Toronto’s housing market rebounded last year as buyer demand climbed while new home listings fell, pushing the average residential sale price close to a record high.
Home sales in the Greater Toronto Area reached 87,825 last year, according to the Toronto Real Estate Board. That is an increase of 13 per cent over 2018, when activity slumped because of a raft of new policies designed to cool the region’s overheated real estate market.
“Many home buyers who were initially on the sidelines moved back into the marketplace starting in the spring,” the real estate board’s president, Michael Collins, said in a statement.
Sales rose as the number of new listings fell 2 per cent compared with the previous year, to 152,739, increasing the competition and pushing up real estate prices.
The average sale price across all types of homes rose 4 per cent to $819,319 last year. That was close to the historic high of $822,727 reached in 2017.
The value of every type of housing increased in Toronto and its suburbs. The average selling price of a detached house in the GTA rose 1 per cent compared with the previous year, to $1,016,776.
Semi-detached properties climbed 4 per cent to $814,424, townhouses rose 3 per cent to $659,990, and the average selling price of a condo increased 6 per cent to $587,959.
Industry experts warned that prices would continue to climb because of the lack of housing.
“Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front,” said Jason Mercer, the real estate board’s chief market analyst.
Toronto realtors said some of the behaviour that characterized the housing frenzy of early 2017 is starting to return. That includes multiple bids on homes and buyers making offers over the asking price.
“It’s probably not as dramatic as 2017 yet. But if the inventory levels stay low and demand continues on the pace, who knows where it will go,” said Chris Slightham, a broker with Royal LePage Signature Realty who has worked in the Toronto area for about two decades.
In the first half of 2017, monthly year-over-year price increases ranged between 20 per cent and 30 per cent. Buyers were forced to reassess their options after Ottawa implemented the mortgage stress test in 2018, which requires buyers to prove they can handle loan payments at a higher interest rate.
The stress test, along with a foreign buyers real estate tax introduced in April, 2017, slowed the Toronto market to a level not seen since 2008, when Canada suffered from a deep recession and the global financial crisis.
But with the Toronto area’s population increasing, the real estate downturn has been brief. The influx of new residents has exacerbated the housing shortage and triggered a slew of new condo and apartment developments in the city and its suburbs.
In the first three months of this year, 10,545 new condo and apartment units are scheduled to be completed, according to real estate consultancy Urbanation, which is almost double the quarterly average for the past decade.
It is unclear whether the new condos will help bring down rental rates or home prices, however.
“Normally I would say, yes, that would stabilize prices and take pressure off rent and condo values while it gets absorbed,” Mr. Slightham said. "Because of this growth that we have experienced population wise, it is hard to say definitely it will affect prices.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.