Tight market conditions likely to persist in Toronto

by Gerv Tacadena on 10 Mar 2020

Toronto reported annual gains in home sales in February due to the persistently tight market conditions, according to the latest report from the Toronto Regional Real Estate Board (TRREB).

Over the month, 7,256 residential transactions were recorded in the Greater Toronto Area (GTA), equivalent to a 45.6% increase from February 2017, when sales hit a 10-year low.

Despite this growth, however, sales were still below the record-high results in 2017.

TRREB President Michael Collins said the sales figures in February point to a busy year ahead for the Toronto housing market. For the year, sales activity is expected to hit 97,000.

"However, the annual pace of sales growth experienced in February will likely not be sustained throughout the year, because we will be making comparisons to much stronger sales results reported after the first quarter of 2019," Collins said.

Also read: Is Toronto in a housing bubble?

Still, the market is expected to remain tight as sales growth outpaces the gains in new listings.  In fact, new listings during the month increased by only 7.9% to 10,613.

"Sales growth well in excess of listings growth is once again the norm.  This is because the temporary effects of the 2017 Ontario Fair Housing Plan and the OSFI mortgage stress test have largely worn off.  However, while these policies were running their course, the well-publicized housing supply problem in the GTA continued unabated," said TRREB CEO John DiMichele.

The tight market conditions have led to a further acceleration in annual price growth over the month.

The average selling price for all home types combined was up by 16.7% to $910,290, with both detached and condominium segments reporting double-digit gains.

The average dwelling price in the city could grow further by 10% this year, said Jason Mercer, chief market analyst at TRREB.

"While this outlook represents a very robust pace of growth, it is possible that further tightening in the detached market segment could push the overall average selling price above the baseline scenario,” Mercer said.

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