Another month, another 10k homes purchased in Toronto. This is a significant report, since it’s the first whole month reported by the Toronto Real Estate Board (TREB) since the new mortgage rules. Surprisingly, the new rules that affected mostly first time buyers had no noticeable impact on real estate demand. The newest report from TREB showed prices continued to rise, new listings are growing at a relatively slow pace, and inventory is being absorbed at a very high rate.
Prices Are Rising
The average price of Toronto had another uptick, and a healthy one at that. The average price of a composite home sold was $776,684. That’s a 22.7% increase from November 2015, and a $13,709 increase from the month prior. All of the media’s bubble talk did little to dissuade people from bidding up homes.
Listings Aren’t Growing Fast Enough
The number of listings year-over-year (YOY) grew by 10.3% to 10,518. While that does sound like healthy growth, the number of sales have increased 16.5% YOY. The slow growth of listings, relative to sales, may be putting extra pressure on prices. Jason Mercer, TREB’s Director of Market Analysis said “going forward, more emphasis needs to be placed on solutions to alleviate the lack of inventory for all home types, especially in the low-rise market segments.” Last week’s news that 1 in 3 homes in Toronto are owned by speculators tells a different story, but I digress.
Absorption Is Really High
Absorption of listings remained very high, booking a ratio of 45.5% in November. Generally speaking, the market is balanced in the 10 – 20 percent range, and anything higher is considered a sellers market. Prices theoretically see upward pressure above 20%. Since the average home sold only spent 17 days on the market last month, we should probably expect this rate to remain high in the near term.
New mortgage rules and bubble talk across Canada did little to slow down the Toronto market this month. Despite growing concern that the city’s prices are reaching dizzying heights, the current low interest mortgage environment is still supporting higher price tags. We’ll be breaking down the market by segment in the coming weeks, so like us on Facebook to stay in the loop.