The Toronto Real Estate Board reports that the housing market is finally starting to recover from the storm caused by last year’s policy and mortgage changes – to the extent that it has prompted concerns of overheating demand.
Compared to August 2017, data from this August reports slight improvement across all TREB regions. At an average price of $765,270, 6,839 homes for sale in Toronto have exchanged hands, a year-over-year increase of 4.7% and 8.5%, respectively. The MLS Home Price Index, used to keep track of the overall value of the market, rose 1.5%, reflecting a greater proportion of higher-priced detached home sales.
On the other hand, new MLS listings in Toronto have declined by 12.2%, totalling 12,166 for the month of August. This decline has shifted the market closer to sellers’ territory at a sales-to-new-listings ratio of 56%.
Conditions have remained relatively stable moving from July to August, with actual sales down by 1.7% and average price down by 2.1%.
Buyers Finally Returning to Market
“It is encouraging to see a continued resurgence in the demand for ownership housing, states TREB President Garry Bhaura in TREB’s release. “Many home 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 and are getting deals done much more so than last year.”
Following last April’s Ontario Fair Housing Plan, and the tougher mortgage qualifications introduced in January, buyers were uncertain if it was the best time to purchase for a home and paused their real estate searches; however, stronger year-over-year activity shows that buyers and borrowers are finally comfortable with these policy changes, and are confident enough to return to the market, he says.
Bhaura also anticipates that real estate demand will increase over the next year as home ownership remains a solid long-term investment, with strong economic factors supporting the market.
Overheating Once Again a Concern
Policy changes in the FHP and Guideline B-20 were introduced with the intention to cool an overheating market. Nonetheless, the growing demand in the housing market sets the tone for overheating once again.
“In August, the annual rate of sales growth outpaced the annual rate of new listings growth,” states TREB director of marketing analysis Jason Mercer. “We have only slightly more than two-and-a-half months of 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 that 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.”