The average Toronto area re-sale home price rose 1.7 per cent year over year in January to $748,328, including single-family homes and condos, according to the Toronto Real Estate Board (TREB), which is forecasting a 4 per cent annual price increase for 2019.
That means homes that sold for $787,195 on average in 2018, would increase to $820,000 across all housing categories. But condos are expected to continue driving price growth this year, with detached houses anticipated to lag again.
“Although we won’t experience record levels, we do expect to see a better year in 2019 for sales and selling prices,” said TREB president Garry Bhaura in a news release issued prior to the publication of the board’s 2019 market outlook report on Wednesday.
TREB joined the growing chorus in the housing industry calling for the Office of the Superintendent of Financial Institutions (OSFI) to reconsider the mortgage stress test it introduced last year. The test, which is designed to protect consumers from drowning if their housing or other costs increase, means home buyers have to qualify for mortgages 2 per cent higher than they negotiate with their banks or the Bank of Canada’s five-year benchmark rate.
In a speech in Toronto on Tuesday OSFI assistant superintendent Carolyn Rogers acknowledged that housing affordability is a problem. But she said the answer isn’t to allow consumers to pile on more debt.
The stress test, along with higher interest rates, has been blamed for the volatility of the 2018 housing market following frenzied activity in 2016 and the first four months of 2017.
Home sales rose slightly year over year in January. The 4,009 transactions in the first month of 2019 was only .6 per cent higher than the same level last year, but was up 3.4 per cent from December, according to preliminary seasonally adjusted figures.
The average price of a detached house in the region was $941,488 last month, a 2.8 per cent year over year decline. Condos averaged $548,176, up 7.9 per cent compared to January 2018.
Apartments and higher-density ground-level homes such as town houses are seeing better price gains simply because they are more affordable said TREB director of market analysis Jason Mercer.
“Market conditions in January, as represented by the relationship between sales and listings, continued to support moderate year-over-year price increases, regardless of the price measure considered,” he said.
Last year’s listings on TREB’s Multiple Listings Service (MLS) returned to post-2009 levels of about 155,000, after a spike in 2017.
An Ipsos consumer home buying survey for the real estate board being released Wednesday will show a dip in home owners expecting to list their properties next year but a slight increase in those looking to buy, said TREB’s press release.
TREB anticipates a continuation of the region’s tight rental market with rents expect to grow in the high single-digits or low double-digits for one- and two-bedroom condos leased on the MLS.
“Almost two-thirds of investor-owners are thinking about selling one or more of their units over the next year,” according to the Ipsos survey. TREB says that is likely a result of rent controls.