Read the latest GTA housing market report from Zoocasa
Detached houses are the weakest link in the Greater Toronto Area housing market.
Overall, the average price of property stands at $784,558 compared to $915,126 in March 2017, according to the Toronto Real Estate Board. That’s a decrease of 14.3 per cent, and for which detached houses are to blame.
Detached home sales generally represent the most expensive market segment, so any dip in price affects the entire average. Indeed, detached houses saw the sharpest dip among any market segment falling 17.9 per cent.
This March, 3,120 detached houses were sold in the GTA for an average price of just over a million: $1,005,779. Last March, 5,887 detached houses were sold, but for an average of $1,214,422.
That price is unlikely to get you a house in the City of Toronto. Instead, for that price, you’re likely looking in the surrounding Toronto suburbs, like houses in Mississauga, where the average selling price of $1,076,183 almost exactly matches the TREB average.
(If you’re looking for somewhere comparatively less expensive to live, look at houses for sale in Hamilton, where detached houses go for less than half that in Toronto, at $565,500, according to the Realtors Association of Hamilton and Burlington).
So we have both far less houses selling, and those houses that are selling are going for far less. What’s going on?
Namely, the basic law of economics: supply and demand.
There’s simply far more inventory on the market this year, leading to prospective buyers being able to take their time, avoid bidding wars and add in conditions. This March, inventory levels range from two to three months, while last March they were less than a month.
Last year’s record-low inventory lead to massive competition for the few detached houses for sale. Prices peaked in early 2017 due a perfect storm of a combination of high demand, low supply, a good job market, demographics and low interest rates.
Detached houses in 2017 were rising an incredible 34.4 per cent year-over-year.
Ontario and the bank regulators, right or wrong, decided to intervene to cool the market. They tightened mortgage lending criteria, introduced various taxes, created new rent controls and more.
And these interventions worked as they were supposed to.
They triggered a sell-off last spring and now there’s just more houses available and sellers are forced to keep their prices competitive.
Now detached houses are down from their peak, but are still trending upwards. In other words, prices are still rising, just slower.
If we take a look at 2016, we can see that just two years ago
the average detached house was under a million: $910,375. That means a detached house has shown a healthy double-digit price growth of 10.5 per cent.
Check out the infographic to see the statistics of all market segments:
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Photo by Binyamin Mellish from Pexels