by Ray Kar, July 24, 2019
The Toronto Star, has a nice summary of the state of the market. The Toronto Real Estate Board (TREB) reported a 10.4 per cent rise in re-sale home transactions in June, part of an 8.5 per cent sales gain this year to date. According to Royal LePage CEO Phil Soper, “The level of activity (sales volume) in Toronto isn’t much below normal levels anymore.” He is among those who believe the region has recovered from the correction that following the announcement of Ontario’s Fair Housing Plan in April 2017. However, according to Soper, the market remains fragile, “[t]here are so many geopolitical wild cards that could send the economy, along with home prices, tumbling, including a knee-jerk trade dispute driven by the administration in Washington.”
TREB doesn’t expect much change in the market’s modest performance for the balance of 2019. It is predicting the average home price will be about $820,000 by the end of 2019, a 4.1 per cent gain over the $787,300, 2018 year-end average, according to Jason Mercer, director of market analysis.
But there is some upward price pressure due to tighter market conditions, he said.
“One of the things that gets forgotten in the discussion and especially the last couple of years, as sales have been off their peak, is that we really haven’t seen any movement in new listings. In fact we’re starting to see a decline again on a year-over-year basis in the number of listings going on the system,” he said.
The stress test has probably also driven some buyers out of the expensive Greater Toronto Area altogether, said Mercer.
That interest in secondary centres is probably helping stabilize Toronto home prices because it is taking just that much demand off city housing and redistributing it, said Soper.
“You look at the popularity and tighter market conditions of places like Hamilton and Kitchener and Guelph and Barrie, these types of locations that, as the share of income required to cover housing has increased, certainly people have looked at other housing options,” said Mercer.
He added, however, that immigration means that the Toronto region’s population will continue to grow and fuel housing demand.
Worth mentioning the mortgage qualifying rate has come down substantially from near 6% at the beginning of the year to 5.19%, along with overall 5 year fixed mortgage rates, which on the whole are generally below 3% at the moment. Declining rates are dampening the impact of the mortgage stress test, and helping to bringing buyers off the sidelines. However as noted by Mr. Mercer, tight listing supply is placing upward pricing pressure on desired neighbourhoods.
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