There's been a lot happening on Toronto market this summer. Many buyers returned to the market after government restrictions on mortgages took effect since January, and continue their search for the perfect home. This resulted in rising sales despite summer being usually the slower months for the market. In August, Toronto Realtors reported, 839 sales through TREB’s MLS® System in August 2018, which makes an 8.5 per cent increase compared to August 2017.
Detached homes were the most popular segment with 17.7 increase, followed by townhouses with 5.8 and condos with a 0.7 per cent increase. The only decrease in sales was reported in the semi-detached segment and the overall decrease in sales for the entire GTA was only 1 per cent.
However the sudden onset of buyers returning to the market and sales being completed did reflect on the inventory. Since buyers been mostly dormant for the first few months of 2018, sellers have been hesitating to enter the market as well. Currently, Toronto has 17,864 active listings in its inventory, which is 8.8 per cent more than last year, but with current monthly sales, it only makes for something over two months of inventory. New listings are also not rising as quickly as sales since there was only 6 per cent more new listings in a year-over-year comparison. With more than 8 per cent new sales, there are currently more buyers entering the market than there are sellers. With many new immigrants coming to the city, the listings to buyers ratio is slowly becoming dangerously unbalanced.
For the average price, it climbed by 4.7 per cent in year-over-year comparison. Average price for August 2018 was $765,270. Detached homes as the most expensive segment did change by 1.2 per cent and settled on $977,187 for a home. Semi-detached homes did sell on average for $741,873, which is 3.6 per cent more than last August. Townhouses cost $624,472 on average with 3.2 per cent climb. Condo apartments remained the quickest rising segment with the average price of $541,106 and 6.4 per cent climb.
Richard Silver, Sales Representative, SVP-Sales
Great News! For the third month in a row, there has been an increase in sales and prices that we have not seen since the Liberal Government implemented their Fair Housing Policy which included a Foreign Buyers Sales Tax and Rent Controls. So far the only people really hurt by the tax have been sellers who were hoping for a continued market and made purchasing plans based on the market increases in the Spring of 2017.
Please do not take this as a sign that we are heading back to the crazy Spring of 2017, however, it is a sign that the market is buoyant and our main issue still seems to be a lack of saleable product. Detached homes, especially in the 905 were the hardest hit by the FBST and it is great to see that they are now leading the market growth, even though they are still below where they normally would have been. Does this make it a great time to buy in the 905? Yes, but in a City like Toronto where commuting is painful at best, to maximize your family time, you must keep in mind lifestyle over profit. Time with family and friends is invaluable. Make it a priority!
Jim Burtnick, Broker, SVP-Sales
Coming from an economics background, I seem to always view the TREB market stats from this perspective. What I see in the August statistics are two distinct economic aspects.
First, comes from the relatively newer field of "behavioural economics". That is, people tend to act in unison in the marketplace. When the Ontario Government introduced the Ontario Fair Housing Plan and the Federal Government also introduced new mortgage stress test rules, the result was consumers going to the sidelines. Simply put, nobody wants to jump into the marketplace when the rules have been changed, they want to wait and see what overall effect these externally mandated changes will have on the marketplace. So it was no real surprise to see that initially, the market slowed down (fewer sales and some prices sensitivity). Now with several months of this "new normal", consumers are accepting these changes and getting back into the marketplace. Expect this trend to continue as everybody needs a roof over their head and the GTA continues to attract the lion's share of the 300,000 plus new immigrants that Canada in bringing into the country every year.
The second economic aspect I see in this report is more revealing of what the future of the residential real estate holds. That is, the lack of supply of listings.
From the Report:
We only have slightly more than two-and-a-half monthsof inventory in the TREB market area as a whole and less than two months of inventory in the City of Toronto. This means that despite the fact the sales remain off the record highs from 2016 and 2017, many GTA neighbourhoods continue to suffer from a lack of inventory. This could present a problem if demand continues to accelerate over the next year, which is expected. (Jason Mercer, TREB’s Director of Market Analysis)
To my economic rationale, this aspect alone speaks to prices for homes continuing to rise. How could it not? There are more buyers (demand) than sellers (supply) in the marketplace. The best we can hope for is that there are many sellers (likely empty nesters) who will be putting their too-big-for-them-any-longer homes on the MLS (R) in the coming months and years. Because developers alone cannot keep up creating enough new supply. Expect prices to continue to rise going forward.
Rizwan Malik, Sales Representative, SVP-Sales
The new TREB stats are refreshing going into the fall market. Greater sales volume and growth over last year shows the strength of our market but the one thing that has changed is the approach to buying and selling. We are working in a more relaxed market without the flurry of offers and the urgency to enter into bidding wars. It will be interesting to see how the September stats compare to last months as there is still a great need for more listings.
Erin Haas, Sales Representative
The Toronto Rental market has seen an increase in price and demand, causing renters to look beyond the scope of the GTA for affordable housing. I have been helping some clients look for apartments and there are multiple offers on units from renters on the first day, sight unseen which is not usually the norm. In terms of purchasing, it is truly a seller's market, without a ton of inventory, prices are increasing and demand is greater for detached homes versus other styles. We are looking forward to seeing how the market changes with the seasons, as we move away from summer and everyone comes back to reality after being at the cottage!