Toronto home prices climbed last month as sales volumes roared ahead by almost 19 per cent, but the gain came off an extremely low base of activity last spring.
The Toronto Real Estate Board reported 9,989 homes were sold in the Greater Toronto Area in May, up 18.9 per cent compared with the same month last year. But the TREB cautioned that sales in May, 2018, were at a 15-year low, and the activity last month was still below the 10-year May average of 10,300 sales.
Nonetheless, May marks the second consecutive month that sales have climbed sharply compared with a year ago, suggesting the Toronto market is beginning to gain steam after almost two years of sluggish sales conditions. Sales in April were up 16.8 per cent compared with a year ago, while first-quarter sales were essentially flat.
“After a sluggish start to 2019, the second quarter appears to be reflecting a positive shift in consumer sentiment toward ownership housing,” TREB president Garry Bhaura said in a statement.
Mr. Bhaura said sales remain below long-term norms because buyers are still grappling with the new mortgage stress test introduced in January, 2018, by Canada’s banking regulator.
TREB said average home prices climbed to $838,540 in May, up 3.6 per cent compared with a year ago, as buyer activity grew while the number of homes available did not keep pace.
The number of new listings in May was up just 0.8 per cent compared with May last year, which was far outpaced by the surge in sales. This means market conditions continued to tighten in favour of sellers.
Jason Mercer, TREB’s chief market analyst, said Toronto’s rate of price growth is “largely sustainable” right now, above the rate of inflation “but in the single digits.”
“If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate,” he warned.
He said Toronto needs a more “sustainable and diverse” supply of housing to encourage more new listings. Many people are not comfortable listing their homes for sale, he said, because they feel there are no housing options available that better meet their needs.
TREB said most of Toronto’s price increase in May came from condominium sales, with prices climbing 4.9 per cent to an average of $590,876 across the GTA.
While the number of detached homes sold in May climbed by 25 per cent, the average selling price rose just 1.1 per cent. TREB said the average detached house in the City of Toronto sold for $1,384,993 in May, up 1.5 per cent, while the average detached house in the suburban 905 area-code region surrounding Toronto sold for $925,621, up 0.3 per cent.