The recovery in Toronto’s housing market gained momentum in April, with sales soaring and home prices climbing for the third consecutive month, as a dearth of properties for sale ramped up competition among buyers.
The home price index, which excludes the highest valued properties, rose by 2.4 per cent to $1,145,700 from March to April, according to the Toronto Regional Real Estate Board (TRREB). That marks the second month that the index rose over 2 per cent, after a 1-per-cent rise in February.
The number of new listings was up 6.5 per cent after adjusting for seasonal influences, but is still well below the 10-year average. The increase in new listings was not enough to meet the demand from the surge in buyers. The number of sales rose 27 per cent from March to April on a seasonally adjusted basis.
TRREB’s chief market analyst, Jason Mercer, attributed the shortage of listings to a number of factors, including homeowner concerns that they will not be able to find another property and higher borrowing costs. As well, some homeowners have been reticent to put their properties up for sale when prices are still lower than last year.
With home prices picking up, Mr. Mercer said we may also see an upward trend in listings: “Listings growth is often correlated with price growth,” he said.
For most of last year, many prospective buyers were uncertain about the pace of interest rate increases and were waiting for home prices to fall further. But after the Bank of Canada took a pause from hiking interest rates earlier this year, buyers started entering the market again.
Now that home prices are increasing, would-be buyers believe the downturn is over, according to realtors.
“All the buyers that were on the fence last fall and winter that didn’t want to buy and waited for the rock bottom in prices, they are jumping in now,” said Rafey Aleem, a realtor in the Toronto region.
Competition is heating up across the Toronto region. In Halton, to the west of the city of Toronto, the home price index rose 5 per cent last month. In Peel and Durham, the index was up 3 per cent. These were some of the areas where prices soared when interest rates were near 0 per cent.
It was a similar story in Vancouver, the priciest real estate market in the country. A pickup in demand has outstripped the number of properties available for sale and sent real-estate prices soaring. The home price index climbed 2.3 per cent over the past month to reach $1,170,700, with values for detached houses rising nearly 3 per cent, according to the Real Estate Board of Greater Vancouver.
The index has climbed 5-per-cent higher over the past three months, surpassing REBVG’s forecast for an annual increase of between 1 and 2 per cent.
REBVG said the low levels of inventory has created competitive conditions where “almost any resurgence in demand would translate to price escalation.” The number of new home listings in April was one-fifth lower than the 10-year average for last month.
“The issue remains a matter of far too little resale supply available relative to the pool of active buyers in our market,” said Andrew Lis, REBVG’s director of economics and data analytics, in a news release.
Although mortgages are more expensive than the first two years of the pandemic, realtors say would-be buyers are adapting and that some are getting significantly more help from their parents for a down payment.