The number of home sales in the Greater Toronto Area was down in February according to a report released by the Toronto Real Estate Board (TREB) Tuesday.
The TREB report showed that there were 5,025 homes sold in the GTA in February. Although that was an increase of 1,016 home sales from the previous month, February is generally a busier month than January and the total marked a 2.4% drop compared to February 2017. Although there are many factors that can affect the real estate market, it seems likely that the winter weather played a big part in the slight slowdown in home sales – with several major snowstorms affecting buyers’ ability to view homes and appetite to buy them.
Stress Test Affecting Home Sales
Although the large amount of snow that fell during February was likely a factor in the slightly lower home sales numbers, TREB President Gurcharan Bhaura focused his attention on the impact of the OSFI mortgage stress test and the impact it is having on buyers’ ability to get into the housing market.
Mr. Bhaura stated: “The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy. The stress test should be reviewed and consideration should be given to bringing back 30-year amortizations for federally insured mortgages.”
Unfortunately, increased affordability looks to be off the table for the short-term future as reduced supply is likely to cause an increase in prices. According to the TREB report, there were 9,828 new listings and 13,284 active listings, which is a year-over-year decrease of 6.2% and 0.6% respectively. With the number of properties available dropping – and demand showing no sign of reducing – it is likely that the average price is going to steadily increase over the coming months.
Average Prices Rising
According to the TREB report, the average price of a home in the GTA now stands at $780,397 – 1.6% higher than the price a year earlier. The year-over-year increase was notably bigger in the City of Toronto, where the average price of a home rose 4.2% year-over-year to $840,211.
There was a similar increase in Peel Region, where the average home price rose 3.8% year-over-year to $712,623. Similarly, York Region’s average home price rose 1.9% to $915,737. One major exception to the upward trend was Halton Region, which experienced a year-over-year decrease of 5.6% – leaving the average price at $792,587.
Once again, condo apartments showed a big year-over-year increase in the average sale price. In February, the average price for a condo apartment in the GTA was $562,161 – a 6.1% increase from a year earlier. Semi-detached homes also saw a big increase, rising 10% in a year from $756,894 to $832,569. Meanwhile, GTA detached homes continued their decline, with the average of $980,914 marking a 2% drop compared to a year earlier and a 19.2% drop from the high of $1,214,422 that was recorded in March 2017.
The different conditions for the various sectors of the market back up the claims made by TREB President Gurcharan Bhaura, as they display reduced activity in the more expensive areas of the market but high demand in other parts. Will this pattern continue? We will see with the next monthly report at the beginning of April.