The price of homes continued to rise last month, to an average of $920,791 for all types of housing in the Toronto region — but re-sale listings also jumped 33 per cent.
The price of Toronto-area homes continued to rise last month — up 24.5 per cent to $920,791 on average for all types of housing — despite an influx of 33.6 per cent more re-sale listings in the traditionally busy spring market.
That means more choice for consumers and healthy sale prices for sellers, say realtors.
But whether the increased choice for buyers is due to sellers cashing out of a cooling market or it’s a shift rooted in new provincial real estate policies, remains to be seen, say officials with the Toronto Real Estate Board (TREB), which released its April statistics on Wednesday.
The boost in new listings applied only to low-rise homes — detached, semi-detached and town houses. The number of re-sale condos available was about the same as last year, although it was the only housing category in which the number of sales rose by 7.7 per cent region-wide.
The number of house sales, however dropped by 3.2 per cent year-over-year last month, something that TREB attributed to the long Easter weekend falling in April this year, rather than March in 2016.
Even with the boost in listings it’s still a seller’s market in the Toronto area, with only about one month of inventory in the re-sale housing market.
“From a historic perspective, a more balanced market would be in the neighbourhood of three to three-and-a-half months. We need to see a number of new listings growth outstripping sales growth to get that inventory number back up to more of a balanced norm,” said Jason Mercer, TREB’s director of market analysis.
“The increase in listings is something we’ve been talking about for some time. One month doesn’t necessarily make a trend,” he warned
Soaring demand and a lack of inventory has led to the cost of a detached house rising to nearly $1.6 million in Toronto, and $1.1 million in the communities surrounding the city.
But after so many months of lamenting the lack of new listings, the 34 per cent jump is a sea change, say realtors.
“It’s a short-term psychological cool-down,” said John Pasalis of Realosophy.
“Houses are coming on the market now with no offer dates, which is mind-blowing considering where we were six weeks ago,” he said.
His Leslieville brokerage’s own research — based on TREB numbers and other data — shows that listings are especially high in Aurora and Newmarket, places that have seen above-average price gains year-over-year and where about 20 per cent of sales go to property investors.
Prices have appreciated so quickly in those areas, a lot of investors probably see this as a good time to capitalize on their investment, said Pasalis.
While prices rose more than $200,000 on average year-over-year, they really haven’t changed much in the last month when a home cost $916,567 on average, he said.
While there has definitely been a shift in the market, it’s a change, not a downturn, said David Fleming of Bosley Real Estate.
“Everyone in Toronto was praying for inventory like farmers pray for rain, and we finally got it in the month of April,” he said, adding he expects it will continue into May.
Fleming predicts prices will continue to rise, but there is already more choice for consumers at every price point in every housing segment.
“It’s really incumbent now upon agents, buyers and sellers to dig a little bit deeper. Buyers can look for opportunities; sellers have to figure out what a house is worth because we’re seeing a lot of properties that have been listed and then being re-listed higher after their strategy doesn’t work,” he said.
Real estate agents will likely have to go back to running comparable prices and listing homes at fair market value.
“For sellers, it’s natural to be a little bit nervous, but I wouldn’t be nervous. You’re still going to sell, you’re still going to get a great price. You might not get as many offers on offer night. Maybe (set a) price closer to fair market value,” said Fleming.
Although it’s too soon to say if the province’s 16-point Fair Housing Plan has begun cooling the market, Mercer said the strong listings growth began in the middle of the month before Premier Kathleen Wynne’s April 20 announcement.
“My sense is there’s more to it than simply the policy announcement,” he said.
The key item in the Ontario Liberal government plan is a 15 per cent foreign buyers taxed aimed at cooling speculation in the increasingly unaffordable Toronto property market.
But if that’s the aim, the government’s fire is directed at a relatively small target, stressed TREB.
Further research into sales, assessment and Teranet data in the Greater Golden Horseshoe confirms the 4.9 per cent figure for foreign transactions that the board published earlier this year, based on an Ipsos poll of its members.
The newer findings show that fewer than 1 per cent of buyers had a mailing address outside the country and most of those were U.S. addresses. The share of foreign buyers averaged only 2.2 per cent of transactions last year and only 2.6 per cent in the first part of this year.
Seven per cent of homes sold in the first four months of this year had been purchased within the last year — slightly more than the 5 per cent that resold within 12 months last year.
Only 6.2 per cent of property owners in the Greater Golden Horseshoe owned more than one piece of real estate.
Ontario Housing Minister Chris Ballard said the TREB numbers “are telling me that we have a market that is in flux.”
But he stopped short of saying that the province’s market cooling measures are behind the shift.
“I’ll echo what a number of people are saying — that it’s springtime, that’s always a big time to put your house on the market and people are looking to get the best possible dollar they can,” he said.
Foreign investment is part of the market, but it’s not as big a factor as in Vancouver, said Pasalis.
Pasalis worries about the widespread perception that foreign buyers are driving high prices.
“When you have what’s going on in the market now, it starts fueling these populist views that it’s immigrants (and) foreigners, which is alarming,” he said.
“I think it would make people feel better to know prices are going up but it’s not (because of) non-residents. If you’re here legally and you’re a foreign resident, you’re allowed to bring your money here,” said Pasalis.
Meanwhile, Vancouver, which introduced a foreign buyers tax last summer, saw a 26 per cent drop in the number of sales last month, compared to April 2016.
With files from Kristin Rushowy and The Canadian Press
By TESS KALINOWSKIReal Estate Reporter- Torontostar