While the Vancouver real estate market takes a moment, Toronto real estate showed no sign of slowing down. The latest statistics from the Toronto Real Estate Board (TREB) showed higher prices, strong demand for detached homes, and inventory continued to shrink.
Real Estate Prices Moved Higher
The benchmark average home climbed to $755,755, a 20.4% increase from the year prior. That’s a 6% increase from last month, which sounds a little odd when you realize it’s $11k/week. If that was too abstract, that’s $1,500 a day – 650% more than the median household makes at work in a day. There’s no way to predict how long this can go, but it’s hard to argue that Toronto real estate was a bad investment.
Higher Priced Units In Demand
Toronto buyers aren’t showing signs of a budget either. Most sales were for higher priced units, with a preference for detached homes. Detached homes were a whopping 47.5% of all sales, with an average price tag of $1,013,788. The median price was $830,000. Lower, but still 10x the median household income in Toronto.
One of the main things sending buyers into a bidding frenzy is a lack of inventory. Inventory continued to decline, with new listings down 5.6% since last year. Active listings were also down 36.6%. This is being met with an increased number of deals, as sales are up 21.5% for the year.
Naturally, more people competing over less units will drive prices up. The strange thing is only 2 out of 3 new listings convert to deals. That’s hardly what we picture when we think of an inventory shortage, but perception is everything.
New Mortgage Rules
New mortgage rules come into effect on October 17, and will create more strict rules for lenders. This is expected to reduce demand for from new buyers, and lower priced homes. It’ll be interesting to see if this creates a last minute rush from buyers in October. If so, prices could see an even larger jump this month.
There’s also an equally good chance that buyers may not rush in. A new regulatory environment creates uncertainty, which may cause buyers to wait and see. Jumping in before the details isn’t always a smart idea, but that implies a logical market. When the average home in a city makes more than 6x the families living in them, it’s safe to say all logic is out the window.
Price data courtesy of Toronto Real Estate Board, adjusted to standardized City of Toronto wards.
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