2020 marks the start of a new decade, but Toronto’s residential resale market has seen little change. As anticipated, January came in strong. In Toronto, January home sales were up 15.4% year-over-year. TREB is forecasting that home sales for 2020 will rise about 10% overall, driven by the higher density low-rise market segments (semi-detached houses and townhouses) and the condominium apartment segment. These home types are more affordable, on average, and fit the budgets of buyers who were, and remain impacted with the mortgage stress-test.
The average sale price in the GTA was up 12.3%, compared with a year earlier, to $839,363 – that’s across all home types. City of Toronto prices rose even more than that, up 13.7% from last January. Detached houses, which declined in some months in 2018 and 2019, are now on the upswing with prices that rose 16.7% to $1,369,848 in the City of Toronto and 8.7% to $957,287 in the surrounding suburbs. This month 130 properties were reported sold in the $2M category, an increase of 44 percent compared to January 2019.
In Central Toronto* (C01-C04, C08-C12), where prices are already inflated, the average price gain was up 5% YoY across detached, semi-detached and condo-apartment segments combined, but this was led largely by the condo sector.
The rise in condo prices has had a spill over effect on semi-detached property sales. Over the last year the spread between the average price of a condo and a semi-detached property in Toronto’s central districts has been dramatically narrowed. In January the average sale price for semi-detached properties was just over $1,000,000, just $35,000 more than the average sale price of condominium apartments in the City of Toronto’s central districts. As a result, buyers who might have chosen to buy a condominium apartment have instead looked to purchase a semi-detached property in some of Toronto’s more desirable neighbourhoods.
In turn, this resulted in an unprecedented shortage of available semi-detached properties. In January, there were only 38 semi-detached properties in the entire Central Toronto districts available for sale!
Due to the large number of sales and the scarcity of new listings, buyers enter February with only 11,962 available properties in the GTA, a mere 65% of the number of properties that were available last year at this time. This will no doubt put upward pressure on prices, but with wages increasing by only 3.5 percent and mortgage stress testing in effect, there are limits as to how far buyers can stretch, particularly if interest rates stay stable or rise.
Looking ahead, we should be wary. Across Canada, the market saw substantial positive price gains, but new listings were at a decade-low. Low supply paired with high buyer demand is causing prices to accelerate more quickly than ever. So much so, that Toronto’s housing market in early-2020 looks a lot like early-2016. With no evidence that there will be a dramatic increase in supply anytime soon, prices could jump at the same rate they did in 2016 and early-2017, when year-over-year gains exceeded 30 percent for Toronto single-detached homes and condos. Fingers crossed that doesn’t happen.
If you are thinking of selling, now more than ever would be a good time to take advantage of the low inventory and rising resale prices. If you’re a buyer, I’m always here to help you navigate this frothy market. Call me at 416-566-7730 or email firstname.lastname@example.org