Greater Toronto real estate is still a tight market, but all of a sudden it has a lot more inventory. Toronto Regional Real Estate Board (TRREB) data shows prices ripped higher in February. Positive price growth news didn’t just end there though, as the market actually saw annual growth accelerated. Oddly enough, this occurred as inventory levels improved dramatically. More inventory but higher price growth. That doesn’t happen often, and when it does it typically doesn’t persist long.
Toronto Real Estate Prices Soared $80k Higher Last Month
Greater Toronto new home prices are seeing growth accelerate even faster as inventory pressure releases. The price of a typical home across TRREB reached $1,340,000 in February, up 6.36% ($80,100) from a month before. Annual growth works out to 35.87% ($273,663) higher. Even with inventory improvements, the annual growth rate has reached a new record high, and with a massive monthly leap.
Greater Toronto Benchmark Price
The price of a “typical” composite home across Greater Toronto.
Source: TRREB; Better Dwelling.
A typical home in the City of Toronto also made huge price advances, adding tens of thousands in just days. The typical home in Toronto reached $1,308,300 in February, up 5.28% ($65,600) last month. Compared to a year before, prices are now 27.38% ($215,616) higher. It’s worth taking note that a typical home in the City is now lower than the Greater Region’s price index. Price growth in the outer regions has outpaced the City for so long, it’s now more expensive to be in the 905.
Greater Toronto Benchmark Price Change
The annual percent change of TRREB’s benchmark price for all home types.
Source: TRREB; Better Dwelling.
Toronto Real Estate Sales Had The Second Best February Ever
Greater Toronto home sales ripped higher, as you might have expected from the rapid price growth. TRREB reported 9,097 home sales in February, up 61.41% from the previous month. Compared to last year, sales are down 16.76% from the previous year. It was the second most sales for February, only second to last year. By itself, this is a very large and impressive number generating significant economic activity.
Toronto Real Estate Sellers Are Greatly Outpacing Buyers
When Greater Toronto new home sales are contrasted to new inventory though, it’s a little less impressive. TRREB reported 14,147 new listings in February, up 77.30% from the previous month. Compared to last year, this number is only 6.60% lower. From the monthly perspective, new listings grew faster than sales, relieving pressure. On an annual basis, new listings fell slower than sales, once again meaning less pressure on prices to move higher.
Greater Toronto Sales To New Listings
The number of newly listed units per month, in contrast to sales.
Source: TRREB, Better Dwelling.
Toronto Real Estate Inventory Is Improving VERY Fast
CREA’s preferred method of tracking absorption of new inventory is the sales to new listings ratio (SNLR). If the SNLR is above 60 percent, it’s a sellers market where prices are expected to grow. When it falls below 40 percent, the market is a buyers market where prices are expected to fall. Between 40 and 60 percent is a balanced market that’s assumed to be priced perfectly for the supply and demand conditions.
Greater Toronto’s SNLR is showing market conditions are moving towards balanced very fast. The ratio fell to 64.3% in February, down from 70.64% the previous month, and 72.1% last year. In December this ratio was a mind-numbing 116%, meaning more homes were sold than were listed on the market. The market is still tight with an SNLR of 64.3%, but it looks like a muumuu in contrast to recent months.
Toronto Homes Couldn’t Qualify For A Mortgage On A Toronto Home
It’s hard to emphasize how fast and high home prices in Greater Toronto are growing right now. Annual growth in dollar terms was greater than double the median household income for the region. If that rapid price growth was a household’s annual income, they would barely qualify for a mortgage needed for that home. By barely, that’s within a few dollars and a less than stellar credit score wouldn’t let it happen.
February’s buyers enter the market with January’s data perspective, understandably leading to price growth acceleration. A couple of months ago, Greater Toronto real estate had panic-inducing low inventory. However, if inventory keeps hitting the market at this level going forward, market indicators show price growth is already near the correct level for demand.
BMO recently said higher rates will help relieve the inventory problem. That’s already occurring, and only the threat of higher rates was needed to trigger that balance.
I’m happy about the extra wealth, but even I know this isn’t sustainable.
I don’t disagree but I’ve heard this for years and prices only went higher. Is there actually anything objective that will prevent prices from climbing further? Looking at immigration figures, new construction rates, BoC’s resistance to raise rates, no change in provincial housing policy, I don’t see anything object that would push prices down.