City of Toronto condo prices climbed almost 6 per cent this April year over year to $637,100 — the only significant price growth out of any property segment.
Single-family home prices remained stable at $1,355,700, while semi-detached grew 3 per cent to $1,051,750 and townhouses declined almost 5 per cent to $757,150, reports the Toronto Real Estate Board in its April report.
But since the majority of all property sold in the city is from either detached houses or condos for sale in Toronto, (982 and 1,608 respectively out of 3,234 total sales), their data is most important in terms of measuring the health of the overall market.
TREB blames both the soft detached market and the rise of the condo market on the mortgage stress test.
“Price growth continued to be driven by the condominium apartment segment and higher-density low-rise segments. The average price for detached houses dipped year over year, specifically in regions surrounding the City of Toronto. The detached market segment, with the highest price point on average, has arguably been hardest hit by measures such as the OSFI stress test,” writes the report.
The new, tighter mortgage lending rules have reduced affordability for buyers, preventing them from taking out large enough mortgages to buy single-family homes, and pushing them into less-expensive apartments. OSFI, the federal bank regulators, however, put the rules in place just for that reason, to ensure that only those who could comfortably afford a large mortgage even with higher rates would be the only ones getting them.
Toronto isn’t the only city experiencing this phenomenon. Vancouver is similar, with high detached home prices meaning prospective home buyers have no option but to look at Vancouver condos , now over $650,000. At the same time, cities in the prairies remain affordable, Calgary condos available for under $250,000.
But it’s not all bad news — sales have enjoyed an excellent month in the 416, with transactions jumping almost 10 per cent to 3,234.
“The strong year-over-year growth in sales is obviously a good news story and likely represents some catchup from a slow start to the year. TREB’s sales outlook for 2019 anticipates an increase relative to 2018,” said TREB President Garry Bhaura, cautioning that listings are not hitting the market as fast as sales, pointing to an ongoing inventory issue. Unless supply keeps up with demand, Toronto is likely to see higher prices, albeit more slowly than the record growth seen in the past five years.
For more data on this month’s housing market data check out the infographic below:
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