How the Toronto Real Estate Market Performed
The Toronto Real Estate Board is projecting that prices will increase in 2020.
Robust economic conditions, strong population growth and low borrowing costs will fuel an increase in home sales.
With the mortgage stress test in place, buyers are moving away from buying more expensive detached homes, and into higher density market segments such as semi-detached homes, townhouses, and the condominium market, where housing is more affordable.
We are seeing an increase in first time home buyer activity, particularly in the condo market.
Low number of new listings leads to increase demand for those listings
The January numbers are out, and they’re supporting the outlook for 2020. It is likely that the number of new listings will remain flat or decline into the year ahead. There is a persistent shortage of new listings in the GTA (i.e. detached homes coming on the market), and the demand for those homes remains high, resulting in an increase in prices.
Why? According to TRREB, Existing homeowners who may have considered moving are concerned about their ability to find an adequate new home that meets their needs. Homeowners are also worried about large upfront costs associated with moving, such as land transfer tax (double if you are in Toronto). This all plays into their decision to move, and many are opting to stay put.
With the number of sales in January up, while new listings were down, we’re seeing tighter market conditions and consequently an increase in prices.
To make sense of this, think of supply and demand. There are fewer homes coming on the market (low supply). There are lots of potential buyers in the marketplace, all searching for a similar type of home (increased demand and therefore increased number of sales). Multiple buyers are all bidding on the same houses, driving prices up. We are still not seeing an increase of housing supply through new construction of detached homes. The population in Toronto and the GTA continues to increase, so there are even more families in the market for new homes, contributing to an overall increase in prices.
January 2020 Results Support the Projection for Strong Price Growth into 2020
Here’s how last month’s numbers compared to January 2019.
January started off strong, with the number of sales up while new listings remained low.
The total # of residential transactions were up 15.4%, compared to January 2019.
The average selling price was up 12.3% to $838,363 compared to last year.
The average days on market was down 18.9% to 30 days, vs. 37 days last year.
The total number of new listings on the market was down 17.1% compared to last year, contributing to the increase in selling price.
The condominium segment leads the way in terms of price growth, but all home types experienced strong price growth.
Here’s how the numbers played out in various pockets of Etobicoke.