Monday, May 27, 2019

Toronto's apartment market remains tight, prices climbing

The condo apartment market in the Greater Toronto Area remains tight with prices facing upward pressure.

The Toronto Real Estate Board says that GTA Realtors reported 4,731 condo sales through the MLS in the first quarter of 2019, down 6.1% compared to the same period of 2018.

Listings saw a 2.4% rise year-over-year, adding 8,222 to inventory.

“While we experienced a slightly better-supplied condo market in the first quarter of 2019, the market segment remained tight enough to retain the highest year-over-year rate of price growth compared to other major home types,” said TREB president Garry Bhaura. “Condos continue to provide prospective buyers with a relatively affordable housing option in the GTA, especially given the impact of the OSFI-mandated mortgage stress test.”

The average price of a condominium apartment increased by 4.5% from $533,520 in Q1 2018 to $557,377 in Q1 2019.

Year-over-year price growth in the City of Toronto, which accounted for 69 per cent of transactions, was slightly higher at 5.4% resulting in an average price of $603,243.

The slight increase in condo apartment listings could be reversed in Q2 with CMHC stats showing a rise in new condo completions at the end of 2018 but a fall in Q1 2019.

Sales could therefore be lower in Q2 and the tight rental apartments market will see further rent hikes.

“The condominium apartment rental market remained very tight through the first three months of 2019. Average one-bedroom and two-bedroom rents were up well-above the rate of inflation on a year-over-year basis in the first quarter. However, the condo rental market also benefitted from an increase in the number of units listed, resulting in more choice for prospective renters. With this said, we would need to see a number of quarters with listings growth outstripping rental transaction growth in order for the market to become more balanced,” said Jason Mercer, TREB’s Chief Market Analyst.

Sunday, May 12, 2019

GTA REALTORS® Release April 2019 Stats

Toronto Real Estate Board President Garry Bhaura announced that Greater Toronto Area REALTORS® reported a substantial year-over-year increase in home sales in April 2019. The number of residential transactions jumped by 16.8 per cent to 9,042 compared to 7,744 in April 2018. On a preliminary seasonally adjusted basis, sales were up 11.3 per cent compared to March 2019.

New listings were also up year-over-year by eight per cent. However, the annual growth rate for new listings was much lower than that reported for sales. This suggests that market conditions continued to tighten which points toward an acceleration in price growth.

“The strong year-over-year growth in sales is obviously a good news story and likely represents some catch-up from a slow start to the year. TREB’s sales outlook for 2019 anticipates an increase relative to 2018. It should be noted, however, that growth in new listings is not keeping pace with sales. This points to the ongoing housing supply issue in the GTA. In this regard TREB welcomes the provincial government’s Housing Supply Action Plan announced last week to reduce red tape and improve the mix of housing types. TREB provided input on the Plan through submissions and participation on working groups,” said Mr. Bhaura.

The year-over-year rate of price growth generally edged up in April relative to the first three months of the year. The MLS® HPI Composite benchmark was up by 3.2 per cent – the highest rate of growth in more than a year. The average selling price was up by 1.9 per cent to $820,148, representing the strongest annual rate of growth so far in 2019. On a preliminary seasonally adjusted basis, the average selling price was also up by 1.1 per cent compared to March 2019.

Price growth continued to be driven by the condominium apartment segment and higher-density low-rise segments. The average price for detached houses dipped year-over-year, specifically in regions surrounding the City of Toronto. The detached market segment, with the highest price point on average, has arguably been hardest hit by measures such as the OSFI stress test.

“While sales were up year-over-year in April, it is important to note that they remain well-below April levels for much of the past decade. Many potential home buyers arguably remain on the sidelines as they reassess their options in light of the OSFI-mandated two percentage point stress test on mortgages. Longer term borrowing costs have trended lower this year and the outlook for short-term rates, for which the Bank of Canada holds the lever, is flat to down this year. Unfortunately, against this backdrop, we have seen no movement toward flexibility in the OSFI stress test,” said Jason Mercer, TREB’s Chief Market Analyst.

Tight market conditions in the condominium apartment rental market remain in place. Year-to-date (January 2019 through April 2019) condominium rental transactions for one-bedroom and two-bedroom apartments were up by 10.2 per cent and 9.7 per cent respectively compared to the same period in 2018. Average year-to-date rents for one- bedroom apartments were up by 7.3 per cent on an annual basis to $2,150. Over the same period, two-bedroom apartment rents were up by 4.1 per cent to $2,815.

“The supply of ownership and rental housing is of paramount importance to the GTA, from the perspective of affordability and economic competitiveness of the region, insofar as talented people are more likely to move to the region if they can easily find housing that meets their needs within their budgets. With this in mind, it is also important to think about housing supply through the lens of public transportation. TREB has been highlighting the important links between housing and transportation for a number of years, including through research conducted for TREB by CANCEA and the Pembina Institute dealing with transportation infrastructure’s impact on affordability and transit supportive development respectively. TREB will continue research in these areas moving forward,” said TREB CEO, John DiMichele.

Just Listed