTA in November 2013 was $538,881, representing an increase of 11.3 per cent compared to the average of $484,208 recorded in last November. Also, the MLS® Home Price Index (HPI) Composite Benchmark, which adjusts for changes in the types of houses selling, rose 5.7 per cent on a year over year basis.
Just like in sales, the strongest growth in prices went to detached homes, increasing 12.3 per cent year-over-year and settling at an average price of $681,597. Townhouse prices went up 7.7 per cent, and prices for semi-detached homes grew 7.4 per cent compared to November 2012. An average condo in the GTA cost $354,864, which is 7.4 per cent more than the price of an average condo in the same month last year. Despite the increase, readers should note that prices for condo apartments experienced different movement in the 416 and 905 regions. In Toronto itself, prices went up by 10 per cent, as opposed to a 0.4 per cent decrease in the surrounding areas. Jason Mercer, TREB’s senior manager of market analysis, pointed out,
Whether we consider the average TorontoMLS selling price or the MLS® HPI Composite Benchmark, annual home price growth remained well-above the rate of inflation in November. This makes sense given the fact that competition between buyers increased last month. Transactions were up strongly year-over-year while the number of homes available for sale was down.
A continuing trend of increasing prices gave rise to alarming predictions of an overheated housing market in Toronto. Market experts point out that on the one hand, there's increasing demand for undersupplied lowrises, and on the other, there's overbuilding in the condo market. Nevertheless, the Toronto housing market shows signs of stability and strength. According to the Bank of Canada, this shows that the situation is improving. Even though the Bank of Canada decided to keep interest rates low, it suggested that the housing market isn't an inflating bubble.