It’s been a dark and dreary start to spring, dampening traditionally robust warm weather sales in some of Canada’s largest markets. However, lower open house foot traffic has not deterred sellers from listing at steeper prices, as demand remains strong enough to prevent buyers from having the upper hand in the GTA.
According to the May numbers released this week by the Toronto Real Estate Board, housing prices have increased by 5.4 per cent year over year, with the average price in the GTA ballooning to $542,174 – a new record high. This is compared to last May’s average of $514,657, and despite a sluggish 10,182 units sold – 3.4 per less than 10,544 in May 2012.
Keep in mind, as last year’s spring buying season was just shy of CMHC’s sweeping amortization changes for high ratio buyers, the decrease is indicative of fewer qualified buyers on the market, though this decline is starting to ease. According to a statement released by TREB President Ann Hannah, “A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market.”
Condos Remain King
Condo purchases remain the most common housing transaction type, with 1,499 units moved in May, at an average price of $372,768 – a 1.2 per cent increase year over year. Not surprisingly, this growth is based in Toronto’s urban centre – only 581 units moved in the 905 region, at $293,398.
Detached in High Demand
As the hordes of buyers flocking to Toronto’s neighbouring bedroom communities can attest, scoring the single family suburban dream within city limits is a challenge. Detached homes remain in fever pitch demand, with a three per cent average price increase of $864,536, compared to just $602,576 in 905 neighbourhoods.
According to Jason Mercer, TREB’s senior manager of market analysis, “The annual rate of price growth in May was not surprising given the competition that still exists between buyers, particularly for low-rise home types such as single-detached and semi-detached houses. We remain on track for a three-and-a-half per cent increase in the average selling price for 2013 as a whole.”
A Slowing Supply Chain
One of Toronto’s largest housing challenges remains high demand; despite rules introduced last summer that limited affordability, the condo market remains steady, and move-up buyers long to remain within city limits. However, a lingering housing boom mindset may be to blame for lack of supply; sellers may be hesitant to settle for today’s current market conditions with memories of yesterday’s hot markets so fresh in mind.
As well, many condo developers remain cautious in the wake of the initial condo slowdown experienced earlier in the year. As we previously reported, new starts dwindled by 55 per cent in Toronto in April, as plans for construction were shelved, and fears arose of a developer credit crunch.
It’s all indicative that the GTA market is slowly rebalancing and though the number of transactions have decreased over the spring months, “the rate of decline has been much smaller,” according to TREB.