What turned out to be a slow spring in the GTA housing market, a spring that was delayed because of an unusually extended winter, has made way for a blistering hot summer. All the statistics suggest that Toronto homebuyers have awoken from their collective hibernation, and are poised to make plenty of purchases. The real question is, what happened in the transition between spring and summer that is causing the surge in the market?
What happened in July?
Home resales in Toronto went up by 10% in July year-over-year, according to the Toronto Real Estate Board. TREB data illustrated that 9,198 homes in the Greater Toronto Area switched ownership, which is the second best July sales result on record. The data also showed that the average sales price in Toronto went up 7.5% to $550,700 in the same time period, with the largest increase in the average selling price belonging to detached houses, which saw a surge of 11% year-over-year to an average of $880,433. Tara Perkins of The Globe and Mail (read here), notes that market observers are waiting for the average selling price of a detached home in downtown Toronto to hit the $1-million mark. But even though the price in July was $880,433, it’s actually on downturn. TREB data from previous months shows that the price of semi-detached homes is down month-over-month, from $921,127 in June, and $943,055 in May.
Condominium units saw a 14% increase in sales across the GTA, which is not surprising, considering that condos are still realistically affordable for the bulk of the population, even with the increase in average price by 4.7%, year-over-year, to $379,002.
Susan Pigg of the Toronto Star (read here), analyzed the same TREB data, and was one of the few reports/analysts to notice a figure that raised some concern. While there were 15,187 new listings, overall active listings went down 5% year-over-year in July. She argues that “the inventory of houses for sale remains a challenge,” implying later on in the article that the lack of supply is the cause of the recent surge in bidding wars, a leap that’s not terribly difficult to make.
The Canadian Real Estate Association (CREA) is set to release similar data regarding existing homes sales in July later this month. It will be interesting to see whether this data backs up the evidence collected by TREB.
What does TREB have to say about it?
TREB President Paul Etherington in a release:
“Sales were up strongly for most major home types and market conditions actually tightened, with sales growth outpacing listings growth. The result was average price growth well above the rate of inflation.”
Etherington’s comment is interesting, pointing out that the number of sales outnumbered new listings, connecting that to price increases. But it doesn’t why the number of sales increased. Another senior market analyst at TREB, Jason Mercer, argues that we will continue to see price increases until “growth in listings outpaces growth in sales for a sustained period of time.” But alludes to the idea that increased sales are simply the result of increased demand. But what caused the increased demand? Perhaps the upcoming national CREA statistics will shed more light on why demand is increasing in the country’s major metropolises.