September 10, 2018 | Market Update
Defying the skepticism of some analysts, recent TREB data reveals that Toronto’s housing market continued to rebound in August. Notably, there was a significant improvement in detached home sales, suggesting that buyers are eagerly returning to the market. While these developments are encouraging, supply remains an ongoing issue.
Sales and prices on the rise
There were 6,839 recorded home sales in the GTA in August, up 8.5 per cent from August of 2017. On a seasonally-adjusted basis, sales were up 2 per cent. Seasonal adjustment strips out seasonal market patterns to provide a clearer picture of general market trends.
In line with what we saw in July, year-over-years sale prices also grew (though not as much as overall sales). The average August home price was $765,270, representing an increase of 4.7 per cent over the same period last year. These prices suggest that the market is continuing to stabilize, which is good news for the GTA’s already strong economy.
Optimism on the detached housing front
Average condo prices were up 6.4 per cent in the GTA from August of last year, leading price growth in the market. Condo sales also increased, but not nearly as much as detached home sales, which were up 17.7 per cent year-over-year. There was also moderate price growth in the detached sector, which is another sign of recovery.
This change in the mix of home sales is promising. It’s clear that many buyers are ready to put their money into detached homes over less-expensive home types, which suggests that they’re seeing home ownership as a worthwhile long-term investment. TREB President Garry Bhaura commented on this month’s positive shift. “Many buyers who had initially moved to the sidelines due to the Ontario Fair Housing Plan and new mortgage lending guidelines have renewed their search for a home,” said Bhaura, “and [they’re] getting deals done much more so than last year.”
The inventory shortage continues
While Torontonians should feel optimistic about the housing market—and the rejuvenated interest we’re seeing in homeownership—there’s still one issue that could negatively impact neighbourhoods in the GTA. Demand for homeownership is on the rise, and there may not be enough supply to meet it.
“Market conditions in the summer of 2018, including this past August, were tighter than what was experienced in the summer of 2017,” noted Jason Mercer, TREB’S Director of Market Analysis. Mercer also noted that there’s only a little over two-and-a-half months of inventory in the TREB market area, and stated that “this could present a problem if demand continues to accelerate over the next year, which is expected.”
Mercer’s comments echo what TREB officials have been saying about housing supply in the GTA over the course of the last few months. Moving forward, provincial and municipal policymakers should take steps toward addressing this ongoing issue.
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