Sales are down but prices are up in Toronto’s real estate market and many are worried that the GTA is in for the same kind of housing crash as recently seen in Vancouver. Yet, despite sales being down 2.4 % year-to-year, prices inched upwards, with CTV News citing a new average price of $780,397, up from $767,801 the month before.
Tighter market conditions
One explanation for the decline in sales is the fact that the city’s seeing much tighter market conditions that a year ago. One commonly cited culprit is the new Canadian Mortgage Stress Test, which was put into place in January 2018. According to this new rule, home buyers will have to pass a test that judges whether or not they’d be able to keep-up with their mortgage should variable interest rates affect them. Speculators say this has kept many from buying new homes, with first-time buyers especially vulnerable. Critics state variable interest rates are less of a concern than a changing job market, with the loss of a job far more likely to affect a buyer’s ability to keep up with a mortgage than a changing interest rate.
New listings down
According to the Toronto Real Estate Board, new listings in February 2019 totaled 9,828. A year earlier, they stood at 10,473. Speculators state this decline in listings is the reason the sales prices increased. It’s also thought that another reason listings went down is that potential sellers are waiting for the market conditions to rebound before listing their homes.
Luxury sales have also taken a hit, with a report by Sotheby’s stating a 2% decline year to year, with properties valued at over $4 million being the hardest hit – down a huge 38%. However, it’s also noted that properties of this type are also typically sold off-market; especially with new policy shifts that expanded the amount of real estate sales data that can be disclosed – thus motivating luxury homeowners seeking privacy to conduct off-market transactions.