Few are buying detached homes over $2 million in the Greater Toronto Area this April, and it’s dragging down the average selling price for the entire market, says the Toronto Real Estate Board.
These expensive Toronto homes for sale accounted for 5.5 per cent of all detached sales in April 2018, versus 10 per cent in April 2017. The decline in these higher-end homes had a disproportionate effect on the average selling price because it’s weighted; so when we see the alarming news that property prices have declined 12.4 per cent year-over-year, it’s a bit misleading.
When we instead look at the MLS HPI Composite Benchmark, a far more nuanced measure, we can see that the decline is far less dramatic, only down 5.2 per cent year over year.
Detached homes are the most-sold property type in the GTA — 3,451 sold this April, out of 7,792 total. They are also almost twice as expensive as the next best-selling property type: condos, which sold 2,218 units.
But the average detached GTA home goes for just over $1 million, whereas the average condo goes for under $560, 000.
So, any slowdown among detached houses will greatly affect the overall market average, with the average home price currently priced at $804,584.
And it just so happens detached houses are currently doing worse than any market segment; prices are down 14.4 per cent, compared to just 6.4 per cent for semis and 7.8 per cent for townhouses. Condos show the only positive price growth, at 3.2 per cent, but as the least expensive market segment, they do little to lift the average.
Perhaps buyers are simply skipping GTA detached houses and looking to Hamilton real estate, where money goes a lot further. In this neighbouring city, just an hour door-to-door from the core, a detached house currently goes for about $583,000, according to the Realtors Association of Hamilton and Burlington.
Or, perhaps because of the federal bank regulator tightening mortgage lending rules this January 1, buyers can no longer borrow enough to stretch themselves into $2-million-plus house.
Either way, we’re unlikely to see any major rush to buy these expensive houses during the upcoming busy spring and summer months. Rather, TREB expects lower-priced condos to lead the way, meaning we can continue to expect more seemingly scary declines in the year-over-year average prices.
Check out the infographic for all the details:
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