Real Estate

GTA homebuyers are back in the real estate market

GTA home buyers are once again feeling the heat this spring from rising competition and higher home prices as a lack of new listings continued to dog the traditionally busy May real estate market.

The average selling price of a home rose for the fourth consecutive month in May to nearly $1.2 million. That was only about 1.2 per cent, or about $14,000, below last May’s average, according to the Toronto Regional Real Estate Board (TRREB) on Friday.

“We’ll definitely see the average selling price and the benchmark price above last year’s levels at some point this year,” said Jason Mercer, the real estate board’s chief market analyst.

Toronto region housing prices peaked on Feb. 22 at an average selling price of about $1.33 million. But eight interest rate hikes from the Bank of Canada almost instantly pushed buyers to the sidelines to re-evaluate what they could afford. Prices began stabilizing later last year and have been slowly creeping up again this year.

That upward momentum is being maintained by a supply shortage that is pushing up prices and competition among buyers who have adjusted to higher interest rates and are jumping back into the housing market, said Mercer. Sellers, however, are still standing on the sidelines.

Although home sales increased about 25 per cent year over year in May to 9,012, new listings dropped 18.7 per cent in the same period.

The lack of listings is part of “a vicious circle,” said Mercer.

“Over the last number of years people have gotten used to the fact, unfortunately, that there’s just not a lot of inventory in the market. So, if you don’t feel you’re going to be able to sell your home and then find another one that meets your needs, people tend to stay in place,” he said.

If there were shovels in the ground on the new housing promised by politicians at all three levels of government, “you would see sellers become more confident that they’d be able to find something else that meets their needs,” said Mercer.

“But we haven’t seen that.”

Although it’s an issue that extends across the Greater Golden Horseshoe area, Ipsos polling shows Toronto residents gave their city council a fail on housing affordability, said real estate board president Paul Baron.

“If we don’t quickly see housing supply catch up to population growth, the economic development of our region will be hampered as people and businesses look elsewhere to live and invest,” he said.

Strong rent growth and record immigration are also boosting housing demand, said Mercer. But, he said, sales levels haven’t caught up to the frenzied pandemic period of 2021.

“We are seeing people move into the marketplace that put their decision to purchase on hold. But there are still people sitting on the sidelines because they are facing affordability issues associated with higher borrowing costs. They’ll need to see lower mortgage rates moving forward before they move back into the market and that’s something we’ll see more in 2024,” he said.

Detached home prices remained flat in the City of Toronto last month with an average selling price of about $1.91 million. They rose only about 1 per cent to $1.44 million in the 905 communities around the city. Condo prices dropped 6.3 per cent in the 905 to an average of $677,874. The average Toronto condo sold for $784,914, about 1 per cent less than a year ago.


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