Real Estate Market “Springs” up in April
Spring has finally arrived in the Greater Toronto Area real estate market as a 16.8% increase in home sales was seen in April 2019. A total of 9042 transactions took place in the month, showing an 11.3% sales increase from March, says Toronto Real Estate Board. With the market reeling from the effects of mortgage stress test among other new housing policies, this is the strongest surge seen so far this year.
Home Prices Rise All Over TREB Area
The average home price in GRA rose slightly by 1.9% to CAD 820, 148 but the MLS Home Price Index by an increase of 3.2% showed that the larger volume of home sales was for higher-value homes. Meanwhile, fewer new MLS listings in Toronto and surrounding areas made TREB cautious of a potentially unbalanced market; a total of 17,205 new homes were listed in April, an increase of just 8%. The sales-to-new-listings for markets tracked by TREB increased from 47% last year to 52% – still within balanced territory but showing an upward trend.
The 416 market also experienced a strong surge, with a sales increase of 9.7% indicating that 3234 homes changed hands, and an average home price rise of 4.4% to CAD 903.992. This market supply was better balanced with the sales, as 5735 new home were listed, an increase of 8.2%. These numbers mean Toronto market’s ratio is 56%, almost unchanged at 55% from last year, though tipping close to being a seller’s market. As per the trend, price growth has been led by condos for sale in Toronto, along with detached houses in higher-density neighborhoods.
TREB Warns Supply-Demand Unbalance Could Overheat Market
“The strong year-over-year growth in sales is obviously a good news story and likely represents some catchup from a slow start to the year,” stated Garry Bhuara, TREB’s president, adding that the board’s overall sales outlook for 2019 is improved from last.
“It should be noted, however, that growth in new listings is not keeping pace with sales. This points to an ongoing supply issue in the GTA.”
Mortgage Stress Test Remains Point of Concern
Jason Mercer, TREB’s chief market analyst, adds, “While sales were up year-over-year in April, it is important to note that they remain well below April levels for much of the past decade. Many potential home buyers arguably remain on the sidelines as they reassess their options in light of the OSFI-mandated two-percentage-point stress test on mortgages.”
He voiced the board’s frustration that no action has been taken by policy makers to adjust the stress test’s criteria, despite shifting economic trends, and an easing interest rate environment. “Longer-term borrowing costs have trended lower this year and the outlook for short-term rates, for which the Bank of Canada holds the lever, is flat to down this year. Unfortunately, against this backdrop, we have seen no movement toward flexibility in the OSFI stress test.”
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