The GTA housing market rebounded in the second half of 2013 after a cooldown that hit the market in summer 2012. The trend of growing sales and robust prices also continued in December 2013, driven by low interest rates and a shortage of low-rise inventory as well as a rush of buyers wanting to make use of their pre-approved mortgages.
The number of residential transactions recorded through the TorontoMLS system in the GTA totalled 4,078, which is almost 14 per cent more than the 3,582 home sales reported in December 2012. Despite a slow start and weak spring season, total sales for the whole calendar year 2013 amounted to 87,111, up approximately 2 per cent compared to the 85,496 transactions in 2012.
The resale housing market in the GTA has continued to defy warnings that the oversupplied market is a growing bubble about to burst. By contrast, the numbers at the end of the year are showing signs of strength and health. Dianne Usher, Toronto Real Estate Board president, commented:
After a slow start to the year, sales growth accelerated to a brisk pace in the second half of 2013. Despite the inclement weather in December, we finished the year with a respectable gain in transactions compared to 2012. Looking forward, I believe that home ownership in the GTA will remain affordable as borrowing costs stay low. The result could be a further increase in sales in 2014.
The biggest year-over-year gains in December sales were recorded in the condo market segment, which went up 27.8 per cent overall, pushed by a vast increase of 46.1 per cent in the suburbs. Townhouse transactions were up 14.8 per cent from December 2012. Detached homes saw an overall increase of 7.1 per cent but recorded a notable 6.7 per cent decrease in the City of Toronto. The semi-detached segment recorded another decrease in the suburbs, going down 0.9 per cent. Nevertheless, semi-detached home sales for the whole GTA were up 2.5 per cent.
New listings entered into the TorontoMLS system declined almost 4 per cent in December 2013 on a year-over-year basis. Lack of inventory and increased demand fuelled frantic bidding wars in low-rise market segments—particularly in well-located neighbourhoods.
Prices Keep Climbing
The average selling price of a home in the GTA for December 2013 was $520,398, representing an 8.9 per cent increase compared to $477,756 in December 2012. For the full year, the average selling price in the GTA settled at $523,035, up 5.2 per cent compared to the calendar year 2012 average of $497,130.
Even though many market observers warned that the Toronto condo market is oversupplied and overpriced, which might lead to a market cooldown, the condo sector ended the year with a 6 per cent increase in prices. An average condo in the GTA sold for $343,943 in December 2013. Moreover, resale condo transactions were up 7.6 per cent in the city, with the average price settling at $367,376 and 4.6 per cent in the suburbs, where the average price reached $293,883.
Price gains were higher for the low-rise segment as a result of bidding wars on a tight market. An average detached home in the GTA was worth $685,787 in December 2013, which is 12.5 per cent more than the average price of detached homes reported in December 2012. Prices of semi-detached homes went up 11.8 per cent year-over-year, settling at an average of 497,805. Townhouses in the GTA sold on average for $400,765, up 11.2 per cent compared to December 2012. Jason Mercer, TREB’s senior manager of market analysis, remarked:
The average selling price will be up again in 2014 and by more than the rate of inflation. The seller's market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA. Some neighbourhoods, especially those characterized by low-rise home types like singles, semis and townhomes, will continue to have less than two months of inventory.
Much of the increased activity in the GTA housing market in the second half of 2013 was due to low interest rates. Finance Minister Jim Flaherty warned that a hike in interest rates could slow down the housing market. However, predictions for 2014 are more optimistic, forecasting a slower, gradual growth in interest rates.
Torontoism has also prepared a 2014 Toronto Real Estate Forecast for you. You can find it here.
Title photo by Michael Gil