Toronto Housing Market Remains Slow in February
The Toronto housing market remains slow in February, with the Toronto Real Estate Board reporting declining sales and stable housing prices.
Sales declined 2.5 per cent to 5,025 transactions, while property prices edged up 1.5 per cent to $780,400.
TREB blames the lackluster February on the mortgage stress test implemented in January 2018 for reducing affordability and making it especially challenging for first-time buyers to get in the market.
“The OSFI-mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy,” said TREB President Garry Bhaura.
One unpredicted side effect of the stress test is that it appeared to push many prospective buyers into condos, by far the least expensive market segment available. We can see that because condo prices have consistently been the fastest growing property type in 2018 and now in the 2019, while detached houses have been the softest, and at times dramatically dropping in price.
This February, detached houses in the 905 dropped 2 per cent to $894,000 and 0.8 per cent in the 416 to just under $1.3 million, year over year.
At the same time, 905 condos rose 3 per cent to $449,000 and 416 condos rose 7.5 per cent to $612,500.
In Liberty Village, the most active neighbourhood for condo transactions across TREB, Liberty Village condos prices actually rose 13.5 per cent year over year. Similar increases were also seen among North York condos and Etobicoke condos.
We may soon see, however, a comeback among detached houses. Very few are putting their home up for sale — new listings are down 13.5 per cent. With far fewer homes on the market, and only slightly slower sales, we’re likely to see tighter market conditions in the upcoming months. Prospective buyers are likely to see prices start to rise in the spring.
Another factor that could lead to a price increase is if we get any policy changes. TREB is currently calling for 30-year mortgages to come back even with down payments below 20 per cent. This would increase buyer affordability and therefore demand.
“The stress test should be reviewed and consideration should be given to bringing back 30-year amortizations for federally insured mortgages. There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability,” said Bhaura.
To check out the details on February housing stats, see the infographic below:
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Writer: Danielle KubesDisclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.