Return of the hot housing market: More homes selling for over list price in March
For the first time since last May, the average selling price of homes in the GTA exceeded the average list price by about 1 per cent in March. It’s a signal that the spring is seeing a return to an increasingly competitive housing market, says the Toronto Regional Real Estate Board (TRREB).Both the average home price and the number of sales declined on a year-over-year basis last month, by 14.6 per cent and 36.5 per cent respectively. Those indicators rose, however, month over month as consumers, who had paused to absorb eight interest rate rises in a year, resumed their home searches amid historically low levels of new listings.Buyers have enjoyed more negotiating power since last spring as higher interest rates stalled the frenzied pandemic era action, said TRREB chief market analyst Jason Mercer. But as demand picks up and listings remain scarce prices will rise, he said.“When you’re looking at active listings going into the spring still sitting at about 10,000, similar to where they were last year, that’s quite low from a historic perspective. It certainly speaks to the tightening market conditions that we’re seeing,” said Mercer.Getting more listings on the marketThe 11,184 new listings that hit the market in March, was 44.3 per cent fewer than the same month last year, TRREB reported Wednesday.Rising prices could, however, help bring more homes on to the market, he said.“As the market starts to tighten up, that could prompt some would-be sellers who are on the sidelines to start thinking harder about bringing their home to market,” he said. “They just need to be convinced that they’re going to be able to find another home that meets their needs.”That’s been the vicious circle for years, said Mercer. Owners are fairly confident they’ll be able to sell but low supply makes them less certain they’ll be able to find the next home.Borrowing costs expected to fallLower inflation and financial uncertainty, including the recent Credit Suisse failure, will help push down borrowing costs this year, likely boosting demand further. TRREB expects a five-year-fixed rate mortgage to be 100 basis points lower this year than the peak last fall. The average selling price of a GTA home in March was $1.11 million, about $13,000 above the February average. Detached houses in the GTA sold for an average of $1.47 million and condos went for $703,566 on average — a 13 per cent year-over-year drop in both categories. The declines were slightly higher in the 905 areas compared to the City of Toronto.The Multiple Listings Service Home Price Index composite benchmark also showed a 16.2 per cent decline in prices year over year in March. But the actual and seasonally adjusted numbers also showed a month-over-month increase.Not enough housingThe issue of housing supply has been pervasive for the last decade but recently there’s been a shift in policy direction with governments agreeing on the need to build more homes, said Mercer.“Where we haven’t seen as much movement yet is converting this positive policy direction into actually seeing homes on the ground. And that’s the next step,” he said.He expects that will be a talking point in the upcoming Toronto mayoral byelection, including how to speed up the construction of more homes into established neighbourhoods.“We haven’t seen a meaningful uptick in home construction and that’s on the ownserhip side, but also the rental side. When I look at a rental market that’s seen double-digit, year-over-year growth in rents, that suggests not enough supply coming online,” said Mercer. The TRREB report comes a day after Ontario Municipal Affairs and Housing Minister Steve Clark reiterated the province’s concerns about its ability to meet its 1.5 million new homes target in the coming decade as inflation and interest rates affect the home construction industry. TD Economics released a report Tuesday, predicting Canadian home prices will bottom in the second quarter of this year, “following a dramatic slide over the past year.”“All told, Canadian average home prices will have likely fallen by 21 per cent on a peak-to-trough basis, retracing less-than-half of the 47 per cent gain recorded during the pandemic. In the second half of this year, and through 2024, subdued sales activity should restrain quarterly price growth to a below average pace,” said TD.Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski
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For the first time since last May, the average selling price of homes in the GTA exceeded the average list price by about 1 per cent in March. It’s a signal that the spring is seeing a return to an increasingly competitive housing market, says the Toronto Regional Real Estate Board (TRREB).
Both the average home price and the number of sales declined on a year-over-year basis last month, by 14.6 per cent and 36.5 per cent respectively. Those indicators rose, however, month over month as consumers, who had paused to absorb eight interest rate rises in a year, resumed their home searches amid historically low levels of new listings.
Buyers have enjoyed more negotiating power since last spring as higher interest rates stalled the frenzied pandemic era action, said TRREB chief market analyst Jason Mercer. But as demand picks up and listings remain scarce prices will rise, he said.
“When you’re looking at active listings going into the spring still sitting at about 10,000, similar to where they were last year, that’s quite low from a historic perspective. It certainly speaks to the tightening market conditions that we’re seeing,” said Mercer.
Getting more listings on the market
The 11,184 new listings that hit the market in March, was 44.3 per cent fewer than the same month last year, TRREB reported Wednesday.
Rising prices could, however, help bring more homes on to the market, he said.
“As the market starts to tighten up, that could prompt some would-be sellers who are on the sidelines to start thinking harder about bringing their home to market,” he said. “They just need to be convinced that they’re going to be able to find another home that meets their needs.”
That’s been the vicious circle for years, said Mercer. Owners are fairly confident they’ll be able to sell but low supply makes them less certain they’ll be able to find the next home.
Borrowing costs expected to fall
Lower inflation and financial uncertainty, including the recent Credit Suisse failure, will help push down borrowing costs this year, likely boosting demand further. TRREB expects a five-year-fixed rate mortgage to be 100 basis points lower this year than the peak last fall.
The average selling price of a GTA home in March was $1.11 million, about $13,000 above the February average. Detached houses in the GTA sold for an average of $1.47 million and condos went for $703,566 on average — a 13 per cent year-over-year drop in both categories. The declines were slightly higher in the 905 areas compared to the City of Toronto.
The Multiple Listings Service Home Price Index composite benchmark also showed a 16.2 per cent decline in prices year over year in March. But the actual and seasonally adjusted numbers also showed a month-over-month increase.
Not enough housing
The issue of housing supply has been pervasive for the last decade but recently there’s been a shift in policy direction with governments agreeing on the need to build more homes, said Mercer.
“Where we haven’t seen as much movement yet is converting this positive policy direction into actually seeing homes on the ground. And that’s the next step,” he said.
He expects that will be a talking point in the upcoming Toronto mayoral byelection, including how to speed up the construction of more homes into established neighbourhoods.
“We haven’t seen a meaningful uptick in home construction and that’s on the ownserhip side, but also the rental side. When I look at a rental market that’s seen double-digit, year-over-year growth in rents, that suggests not enough supply coming online,” said Mercer.
The TRREB report comes a day after Ontario Municipal Affairs and Housing Minister Steve Clark reiterated the province’s concerns about its ability to meet its 1.5 million new homes target in the coming decade as inflation and interest rates affect the home construction industry.
TD Economics released a report Tuesday, predicting Canadian home prices will bottom in the second quarter of this year, “following a dramatic slide over the past year.”
“All told, Canadian average home prices will have likely fallen by 21 per cent on a peak-to-trough basis, retracing less-than-half of the 47 per cent gain recorded during the pandemic. In the second half of this year, and through 2024, subdued sales activity should restrain quarterly price growth to a below average pace,” said TD.
Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski
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