Toronto's hot housing market showed early signs of cooling in April as prices for low-rise homes fell slightly compared with March after a surge of new listings came onto the market.
Prices continued their torrid gains compared with a year earlier, climbing another 25 per cent in April for all types of homes, according to sales data from the Toronto Real Estate Board. The average selling price for all home types hit a new record level of $920,791 in the Greater Toronto Area in April, up 24.5 per cent from the same month a year ago.
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 with March, when prices averaged $916,567.
Prices for detached homes dipped 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 with 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 showed 21,630 homes were listed for sale in April, a substantial 33.6-per-cent increase over the same month last year. TREB said 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. Condominium listings were flat, however.
CIBC World Markets Inc. economist Benjamin Tal said Toronto is starting to look like "Vancouver light." House prices in the Toronto area surged in 2016 and the first quarter of 2016, similar to Vancouver's growth in 2015, and Toronto now looks poised to cool down, as Vancouver did in 2016.
"I think that Toronto today is similar to Vancouver at the end of 2015," Mr. Tal said. "Following an unexplained, rapid price acceleration, we will see some sellers take profit. Add to it the 'sitting on the sidelines' by buyers due to the Ontario regulations, and we have a recipe for a healthy softening in activity in the coming months."
The sales data comes less than two weeks after Ontario 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.
Bank of Montreal chief economist Douglas Porter said it is too early to know for sure which way Toronto's market is moving because so much was happening in April, including weeks of speculation about a possible foreign-buyer's tax.
"There were so many moving parts in April, it's tough to draw a bead on exactly what's going on just yet," Mr. Porter said. "Obviously it's a very confusing market at this point. I think we'll get a little bit more clarity in May."
However, he said the surge in new listings in April is "definitely an eye-opener" because the paucity of new listings had been a driver of rising prices. "So it is interesting to see that the dam is apparently broken on that front."
Chris Slightham, president of Toronto-area brokerage group Royal LePage Signature Realty, said he does not believe the new foreign-buyer's tax is significantly affecting Toronto's market yet because all other fundamentals remain so strong, including low interest rates, a strong economy and a growing population. And despite the recent surge of new listings, he said inventory is still tight.
"I think the cost of ownership is what's driving most of the activity, and it will take the next month or so for home owners and buyers to wrap their head around what this [tax] means, but the fundamentals haven't changed," said Mr. Slightham, who oversees three offices with 1,000 realtors across the GTA.
He added that his office had a number of multiple-offer bidding wars going on for houses on Wednesday evening, so there is no sign in his business that the market is cooling significantly. "It definitely hasn't stopped, that's for sure," he said.
TREB also released a new analysis on 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, which is a vast area that extends well beyond the Greater Toronto Area.
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.
"The trend from 2008 to April, 2017, suggests that the share of foreign home buyers has remained low," TREB concluded.
Mr. Porter at Bank of Montreal said the Greater Golden Horseshoe area studied in the TREB report includes cities such as Peterborough and Guelph that are relatively far from Toronto and have not had high levels of foreign buyers stretching back to 2008. He said it would be more significant to consider the percentage of foreign-buyer activity in the Greater Toronto Area.
TREB released a survey of GTA realtors in late January, showing they estimated 5 per cent of deals came from foreign buyers. Mr. Porter said that number is high enough to have a meaningful impact on pricing.
"Even at 5 per cent, I think that is a very significant number," he said. "In what is an incredibly tight market, I think 5 per cent is enough to drive a market."