Torrid Toronto housing market finally takes a breather

TheGlobeAndMail.com
May 3, 2017
Janet Mcfarland

Toronto’s housing market showed signs of cooling in April as prices for low-rise homes dropped slightly compared to March and a surge of new listings increased the available supply of resale homes.

Prices continued their torrid gains compared to a year earlier, climbing another 25 per cent in April for all types of homes compared to April, 2016, according to sales data from the Toronto Real Estate Board.

TREB said the average selling price for all homes types hit a new record level of $920,791 in the Greater Toronto Area in April, up 24.5 per cent over April last year.

But there were signs the Toronto region’s market may be poised for more balanced growth.

The average sale price for all homes in April was almost flat – up just 0.5 per cent – compared to March, when prices averaged $916,567.

Prices for detached homes dipped slightly to an average of $1,205,262 in April from $1,214,422 in March, while semi-detached and townhouse prices also fell slightly compared to a month earlier. Condominium prices rose 4.3 per cent, however, to an average of $541,392 in April from $518,879 in March.

The data also show 21,630 homes were listed for sale in April, a substantial 33.6-per-cent increase over the same month last year.

There were double-digit increases in new listings across all of the particularly tight categories of low-rise homes, including detached and semi-detached houses, as well as townhouses, TREB said. Condominium listings were flat.

TREB president Larry Cerqua said it is too soon to know whether the strong growth in listings in April is a sign of sellers reacting to recent price growth, or whether the Ontario government’s new housing measures are playing a role in the market.

The sales data comes less than two weeks after the Ontario government announced a new 15-per-cent tax on foreign buyers on April 20, and said it would give the City of Toronto powers to impose a new tax on vacant homes.

Jason Mercer, TREB’s director of market analysis, said he still anticipates the annual rate of price growth to remain well above the rate of inflation through the spring and summer months, arguing it will take “a number of months to unwind the substantial pent-up demand” that has built over the past two years.

“It was encouraging to see a very strong year-over-year increase in new listings,” Mr. Mercer said in a statement. “If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions.”

The total number of homes sold fell 3.2 per cent in April compared to a year ago, but TREB said the Easter long weekend was in April this year, but in March last year, which meant there were fewer working days in April to conclude sales compared to last April.

TREB also released a new analysis Wednesday of the impact of foreign buyers in the Toronto region’s housing market, saying it believes foreign buyers and other speculators are not playing a major role in current market conditions.

The association analyzed annual property sales data from 2008 to April, 2017, provided by the Municipal Property Assessment Corp. and by Teranet Inc. for the broad region surrounding Toronto known as the Greater Golden Horseshoe.

The data showed that foreign buyers in the region accounted for 2.3 per cent of sales between 2008 and April, 2017, including 2.2 per cent of sales in 2016 and 2.6 per cent from January to April this year.

Between 87 per cent and 90 per cent of buyers bought their homes as a place to live, TREB said, including 88 per cent of those buying so far this year. Fewer than 1 per cent of buyers had a mailing address outside of Canada, and most of those were U.S. addresses.

“The trend from 2008 to April, 2017, suggests that the share of foreign home buyers has remained low,” TREB concluded.

The association also looked at data on speculation in the market, saying homes sold within a year of purchase by domestic or foreign buyers accounted for less than 5 per cent of sales in 2016 and about 7 per cent in the first four months this year. TREB said 6.2 per cent of property owners in the region owned more than one property as of April.