This year’s spring housing market sure took its time to arrive, but peak home buying season is officially in force with the number of sales spiking 16.8 per cent in April, according to the latest data from the Toronto Real Estate Board.
A total of 9,042 homes sold over the course of the month, marking an 11.3 per cent uptick from March. The average home price in the GTA also rose 1.9 per cent to $820,148, with the MLS Home Price Index – which measures the overall value of homes sold – rising by 3.2 per cent, its largest increase in over a year.
Housing Market At Risk Of Overheating
However, the board warns that this growth could lead to the same supply crunch factors that have caused unbalanced market conditions in the past. The increase in new listings fell well short of sales growth, up just 8 per cent to a total of 17,205. That’s pushed the sales-to-new-listings ratio, which measures the level of buyer activity in the market, to 52 per cent; that still indicates the market is balanced, but conditions are tighter than they were last year when the ratio was 47 per cent. As has been the long-term trend, condos for sale in downtown Toronto, as well as houses in inner-city neighbourhoods, have driven the greatest price growth.
“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,” stated Garry Bhuara, TREB’s president, adding that the board’s overall sales outlook for 2019 is improved from last.
“It should be noted, however, that growth in new listings is not keeping pace with sales. This points to an ongoing supply issue in the GTA.”
April Sales And Prices Up In City Of Toronto
Things were also looking up within the City of Toronto proper, where home sales rose 9.7 per cent year-over-year with 3,234 transactions. The average home price rose at a greater pace than the total TREB region, up 4.4 per cent to $903,992, and while the pace of growth for new MLS listings in Toronto fell short of the sales increase, the two metrics are better aligned than in the rest of the market; new listings rose 8.2 per cent, with a total of 5,735 coming to market over the course of the month. The sales-to-new-listings ratio in the 416 remains on the edge of a sellers’ market, however, at 56 per cent.
Stress Test Still Making A Dent In Buyers’ Budgets
However, this short-term improvement isn’t as strong as it could be, according to Jason Mercer, TREB’s chief of market analysis. He points out that sales are still well below the 10-year average, and that prospective home buyers are still finding their budgets chopped by the federal mortgage stress test.
“Many potential home buyers arguably remain on the sidelines as they reassess their options in light of the OSFI-mandated two-percentage-point stress test on mortgages,” he stated. “Longer-term borrowing costs have trended lower this year and the outlook for short-term rates, for which the Bank of Canada holds the lever, is flat to down this year. Unfortunately, against this backdrop, we have seen no movement toward flexibility in the OSFI stress test.”
Check out the infographic below to see how sales and price trends changed year-over-year in the City of Toronto in April: