Buyers continued to take part in bidding wars over Toronto homes despite the freezing weather in February. The main reasons why Toronto homebuyers don't hesitate to enter bidding wars over properties they want are a shortage of low-rise inventory and low interest rates. Despite this situation, the latest report from Greater Toronto Area REALTORS® indicated that both Toronto home sales and prices were on an upward trajectory.
The number of home sales recorded through the TorontoMLS system this February reached 5,731 — a 2.1 per cent increase compared to the 5,613 units sold in February 2013. However, this growth was mostly driven by the condominium segment, which spiked 12.5 per cent overall. Sales of all other housing types flatlined or even declined. The number of detached homes sold in the GTA in February was up only 0.1 per cent on a year-over-year basis. Semi-detached homes saw a decline of 2.0 per cent, and townhouses were down 5.3 per cent in February. Toronto Real Estate Board (TREB) president Dianne Usher commented,
Despite the continuation of inclement weather in February, we did see a moderate uptick in sales activity last month. The sales increase was largely driven by resale condominium apartments. New listings of resale condominium apartments were up on a year-over-year basis, giving buyers ample choice. This is in contrast to the listings situation for singles, semis and townhomes, where supply continued to be constrained. Some would-be buyers had difficulty finding a home that met their needs.
The undersupplied inventory of low-rise properties continued to drag home sales down. After a steep 16 per cent fall in new listings in January, February saw a 1 per cent year-over-year decline of new listings and a 12.2 per cent drop of active listings. Usher explained,
If we see renewed growth in listings for low-rise home types, the pace of sales growth will accelerate as we move through the year.
The average selling price of a home in the GTA reached $553,193 in February 2014, which is 11.3 per cent more than the average price of $509,396 reported in February 2013. The MLS® Home Price Index (HPI) Composite Benchmark, which adjusts for changes in the types of houses that are selling, was up 7.3 per cent year-over-year.
The average selling price in Toronto's C08 district — which includes Cabbagetown, the St. Lawrence Market, the Toronto waterfront, Moss Park, the Garden District, and Church and Wellesley — reached $431,363. Home transactions recorded in this district in February 2014 totalled 108, worth $46,587,200 on average. Moreover, there were 201 new listings and 286 active listings in Toronto's C08 district this February.
Prices were up in all market segments across the GTA. Detached homes recorded the biggest increase, at 11.2 per cent, across the GTA in February. Townhouse prices were up 10.9 per cent year-over-year, followed by semi-detached homes, with growth of 4.9 per cent. Condominium apartments saw the smallest price increase, at 4.8 per cent. TREB's senior manager of market analysis, Jason Mercer, commented,
While the strong price growth experienced over the last year should prompt an improvement in the supply of listings, sellers' market conditions will continue to prevail this year. Home prices, on average, will trend upwards at a pace well-above the rate of inflation. The impact of strong price growth on affordability will be mitigated by low borrowing costs.
The Toronto housing market showed signs of resilience continued growth despite extremely harsh winter and a lack of low-rise inventory. Homebuyers are determined and willing to pay, which is a positive sign, as the peak spring season is just around the corner.
The shortfall in listings during this winter has led to multiple offers for houses listed close to or at market value. Properties that received more than five offers only signal to me that they were under-listed, causing a flurry that didn't benefit the seller or the buyer and frustrated all parties concerned. Please note that going out on multiple offers nightly, when you know there's only one buyer agent who will succeed, isn't a lot of fun for salespeople either. When you hear of houses that receive more than five offers, it's not a sign of the market as much as it is a sign of poor market research.
Title photo by: The City of Toronto