Toronto property prices edged up year over year, supported by shrinking inventory, says the Toronto Real Estate Board’s (TREB) November report.
Home prices grew 3.5 per cent to $788,345 from November 2017.
Condo units grew 7.5 per cent to about $556,700 year over year, second only to semi-detached houses which climbed a surprising 8.3 per cent to $791,700. Detached houses edged up 1.3 per cent to just over $1 million and townhouses 3.1 per cent to $647,500.
This price growth seen across the board is likely due to the lack of supply: new listings dropped 26 per cent to 10,534 and active listings dropped 9.8 per cent to 16,420.
With a total of just 26954 properties available across all of TREB region, and 6,251 sales, there’s only a few months of reserve inventory available.
Although sales have dropped by 14.7 per cent from last, that is likely due to the rush to buy last year before new mortgage rules took effect in January. In other words, it was an aberration due to market interference and not an indication of lesser demand. Most importantly, sales remain stronger than listings and thus buyers are likely to face increased competition.
The only way to stop such a scenario is if unless sellers decide to list en masse, or buyers decide the Greater Toronto Area is no longer desirable – both scenarios unexpected.
The sales-to-new-listings ratio (SNLR) remains balanced for now , at a 49.8 per cent average across the whole of TREB’s region, but individual neighbourhoods tell a different story.
When the SNLR rises above 60 per cent, the territory becomes advantaged to the seller, with frustrated buyers doing almost anything to land a house, including participating in bidding wars and removing financing and home inspection conditions from offers. When this ratio dips below 40 per cent, the market becomes advantaged to the buyer, with sellers vying for attention, including upgrading the properties, offering incentives and potentially lowering prices.
The City of Toronto is dangerously close to becoming a sellers market, with the SNLR at 58 per cent. Toronto West is already a sellers market, with neighbourhoods like High Park, the Junction and Roncesvalles at an SNLR of 70 per cent.
It’s little better outside of TREB’s region, in the rest of southwestern Ontario: Kitchener homes for sale, for example, increased 7.6 per cent to $477,526 and with an SNLR of 66 per cent they are a confirmed sellers market.
York Region and Simcoe County, in contrast, are buyers markets, with SNLR’s at 35.4 and 39 per cent respectively Here, good deals can likely be found.
Generally, however, the tight market conditions see over the last decade are expected to prevail into 2019.
Check out the infographic for more details: