The Toronto Real Estate Board reported this week that property sales jumped in May year over year, while prices remained fairly stable.
Property sales soared up 19 per cent this May, with the caveat that transactions in May 2018 were at a 15 year-low. In fact, sales are still lower than the 10-year average, a situation that TREB blames on the mortgage stress test and stagnant new listings.
“After a sluggish start to 2019, the second quarter appears to be reflecting a positive shift in consumer sentiment toward ownership housing. Households continue to see ownership housing in the GTA as a quality long-term investment as population growth from immigration remains strong and the regional economy continues to create jobs across a diversity of sectors,” says TREB President Garry Bhaura. “However, sales activity continues to be below the longer-term norm.”
Home prices nudged 3.5 per cent higher to $838,540. Condo units still showed the strongest growth, with prices up 5 per cent to $590,876, while detached houses barely increased 1 per cent to $1,042,218.
TREB expects Toronto real estate to rise due to a lack of inventory. New listings grew less than a per cent to 19,386 this May, and did not keep pace with sales. TREB thinks new listings are in a slump because potential sellers have so few options to move into. If they live in a detached home they may not be ready to move into a small condo unit, and the inventory of houses for sale in Toronto is severely lacking in any in-between options. They call this the “missing middle”.
“If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate,“ says Jason Mercer, chief market analyst at TREB. “This potential outcome underpins calls from TREB and other housing industry stakeholders to address roadblocks preventing a more sustainable and diverse supply of housing reaching the market.”
In other words, there are more buyers than sellers, and it’s going to increase competition and nudge prices higher.
For more details on this month’s housing market check out the infographic below:
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