Pent up demand supporting strong price growth in resale housing market

The Greater Toronto Area resale housing market had a strong spring, and summer started off strong, too. Based on the latest market figures from the Toronto Real Estate Board, summer is still hot! 

In July 2019, there were 8,595 home sales in the GTA reported through the MLS system in July 2019, which is a year-over-year increase of 24.3%, and more than 5% higher than June 2019. The greatest growth in sales was in the semi-detached market, increasing 42% with 859 units sold during the month. 

New listings in July 2019 also increased, but only by 3.7%, so sales growth outpaced new listings growth by a significant margin. Active listings in the resale market as of the end of July were down 9.1% year-over-year, so the market remains tight. 

“While the OSFI mortgage stress test has clearly had an impact on the number of home sales over the last year-and-a-half, for most GTA residents the goal of home ownership has not diminished,” says TREB CEO John DiMichele. “In fact, we’re seeing growing pent-up demand for ownership housing, especially as the number of GTA households continues to increase by 40,000 to 50,000 each year due to strong population growth. As more and more households come to terms with the stress test and move back into the market in the coming months and years, they could suffer from a chronically under-supplied marketplace and an acceleration of home price growth to unsustainable levels. Fortunately, policy makers have acknowledged the housing supply issue and are working toward solutions.”

Detached home sales came in at 3,941, up nearly 30% from a year ago. While the majority of sales last month were of detached homes, it’s the only housing type with a drop in average price. The average price of a detached home in July fell 0.9% to $995,043. This is mostly due to a decline in the 416 area where the average dropped 9.1% to $1,227,301. In the 905 region, the average price of a detached home actually increased 2.5% to $929,633. 

“On the housing supply issue, it has certainly been encouraging to see both the City of Toronto
and the Ontario Government working on solutions to bring more supply on-line,” says TREB President Michael Collins. “Based on Mayor John Tory’s motion, Toronto City Council gave City staff a strong mandate to report back on how to develop a greater diversity of housing options in traditional single-family neighbourhoods, including timelines. Similarly, we’ve seen the Provincial Government launch consultations to spur on, and speed up, the development of different forms of housing in conjunction with their ‘More Homes, More Choice’ Plan. TREB looks forward to working with the City and the Province to turn their initiatives into reality.”

While condo sales increased the least of all the housing types, jumping 14.3% with 2,277 units sold, the price growth was the strongest, increasing 6.7% to $584,019. This is likely due to a strong demand for relatively affordable housing. The overall average home price in the GTA increased 3.2% to $806,755.    

“Broadly speaking, increased competition between buyers for available properties has resulted in relatively strong price growth above the rate of inflation for semi-detached houses, townhouses and condominium apartments,” says Jason Mercer, TREB’s Chief Market Analyst. “However, the single-detached market segment, which has arguably been impacted most by the OSFI stress test, has experienced a slower pace of price growth, with average detached prices remaining lower than last year’s levels in some parts of the GTA.”