Home prices increased 3% year-on-year in the Greater Toronto Area during August but the general slowdown continued, with month-on-month prices and sales of detached homes down once again.
In its latest report released Wednesday, the Toronto Real Estate Board revealed that the average sale price of homes in the GTA was $732,292 – a 3% increase compared to August 2016. Despite that year-on-year rise, August was also the fourth month in a row that the average sale price has fallen and it is now down 20.5% from the record high of $920,791 in April 2017.
Average prices in the City of Toronto fared a little better. Although the average of $726,712 meant sale prices dropped for a fourth straight month, year-on-year there was an increase of 7.3%. York region also saw a fourth consecutive drop in the average price – marking a 21.8% decrease in average price since April. More notably, the average price of $936,885 is a 2% drop from the average price in July 2016 ($956,240).
There was better news elsewhere in the GTA with regards to average prices. Halton Region, Durham region, Dufferin County and Simcoe County all recorded both month-on-month and year-on-year increases in average sale price – giving homeowners reason to feel confident.
After a dip last month, the number of sales was up from 5,921 in July to 6,357 in August. However, there was a notable 35% decline from the number of sales recorded in the same month in 2016. It is also the lowest number of sales recorded in the month of August since 2010. This drop in sales activity has been a boost to buyers, helping to end some of the bidding wars and giving buyers more choice in the market.
Looking more closely at the sales numbers gives a key indication of why the average price has dropped recently, with a recent slump in detached home sales likely having a big effect. Just 2,578 detached homes were sold in the GTA in August, which is the lowest number recorded in that month in the six years of data we were able to analyse. More importantly, the share of home sales taken up by detached homes fell to 40.6% – the lowest percentage in those six years and well down from the 49.1% share in April when prices reached their peak so far this year.
During that same period, the share of sales taken up by condo apartments rose from 25.9% (April) to 31.4% (August). There could be a variety of reasons for buyers focusing more on that side of the market, with lower home prices a potential factor since the average price of a condo apartment is just over half the average price of a detached home. That difference in price explains some of the drop in average prices, with lower-priced homes taking up a greater share of total sales. However, it should be noted that this is not the only reason since there has also been a drop in the average price of a detached home in the GTA (from $1,214,422 in March to $968,494 in August).
Following on from some busy activity in the previous few months, active listings were down to 16,419. That compares with 18,477, 19,680 and 18,751 in May, June and July. Despite the month-on-month drop, the number of active listings is substantially higher than in August 2016 when there were only 9,949. That lack of listings in 2016 exacerbated supply issues and contributed to the fast rise in home prices, so it is to be hoped that the extra listings are a sign of a more balanced market.
One concern from the TREB report is that, despite the high number of active listings in recent months, inventory is still low in the GTA – just 1.4 months according to the report. This is the case throughout the GTA, with only a few locations boasting more than two months’ inventory: Toronto C02 (Wychwood and The Annex) – 2.2, Toronto C12 (Lawrence Park North and St Andrew Windfields) – 2.4, Caledon – 2.3, East Gwillimbury – 2.5, King – 3.3, Whitchurch-Stouffville – 2, Brock – 2.5, Adjala-Tosorontio – 2.6, and Innisfil – 2.5.
The lack of inventory has been cited by many as a major factor in rising home prices and, understandably, led to lots of competition for the few homes available. Many buyers will be hoping that the recent drop in sales and rise in listings will help to improve inventory levels across the GTA.