GTA real estate continues to rise, shooting up 23%
Toronto realtors say rigorous testing of mortgages, increase in interest rates aren’t discouraging buyers
House hunters in the Toronto region paid about $144,000 or 23 per cent more to purchase a home this November than those who bought in the same month last year, according to the latest sales statistics.
The average home in the Toronto area cost $776,684 in November, up from $632,774 the same month last year, according to the Toronto Real Estate Board (TREB).
TREB’s Multiple Listing Service benchmark rose by about 20 per cent year over year last month.
Toronto-area realtors say the numbers show that more rigorous stress testing of mortgages and a small rise in interest rates isn’t discouraging market activity.
That’s all the more reason Ottawa and Queen’s Park might take more pointed action next year, suggested Cam Forbes, general manager of ReMax Realtron Realty.
“(Interest) rates are going up (but not substantially) and that will be helpful, but there’s just so many positive factors in Toronto,” he said. “You look at immigration, you look at interprovincial migration, you look at the U.S. economy, you look at interest rates, the wealth effect of homes and the stock market — all of those are strongly positive for the home ownership market.”
The new mortgage stress test really only affects about 10 per cent of the market, said John Pasalis of Realosophy, a Leslieville brokerage.
There has been speculation, he said, that Ottawa could expand the new rules beyond loans for those with 20 per cent or less down on a home. That requirement to qualify at the five-year Bank of Canada fixed posted rate of 4.64 per cent could be applied to all loans.
That would have a far greater impact on the market, Pasalis said.
The strongest November price gains were in the lower end of the market in townhouses and condos, which saw region-wide average growth of 24 per cent and 15 per cent respectively.
Durham Region, considered to be one of the most affordable areas for homebuyers, also experienced the highest year-over-year per-cent increase on the MLS home price index with 25.4-per-cent growth.
“The 905 is really driving a lot of what’s been happening,” said Pasalis. “Even up in Georgina, close to Lake Simcoe, sales are up (25 per cent). That’s consistent with a lot of people moving further out of the city just for affordability.”
The 8,547 home sales in the region last month was a 16.5-per-cent increase year over year.
Although there was a slight year- over-year increase in new listings, active listings were down 36 per cent compared with November 2015.
That lack of supply is frustrating homebuyers, TREB president Larry Cerqua said in a Friday press release.
“Seller’s market conditions once again translated into robust rates of price growth,” he said.
Forbes of ReMax calculates there is only one month of home supply left in the region.
Since 1999, there has typically been 2.9 months’ worth of supply.
“So we’re at a third of the level we were on average, in terms of the supply of homes for sale,” he said.
“It’s not a fun market for buyers — you’re often stretching yourself to obtain something that will work for your family and you’re having to compete many times to purchase the home you’re wanting,” said Forbes.
TREB officials are urging governments to address the supply issue.
“Recent policy initiatives seeking to address strong home-price growth have focused on demand,” said Jason Mercer, TREB’s director of market analysis.
“More emphasis needs to be placed on solutions to alleviate the lack of inventory for all home types,” he said.
That’s especially true in lowrise housing, which includes detached, semi-detached and townhomes.
TREB statistics refer to resale homes, but new homebuilders have also made repeated calls on governments to increase the supply of homes in the region, which is attracting an influx of about 100,000 residents annually.
The homebuilders are concerned that amendments to Ontario’s growth plan next year will further constrain the supply of serviced land available for the single-family homes that are in high demand.
The price of a detached home in Toronto rose about 32 per cent year over year to $1.35 million. In the 905, a detached home with a yard averaged $957,517. Semi-detached homes saw a 6.3-per-cent increase over November 2015.