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Home Sales Jump While New Listings Lag Behind, According To TREB Report

The GTA real estate market experienced continued supply and demand issues in June. Sales considerably outpaced new listings brought to market, despite recent market-cooling policies put into place by the government over the last two years.

The June data released by the Toronto Real Estate Board reported a total of 8,860 transactions, marking a notable 10.4% year-over-year increase. However, new listings of Toronto condos, houses, and townhouses have remained stagnant with only 15,816 homes brought to market, a slight drop of 0.3%.

This has caused prices to jump, with GTA homes reaching an average of $832,703, an increase of 3% from 2018. Home values also experienced a boost, rising by 3.6% as reported by the MLS Home Price Index. Higher-density market segments, such as condos and townhomes, led much of the price growth.

BOOM TIMES IN THE 905 MARKETS

Much of the region’s growth happened beyond Toronto, as sales surged by 14.3% in the 905 markets with 5,659 transactions. A small 2.2% contraction in new listings also increased prices by 2.1%, to an average of $785,879. Overall buying conditions steepened to a sales-to-new-listings ratio (SNLR) of 54% – tighter than last year’s 46%, but still within a balanced state.

Moderate growth was observed within the 416, with sales rising 4.1% and 3,201 homes changing hands. New listings rose by 3.4% and the average home price boosted by 5.1% to $915,481. Overall, market conditions remain similar to last year with an SNLR of 59%, up by just 1% from 2018 – just on the edge of a sellers’ market.

Overall, the TREB area remains on the tighter side of balanced with a ratio of 56%, up by 6% from 2018. This shows the resilient nature of buyers as they bounce back from the slowdown that came from the federal mortgage stress test and Ontario Fair Housing Plan.

PRESSURE ON THE CONDO MARKET IS A CONCERN, SAYS TREB

TREB’s market analysts express concern about the prolonged shortage of new listings, especially among the region’s medium-density home types that usually fill the space between starter condos and single-detached homes.

“Buyers started moving off the sidelines in the spring, as evidenced by strong year-over-year price growth throughout the second quarter,” stated Jason Mercer, TREB’s chief market analyst. “However, because we saw virtually no change in the number of new listings, market conditions tightened and price growth picked up, especially for more higher-density home types, which, on average, are less expensive than traditional detached houses and therefore provide more affordable housing options under the new stress test regime.”

TREB’s CEO John DiMichele adds that as buyers overcome the affordability challenges presented by the mortgage stress test, it will continue to put pressure on the tight condo market since buyers are blocked from more expensive home types. This will further reduce entry into the GTA market, even after homeowners have the chance to build some equity.

Similar patterns are observed in wider Canadian markets as well, especially for multi-family housing types. For example, more affordable Vancouver condos and Calgary condos have experienced an increase in demand as residents absorb the impacts of the mortgage stress test.

DiMichele stresses that “finding ways to add more mid-density housing types to existing neighbourhoods and new developments needs to be a key component of municipal, provincial, and federal housing plans and policies moving forward.”

GTA JUNE SALES AND PRICE TRENDS

Check out the infographics below to learn how sales and price trends have changed year-over-year in both the City of Toronto and total TREB area in June.

 


Image courtesy of Andy Dean Photography (Shutterstock).