The February data is in for the Toronto real estate market, and the numbers reveal activity continues to decline from last year’s levels; sales have fallen 34.9 per cent and prices 12.4 per cent to an average of $767,818, compared to February 2017.
An Opportunity to Upgrade
However, housing analysts say perspective is important when looking at the shorter-term picture – while the market has softened considerably, it has done so from historically high levels that were considerable unsustainable for many home buyers. In fact, not only is today’s market in much more balanced territory, but month-over-month data indicates this spring season will be as robust as ever.
Lauren Haw, Broker of Record at Zoocasa Realty, says buyers and sellers who focus only on year-over-year market change are in for a shock, as real-time conditions are much more competitive than the numbers let on.
“The numbers continue to show that if you’re focusing only on year-over-year growth, you’ll miss the boat on a rising market,” she says. “We’re in line with other hot markets, like in February 2016 where the average Toronto home price was $719,843 versus $806,494 now. We’re right in line with where a market like Toronto should be.”
And, as steadily rising prices have narrowed the cost gap between condo and detached ownership, Haw says there’s one particular consumer segment set to benefit most – move up buyers.
“It’s a good time to sell a condo and buy a house in the GTA – we know that the condo market was fairly flat in terms of price appreciation for many years, but the gap has narrowed and we’re seeing more of a ‘move-up’ market,” she says. “There was a $432,584 gap between the average condo and semi-detached price in February 2016, and it’s now down to $415,627.”
Check out the infographic below to see how February’s real estate market performance compares annually, and from January.
Market Decline Part of TREB’s Forecast
That the market is off to a slower start is actually in line with Toronto Real Estate Board predictions – new mortgage rules that went into effect on January 1st caused a “pull forward” on would-be January sales, which the board says has contributed to a cooler Q1.
“When TREB released its outlook for 2018, the forecast anticipated a slow start to the year compared to the historically high sales count reported in the winter and early spring of 2017,” says TREB President Tim Syrianos. “Prospective home buyers are still come to terms with the psychological impact of the Fair Housing Plan, and some have also had to re-evaluate their plans due to the new OSFI-mandated mortgage stress test guidelines and generally higher borrowing costs.”
Prices Fall Across Most Home Types
Home prices continued to moderate, with the only increase seen in the condo segment, which appreciated an average of 10.1 per cent, to $529,782. As has been the trend since the implementation of the Fair Housing Plan, detached homes saw the greatest price declines, falling 17.2 per cent to $1,00,736. Semi-detached and townhomes both saw single-digit price declines of 8.6 and 2.9 per cent, to $756,894 and $638,691, respectively.
However, February prices still clocked in 12 per cent higher than in February 2016, “which represents an annualized increase well above the rate of inflation for the past two years.”
Sales and price fluctuations also differed greatly across the Greater Toronto Area – condos for sale in Mississauga, for example, go for under the GTA average at $411,561, compared to Toronto condos at $570,275, which are priced above. Check out the chart below to view price and sale conditions across the region: