Home sales climbed 12 per cent in the Toronto area in October over September, marking the biggest month-over-month growth in sales since the city saw its overheated housing market hit a sales peak in March.
The Toronto Real Estate Board said 7,118 homes were sold in the Greater Toronto Area in October, a 12-per-cent increase in sales from September but a decline of 27 per cent compared to record high sales in the same month last year.
“Every year we generally see a jump in sales between September and October,” TREB president Tim Syrianos said in a statement.
“However, this year that increase was more pronounced than usual compared to the past 10 years. So while the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up.”
TREB said the average GTA home sold for $780,104 in October, up 0.6 per cent from September and 2.3 per cent higher than the same month last year.
Average home sale prices began a modest recovery in September and continued to grow slowly in October, suggesting Toronto has at least halted the sharp downturn in house prices that began in May after the provincial government announced its Fair Housing Plan reforms to cool the overheated housing market, including a new foreign buyer’s tax.
Royal LePage real estate agent Shawn Zigelstein, who is based in Richmond Hill, said the biggest factor driving sales has been the large increase in active home listings in the market, which could also lead to sales growth in November compared to October. TREB reported 18,859 homes were listed for sale in the GTA as of October 31, up 78.5 per cent from 10,563 homes a year ago.
“We have so much more product on the market, it’s up almost 80 per cent year over year,” Mr. Zigelstein said. “It’s a huge number, and we will see how that translates into November and December.”
Toronto realtor Eryn Richardson, general manager of Century 21 Heritage Group, said his offices saw the volume of home sales climb in October not only compared to September, but also compared to October last year.
He says buyers no longer seem concerned about a bubble bursting and a market collapse, so are back shopping for homes. But Mr. Richardson also said a factor in the sales growth in October was the looming introduction of new mortgage stress-testing rules announced by Canada’s banking regulator on Oct. 17. They take effect Jan. 1, and buyers are keen to buy before the higher standards kick-in.
“That’s getting people out and buying – I think that’s a big factor for sure,” Mr. Richardson said.
But Royal LePage chief executive officer Phil Soper said he thinks most buyers will be unaware of the details of the stress-testing rules introduced by the Office of the Superintendent of Financial Institutions (OSFI) and will not factor them into their decision to buy.
He believes the Toronto market is being driven by strong demand for housing due to the region’s strong economy and continuing population growth, and now worries the biggest risk is another huge run-up in prices.
“I’m more concerned about the upside than the downside,” Mr. Soper said. “I hope that the OSFI moves … will take some of the steam out of the market in the spring of 2018 and keep a lid on home price appreciation, because I do believe there’s more risk that the market will get away and trend towards that irrational exuberance we saw last year. That would be my bigger fear, rather than the downside.”
Jason Mercer, TREB’s director of market analysis, said the Toronto market is continuing to follow the pattern of Vancouver, which saw sales fall after the B.C. government introduced a foreign-buyer’s tax in August, 2016, then begin to recover by January this year.
He said TREB will launch consumer polling in November to assess the impact of a recent and proposed government policy changes, including new mortgage stress-testing rules.
The condominium sector remains the strongest segment of the housing market in the GTA, with condos selling for an average of $523,041 in October, up 0.5 per cent over September and 21.8 per cent higher than October last year.
The most-expensive housing category, detached single-family homes, continues to face the greatest impact of the housing downturn as buyers favour more affordable options. The average detached home sold for $1,008,207 in the GTA in October, a drop of 0.7 per cent compared to September and a decline of 2.5 per cent compared to a year ago.
Source: The Globe and Mail