2015 was a record breaking year for the Toronto real estate market. The city is growing in population, foreign investment is pouring in, and the demand for new homes has never been stronger, with the annual record for total home sales in the GTA being broken with over a month to go left in the year. The construction of new condos had no issue meeting the demand for such units in the city, but the same could not be said for other housing type categories and detached and semi-detached homes. The lack of supply and the staggering demand sent house prices soaring, with detached homes reaching an average selling price of $1M by the spring.
John Pasalis of Move Smartly provides a detailed overview of the Toronto real estate market in 2015, identifying four major areas: record sales, lack of supply, strong demand for condominiums, and mortgage rule changes. Here is a point form breakdown of the big highlights of 2015, as identified by Pasalis.
- Home sales were up every month in 2015 when compared to 2014.
- Annual sales up 9% in 2015 versus 2014.
- The annual record for home sales was broken by November, with 96,901 homes sold in the GTA up to that point (beating the previous record of 95,223 homes sold, which was set back in 2007).
- Certain key figures illustrate that the demand for new homes far outweighed the supply. The number of new listings (homes for sale) increased by 2.7% in 2015, while the number of sales was up by just over 9%.
- This discrepancy is exactly what many analysts agree accounts for the increase in house prices seen last year. Prices for homes went up 10% when compared to 2014.
- Every month in 2015 saw fewer houses available for sale when compared to 2013 and 2014.
Strong Demand for Condos
- To understand just how strong the demand for condos was last year, supply and sales figures for condominiums needs to be compared to that of detached homes, arguably the most sought after house type by potential new homebuyers.
- Sales of detached homes went up 8% in 2015 with practically no increase in the number of new listings. Condo sales went up by 13% in 2015, while new listings increased by 6% compared to a year prior.
“When we look at the absolute numbers both sales and new listings [for condos] were up by just over 2,600 units which means that all of the increase in supply was absorbed. More condos get listed for sale than actually sell which is why the percentage change for new listings is lower even though both saw a similar absolute increase.”
Mortgage Rule Changes
- Late into 2015, the federal government changed the mortgage rules for insured mortgages by introducing a tiered down payment system, increasing the down payment requirement from 5% to 10% for any portion of a home’s price above $500K. A minimum 20% down payment is now required for homes priced over $1M (prior to this, buyers could buy a $1M+ home with just 5% down).
- The effect these rule changes will have in the housing market in 2016 is still unknown.