July 10, 2018 | Market Update
June marked Garry Bhaura’s first month as Toronto Real Estate Board (TREB) President, and things started off on a good note. There were positive shifts in Toronto’s housing market, including gains in both average home prices and the number of sales that occurred. Now, many commentators have turned their attention to predicting the levels of buyer competition we’re likely to see through the rest of the year.
Home sales and prices on the rise
There were 8,082 home sales reported this June, representing a 2.4 per cent increase from June of last year. Year-over-year, the average home sale price also rose by 2 per cent.
Tellingly, month-over-month figures received a bigger bump. Average sale prices increased by 3.3 per cent between May and June of this year—but the real spike occurred in the number of transactions that took place. Seasonally adjusted, home sales grew by 17.6 per cent in one month. This sudden uptick revealed a significant market shift.
While we’re used to hearing about gains in the condo market (which was incredibly strong during the first two quarters of this year), it’s worth remembering that overall sales numbers include detached homes, semi-detached homes, and townhouses. In one particularly notable development, detached sales rose by 5.9 per cent. What we’re seeing is a shift in some of the major market trends of recent months.
Buyers adjusting to the market
It’s a story that’s familiar to every Torontonian who’s following what’s happening in the market. The OSFI stress test requirements have had a very real impact on buyer behaviour this year. Fortunately, market activity appears to be stabilizing. There’s evidence that after months of hesitation, homebuyers are reentering the market.
Mr. Bhaura has observed that sales are trending up from last year’s lows; he summed up conditions well by stating, “home ownership has proven to be a positive long-term investment.” That said, there were some areas in the GTA that didn’t fare quite as well as others in June (for example, York Region saw a noteworthy decline in detached home sales prices). Nonetheless, overall market shifts represented good news for the city and its surrounding area.
How much of an impact will supply have?
In May, new listings were low in comparison to sales. These conditions suggested increased competition between buyers—a trend that’s continued into June (and could continue through the next year).
In short, the market is getting tighter. While we’re definitely seeing an improvement in sales, low supply and ensuing competition could impact affordability in the future.
Jason Mercer, TREB’s Director of Market Analysis and Service Channels, called attention to the role that policy can play in keeping the market healthy. Mercer noted that “[w]ith a new provincial government in place and municipal elections on the horizon, housing supply should be top of mind for policy makers.”
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