The number of homes sold in Toronto climbed in April even as prices inched higher, signalling that homebuyers continue to compete for listings in an increasingly tightening housing market.
There were 9,042 residential transactions in April, jumping 16.8 per cent from 7,744 sales during the same time last year, according to the Toronto Real Estate Board. Meanwhile, average home prices across the GTA rose year-over-year in April relative to the first three months of 2019.
The MLS home price index showed the benchmark price ticked upwards by 3.2 per cent — the highest rate of growth in more than a year. The average sale price of a Toronto home increased by 1.9 per cent to $820,148 from $804,926, the strongest annual rate of growth so far in 2019.
The hike in prices was driven primarily by higher-density segments, such as condos and lowrise apartments. The average price of a condo rose 5.1 per cent year-over-year to $588,168.
In contrast, TREB reported a slump in the average price of detached houses — a segment that typically boasts the highest price points.
The average price of a detached home decreased by 1.3 per cent year-over-year to $1,018,147, weighed down by the 905 suburban regions around the city.
In the 416, the average price of a detached home remained stable at $1,355,764 — a 0 per cent change year-over-year. Over in the 905, the price tag dropped by 1.7 per cent to $914,249.
Nicole Harrington, a real estate agent at BREL Union Realty Brokerage Inc. who focuses on the western GTA region, said that homebuyers aren’t necessarily looking at the suburbs for more space and are willing to forgo the multi-bedroom homes with backyards for lower prices and easier commutes.
She recently hosted an open house for a condo townhouse in Mississauga’s Port Credit neighbourhood and the majority of the attendees were first-time homebuyers from Toronto looking for more affordable options in the suburbs that included access to transit corridors.
“The detached houses are still out of reach for a lot of people because they’re in the million-dollar range,” Harrington said. “People who are moving out here are looking for more bang for their buck and they’re not necessarily getting that with a detached.”
Some of the pressure on detached prices is a result of homebuyers grappling with stricter borrowing regulations, according to TREB.
The stress test, mandated by federal Office of the Superintendent of Financial Institutions (OSFI), was introduced in 2018 to cool Toronto’s overheated housing market by allowing only those with more than a 20 per cent down payment to qualify for mortgages. The stricter rules also reduced the maximum amount buyers could borrow to buy a home.
“Many potential homebuyers arguably remain on the sidelines as they reassess their options in light” of the stress test, said Jason Mercer, TREB’s chief market analyst.
Realosophy broker John Pasalis said that the stress test slowed Toronto’s real estate market and would have impacted sellers listing homes for more than a million dollars.
“I wonder if part of it is that people were getting used to the stress test,” Pasalis said. “Maybe people who hit pause a year ago are starting to jump back into the market.”
While the number of new listings also increased, up by 8 per cent year-over-year to 17,205 from 15,933, the annual growth rate for new listings was lower than that for sales. This signals tightening market conditions that could bump up prices, according to TREB.
“This points to the ongoing housing supply issue in the GTA,” Mercer said, adding that the Ontario government’s new housing legislation could help “reduce red tape and improve the mix of housing types.”
Part of the More Housing, More Choice bill that the province introduced on Thursday is intended to create opportunities for “missing middle” densification, such as secondary suites that homeowners could add as laneway homes, coach houses and garages.
“Secondary suites have been a huge trend in downtown Toronto in part because there’s such a big demand for basement apartments,” Pasalis said.
TREB reported that average year-to-date rent for one bedroom apartments were up by 7.3 per cent on an annual basis to $2,150. Two-bedroom apartment rents were up by 4.1 per cent to $2,815.