August 2017 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 6,357 home sales through TREB’s MLS® System in August 2017.  This result was down by 34.8 per cent compared to August 2016.

The number of new listings entered into TREB’s MLS® System, at 11,523, was down by 6.7 per cent year-over-year and was at the lowest level for August since 2010.

“Recent reports suggest that economic conditions remain strong in the GTA.  Positive economic news coupled with the slower pace of price growth we are now experiencing could prompt an improvement in the demand for ownership housing, over and above the regular seasonal bump, as we move through the fall,” continued Mr. Syrianos.

The average selling price for all home types combined was $732,292 – up by three per cent compared to August 2016.  This growth was driven by the semi-detached, townhouse and condominium apartment market segments that continued to experience high single-digit or double digit year-over-year average price increases.

The MLS® Home Price Index composite benchmark, which accounts for typical home types throughout TREB’s market area, was up by 14.3 per cent year-over-year in August.  The fact that MLS® HPI growth outstripped average price growth, points to fewer high-end home sales this year compared to last.

“The relationship between sales and listings in the marketplace today suggests a balanced market.  If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation.  However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels,” said Jason Mercer, TREB’s Director of Market Analysis.

 Source: The Toronto Real Estate Board

August 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 2,706 sales through TREB’s MLS® System during the first 14 days of August 2017. This result was down by 35.6 per cent compared to the first 14 days of August 2016.

Over the same period of time, the number of new listings entered into TREB’s MLS® System was down by 10 per cent on a year over year basis. New listings were down in the City of Toronto and the surrounding regions making up the GTA.

The average selling price during the first two weeks of August, at $731,614, was up three per cent compared to the same period in 2016. Overall average price growth was driven by the condominium apartment and semi-­‐detached market segments, which experienced double-­‐digit average annual rates of price growth.

Source: The Toronto Real Estate Board

July 2017 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 5,921 residential transactions through TREB’s MLS® System in July 2017. This result was down by 40.4 per cent on a year-over-year basis, led by the detached market segment – both in the City of Toronto and surrounding regions.

While sales were down, the number of new listings reported were only slightly (+5.1 per cent) above last year’s level.

“A recent release from the Ontario government confirmed TREB’s own research which found that foreign buyers represented a small proportion of overall home buying activity in the GTA. Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve,” said Mr. Syrianos.

“Summer market statistics are often not the best indicators of housing market conditions. We generally see an uptick in sales following Labour Day, as a greater cross-section of would-be buyers and sellers start to consider listing and/or purchasing a home. As we move through the fall, we should start to get a better sense of the impacts of the Fair Housing Plan and higher borrowing costs,” said TREB CEO John DiMichele.

The MLS® Home Price Index (HPI) Composite Benchmark price was up by 18 per cent on a year-over-year basis. However, the Composite Benchmark was down by 4.6 per cent relative to June. Monthly MLS® HPI declines were driven more so by single-family home types. The average selling price for all home types combined was up by five per cent year-over-year to $746,218.

“Home buyers benefitted from more choice in the market this July compared to the same time last year. This was reflected in home prices and home price growth. Looking forward, if we do see some would-be home buyers move off the sidelines and back into the market without a similar increase in new listings, we could see some of this newfound choice erode. The recent changes in the sales and price trends have masked the fact that housing supply remains an issue in the GTA,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: The Toronto Real Estate Board

July 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 2,670 residential transactions through TREB’s MLS® System during the first 14 days of July 2017. This result was down 39.3 per cent compared to the same period in 2016. The greatest year-over-year decline in sales was noted for the detached market segment. The lowest annual rate of decline was noted for the condominium apartment market segment.

The number of new listings entered into the system was up by 6.5 per cent year-over-year. While still up compared to last year, the annual rate of growth for new listings has declined markedly, from over 40 per cent in mid-May, and over 20 per cent in mid-June, to less than seven per cent in mid-July.

With sales down and new listings up year-over-year, the market was better supplied compared to last year. This translated into a more moderate 6.5 per cent annual growth rate for the average selling price, which was $760,356 for all home types combined.

When breaking down average price growth by geography, an interesting dichotomy has developed between the City of Toronto and the surrounding ‘905’ area code regions for some market segments. The annual growth rate for the average detached price in the ‘416’ area code was 12.1 per cent, compared to 2.7 per cent for the ‘905’ regions. The annual growth rate for the average condominium apartment price was 30.5 per cent in the ‘416’ area code versus 12.4 per cent in the surrounding ‘905’ regions.

Source: The Toronto Real Estate Board

Top 10 Reasons Canada Can Take Bank of Canada Hikes

In lieu of a Bank of Canada rate hike here is a quick cheat sheet of answers to commonly raise obstacles to hiking once, twice, three times and more. Call it an economist’s attempt at late night comedy, minus the part about being funny of course because this is about monetary policy.

  1. This is no longer an emergency of recession but we still have emergency rates. This is 2017. Not 2009 or even 2014.
  2. Housing can take it and a cooler market for affordability is welcome to a point. Toronto housing will continue to cool near term. Rule changes make it so borrowers have to qualify at a 4.6% average 5 year posted rate more than 200 points above the effective best offer 5 year rate. There is a built-in rate shock buffer in mortgage rules. Plus it’s not like the Fed raising 425bps over 2004-06. It’s also seriously misinformed to view parallels between the US housing finance system back then and Canada’s today.
  3. Consumers can take it. Disposable income growth is about 4% y/y now, 3%+ next year. 50-75bps+ on debt service is swamped by this effect. Don’t just adjust rates, consider income growth and increased international purchasing power.
  4. Exports can take it. USDCAD and the real effective exchange rate are where they have averaged for the past two years, which is what matters to lagging trade effects. Income effects from an improving global economy can offset price effects from the exchange rate.
  5. Investment can take it. Overall financing conditions are and should remain very stimulative aided by CAD strength given high reliance on imported capital goods. Capacity pressures will require expansion supported by gains in worker productivity. Resource maintenance cap-ex can no longer be postponed.
  6. Slack is being rapidly eroded with growth more than double the non-inflationary speed limit on average for the past 4 quarters. Spare capacity disappears by both output gap measures this year and then Canada begins slipping into excess aggregate demand.
  7. Core inflation will be bottoming into the Fall. Ending 2018 at 1.9% as excess aggregate demand arrives and followed by further progress into 2019. That’s not emergency conditions. Monetary policy needs to lean in front of that occurring instead of pointing to the last inflation report in order to mitigate the rise given monetary policy lags. The costs to being wrong about inflation upsides are less than the costs to maintaining emergency insurance against forecast risks.The Fed can afford to pause being 100bps ahead but Canada hasn’t started. A 10% sustained two year average appreciation (ie: not from a transitory peak) in CAD versus the USD knocks 0.1-0.2% off core inflation two years out. Other forces are likely to dominate currency effects that the BoC views as transitory anyway.
  8. Wage growth is also bottoming. Rapidly tightening job markets, a maturing commodity shock on incomes and minimum wage hikes in Ontario and Albert should lift wage growth into 2018.
  9. Business surveys – like the Bank of Canada’s BOS – are saying growth is durable with plans to keep on investing and hiring.
  10. Downbeat risks are generally not being realized. NAFTA has not been torn up, there are no border taxes, an imported bond shock hasn’t arrived and some geopolitical risks have improved (European elections) while others remain.

Source: Scotiabank Global Economics Special Report July 2017

June 2017 GTA REALTORS® Release Monthly Resale Housing Figures

Greater Toronto Area REALTORS® reported 7,974 sales through TREB’s MLS® System in June 2017 – down by 37.3 per cent in comparison to June 2016.

The number of new residential listings entered into TREB’s MLS® System, at 19,614, was up by 15.9 per cent compared to June 2016. While this annual rate of growth was sizeable, it
represented a more moderate annual rate of growth compared to May 2017, when new listings were up by 48.9 per cent year-over-year.

“We are in a period of flux that often follows major government policy announcements pointed at the housing market. On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan.

On the other hand, we have existing home owners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a
moderating annual pace of price growth,” said Mr. Syrianos.

Annual growth rates for MLS® HPI benchmark prices have moderated over the past two months, but remain strong. The MLS® HPI composite benchmark price was up by 25.3 per
cent on a year-over-year basis in June. June’s average selling price for all home types combined for the TREB market area was $793,915, representing a 6.3 per cent increase compared to the same month in 2016. A better supplied market has certainly been a key factor influencing the moderation in price growth.

“Recent Ipsos survey results suggest that home buying activity in the GTA will remain strong moving forward. The year-over-year dip in home sales we have experienced over the last two months seem to be the result of would-be buyers putting their decision to purchase temporarily on hold while they monitor the impact of the Fair Housing Plan. On the supply side of the market, it certainly looks as though buyers will benefit from more choice in the second half of 2017 compared to the same period in 2016,”said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

Source: The Toronto Real Estate Board

June 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 2,999 transactions through TREB’s MLS® System during the first 14 days of June 2017. This result was down by 50 per cent in comparison to the same time period in June 2016. The decline in sales was greatest for detached houses followed by other low-rise home types.

The number of new listings through the first two weeks of June was up on a year-over-year basis to 9,988 – a 22 per cent increase compared to the same time period in 2016. It is worth noting, however, that the annual growth rate for new listings did moderate compared to May. Growth in new listings was much stronger in the regions surrounding the City of Toronto, where low-rise home types are most common. In the City of Toronto, where the concentration of condominium apartments is higher, new listings growth was much more subdued.

The condominium apartment market remains relatively tight. The average selling price continued to increase compared to 2016 – up by 6.7 per cent to $808,847 for all home types combined. GTA-wide, the strongest average annual rate of growth was for the condominium apartment segment – up by 25.5 per cent compared to the first 14 days of 2016. The average selling price for detached houses was up by 7.7 per cent year-over-year.

Source: Toronto Real Estate Board

May 2017 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 10,196 sales through TREB’s MLS® System in May 2017 – down by 20.3 per cent compared to 12,790 sales reported in May 2016.  Sales of detached homes were down by 26.3 per cent.  Sales of condominium apartments were down by 6.4 per cent.

The supply of listings was up strongly over the same period.  Active listings – the number of properties available for sale – at the end of May were up by 42.9 per cent compared to the record low a year earlier.  The number increased considerably for low-rise home types including detached and semi-detached houses and townhouses.  Active listings for condominium apartments were down compared to May 2016.

“Home buyers definitely benefitted from a better supplied market in May, both in comparison to the same time last year and to the first four months of 2017.  However, even with the robust increase in active listings, inventory levels remain low.  At the end of May, we had less than two months of inventory.  This is why we continued to see very strong annual rates of price growth, albeit lower than the peak growth rates earlier this year,” said Mr. Cerqua.

Selling prices continued to increase strongly in May compared to the same month in 2016.  The MLS® HPI Composite Benchmark price was up by 29 per cent year-over-year.  The average selling price for all home types combined for the TREB Market Area as a whole was up by 14.9 per cent to $863,910.  Year-over-year price increases were greater for condominium apartments compared to low-rise home types.  This likely reflects the fact that the low-rise market segments benefitted most from the increase in listings.

“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen.  In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out.  On the listings front, the increase in active listings suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: The Toronto Real Estate Board

March 2017 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 8,014 residential sales through TREB’s MLS® System in February 2017.  Despite the fact that February 2016 had one more day due to the leap year day, this result was up on a year-over-year basis by 5.7 per cent compared to 7,583 sales reported last year.

“The February statistics tell me that many Greater Toronto Area households continue to view home ownership as a great long-term investment.  The high demand for ownership housing we’re seeing is broad-based, with strong sales growth for most low-rise home types and condominium apartments.  This makes sense given the results of a recent consumer survey undertaken for TREB by Ipsos, which found an even split between intending first-time buyers and existing homeowners who indicated that they were planning on purchasing a home in 2017,” said Cerqua.

According to the recent Ipsos survey of intending GTA home buyers, first-time buyers will continue to account for much of the demand for ownership housing in Toronto and the surrounding regions.  For the GTA as a whole, 53 per cent of likely buyers indicated that they would be first-timers – up from 49 per cent a year earlier.  First-time buying intentions were highest in the City of Toronto, where 64 per cent of likely home purchasers indicated they would be first-timers – up from 56 per cent a year earlier.  The higher percentage of first-time buyers in the City of Toronto likely relates to the prevalence of condominium apartments, which are a popular entry point into home ownership.

“There has also been much speculation, both in the media and among government policymakers, about the amount of foreign buying activity in the GTA.  A recent Ipsos survey of the TREB membership on foreign buying activity suggests that the impact of foreign buyers in the GTA marketplace has been somewhat overblown.  GTA-wide, the number of transactions accounted for by foreign buyers was less than five per cent.  Furthermore, the great majority – 80 per cent, to be exact – of foreign buyers were purchasing a home as a primary residence, a home for another family member to live in, or as an investment to rent out to a tenant, which is helpful in a tight rental market,” continued Cerqua.

“To date, the provincial government and municipal governments have resisted the implementation of a foreign buyer tax in the absence of empirical evidence. The Ipsos survey of TREB Members should further solidify the argument that the solution to strong rates of price growth and related affordability concerns lies not with taxing foreign buyers more, but rather with addressing the supply of homes available for sale, or lack thereof,” added Cerqua.

While the demand for ownership housing grew over the past year, new listings entered into TREB’s MLS® System in February were down on a year-over-year basis by 12.5 per cent to 9,834. This continues a pattern we saw throughout much of 2016, with the sales trend pointing up while the listings trend has been down, which has resulted in a contraction of the inventory of homes available for sale. TREB’s average months of inventory trend for February was at one month, while in many neighbourhoods across the GTA, inventory can now be measured in weeks rather than months.

“The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home price increases we are now experiencing on a sustained basis, both in the low-rise and high-rise market segments. Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue,” said Jason Mercer, TREB’s Director of Market Analysis.

The MLS® HPI Composite Benchmark Price was up by 23.8 per cent compared to February 2016. Similarly, the average selling price was up by 27.7 per cent year-over-year to $875,983. Annual rates of price growth continued to be strongest for low-rise home types, particularly detached houses. Growth rates for condominium apartment prices were also in the double digits, likely a result of strong demand from first-time buyers.

“Over the past year, we have reached a point where government policies that target only the demand side of the market, whether we’re talking about foreign buyers or further changes to mortgage lending guidelines, will not be enough to balance market conditions and moderate the pace of price growth,” continued Mercer.

“In 2017, policymakers at all three levels of government must turn their attention to the supply of homes available for sale. They should consider revisiting land-use designations in built-up areas to allow for a greater diversity of home types, streamlining development approvals and permitting processes, and looking at ways to incentivize landowners to develop their land,” suggested Cerqua.

A panel of industry experts was on hand at TREB’s recent Economic Summit, which served as a launch for TREB’s Market Year in Review & Outlook Report 2017, to share their take on the growing housing supply crisis in the GTA. Discussing the nature and scope of the crisis as well as possible solutions, the implications were clear: there is a housing supply crisis and the only way to solve it would be coordinated and innovative solutions by the government, private and not-for-profit sectors.

This and other issues, including a market outlook for 2017 and the impact of transit infrastructure and housing affordability were discussed at the Economic Summit and are touched on in the report. To learn more about the Economic Summit or to read a copy of TREB’s Market Year in Review & Outlook Report 2017, please visit www.TREBhome.com

March 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 5,238 home sales through TREB’s MLS® System during the first 14 days of March 2017. This result was up by 16.4 per cent in comparison to the first two weeks of March 2016, when 4,500 home sales were reported.

The strongest annual rate of sales growth was experienced for the condominium apartment market segment.

However, double-digit annual rates of growth were also reported for detached houses and townhouses.

New listings reported by REALTORS® during the first half of March were down by more than four per cent compared to the same period in 2016. As the trend of declining listings and increasing sales continued, market conditions tightened further with the end result being further acceleration in the annual average rate of price growth.

The average selling price for all home types combined was $935,296 during the first two weeks of March 2017, representing a 35.1 per cent increase compared to March 2016. While the detached market segment experienced the highest annual average rate of price growth, at 37 per cent for the TREB market area as a whole, it is important to note that growth rates were above 30 per cent for all major home types including condominium apartments.

Source: Toronto Real Estate Board

December 2016 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that 2016 was a second consecutive record year for home sales.  Greater Toronto Area REALTORS® reported 113,133 home sales through TREB’s MLS® System – up by 11.8 per cent compared to 2015.  The calendar year 2016 result included 5,338 sales in December – an annual increase of 8.6 per cent.

The strongest annual rate of sales growth in 2016 was experienced for condominium apartments followed by detached homes.

“A relatively strong regional economy, low unemployment and very low borrowing costs kept the demand for ownership housing strong in the GTA, as the region’s population continued to grow in 2016,” said Mr. Cerqua.

“It is important to point out that the strong demand that we experienced in 2016 was very much domestic in nature.  TREB recently commissioned Ipsos to survey its Members with regard to the level and type of foreign buying activity within the Greater Toronto Area.  The results of the Ipsos survey suggest that the level of foreign buying activity is low in the GTA.  Only an estimated 4.9 per cent of GTA transactions, in which TREB Members acted on behalf of a buyer, involved a foreign purchaser.  In the City of Toronto, the share of foreign buyers was five per cent,” continued Mr. Cerqua.

The methodology of the Ipsos research involved an online survey of the TREB Membership hosted on the Ipsos platform. A total of 3,518 surveys were completed between October 6 and October 21, 2016. The margin of error is ±2 percentage points 19 times out of 20. TREB will be releasing the full results of the Ipsos survey dealing with foreign buyers on January 31, 2017, in conjunction with its Market Year in Review and Outlook Report and related media event.

The annual rate of growth for the MLS® Home Price Index (HPI) in the TREB market area accelerated throughout 2016 – from 10.7 per cent in January 2016 to 21 per cent in December 2016.  The overall average selling price for calendar year 2016 was $729,922 – up 17.3 per cent compared to 2015.  The pace of the annual rate of growth for the average selling price also picked up throughout the year, including a climb of 20 per cent in December.

“Price growth accelerated throughout 2016 as the supply of listings remained very constrained.  Active listings at the end of December were at their lowest point in a decade-and-a-half.  Total new listings for 2016 were down by almost four per cent.  In 2016, we saw policy changes and policy debates pointed at the demand side of the market.  If we want to see a sustained moderation in the pace of price growth, what we really need is more policy focus on issues impacting the lack of homes available for sale,” said Jason Mercer, TREB’s Director of Market Analysis.

TREB’s Market Year in Review and Outlook Report and media event will include an expert panel and related submissions on the foundations of the housing supply issue in the GTA and possible solutions.

With continued strong rates of price growth, housing affordability is a growing concern.  Unfortunately, the City of Toronto’s Budget Committee is considering an increase to the Land Transfer Tax that could see buyers of average-priced homes pay another $750 to the City, which would represent a seven per cent increase to the $11,000 that they already pay City Hall as an upfront Land Transfer Tax closing cost.  This would be on top of the $12,000 that is also paid to the province.  First-time buyers could end up paying $475 more, or, at best, be no better off, even though the province recently doubled their first time buyer LTT rebate.

“The last thing people need is to dish out another $750, on top of the $11,000 that they already pay City Hall.  The City should be looking for ways to make housing affordability better, not worse, especially for first-time buyers who could go backwards, or at best, be no better off,” said Mr. Cerqua.  “The Budget Committee should stop this proposal in its tracks and instead enhance the rebate for first-time buyers.”

Source: The Real Estate Board

December 2016 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 3,196 home sales through TREB’s MLS® System during the first 14 days of December 2016. This result represented an increase of almost 18 per cent compared to the first two weeks of December 2015, when 2,713 home sales were reported.

Broken down by market segment, the strongest annual growth in sales was experienced for condominium apartments – both for the City of Toronto and the surrounding regions. Double digit growth in detached home sales was also reported, but this was driven solely by sales outside of Toronto. Within the City of Toronto, sales were down for all low-rise home types – likely due to a lack of listings rather than a lack of demand.

New listings reported by REALTORS® were down by 4.7 per cent year-over-year to 3,061. With sales up strongly and listings down, market conditions were tighter compared to a year earlier. Strong competition between home buyers continued to result in double-digit price increases.

The average selling price for all home types combined was $741,515 during the first two weeks of December, representing a 19.3 per cent increase compared to a year earlier. Average annual rates of price growth generally remained strongest for low-rise home types, but the pace of condominium apartment price growth continued to accelerate.


Source: The Toronto Real Estate Board

November 2016 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 8,547 home sales through TREB’s MLS® System in November 2016. This result represented a 16.5 per cent increase compared to November 2015.

For the TREB market area as a whole, sales were up on a year-over-year basis for all major home types. The strongest annual rates of sales growth were experienced for the townhouse and condominium apartment segments.

“Home buying activity remained strong across all market segments in November.  However, many would-be home buyers continued to be frustrated by the lack of listings, as annual sales growth once again outstripped growth in new listings. Seller’s market conditions translated into robust rates of price growth,” said Mr. Cerqua.

The MLS® Home Price Index (HPI) Composite Benchmark was up by 20.3 per cent compared to November 2015. The average selling price at $776,684 was up by 22.7 per cent on a year-over-year basis.

“Recent policy initiatives seeking to address strong home price growth have focused on demand.  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,” said Jason Mercer, TREB’s Director of Market Analysis.

In January 2017, TREB will be releasing its second annual Market Year in Review & Outlook Report.  This report will contain a more in-depth discussion on the current state and future direction of the housing market in the Greater Golden Horseshoe. Detailed findings from Member and consumer surveys conducted by Ipsos will be released, including consumer intentions, buyer profiles marketwatchnov2016and foreign buying activity.  The results of a TREB-commissioned study on transportation infrastructure on housing affordability will also be presented.

Source: The Toronto Real Estate Board

November 2016 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 4,051 home sales through TREB’s MLS® System during the first 14 days of November 2016. This result represented a 13 per cent increase compared to the first two weeks of November 2015, during which time 3,584 sales were reported.

Sales were up strongly for all major home types except semi-detached houses. The year-over-year dip in semi-detached transactions, both in the City of Toronto and surrounding regions, was not due to a lack of demand, but rather a lack of available listings.

TREB Members reported 5,494 new listings between November 1st and November 14th – up six per cent compared to the same period in 2015. While the annual growth in new listings was certainly welcome, the rate of growth was less than that reported for sales. This means that market conditions continued to tighten compared to last year.

The average selling price for all home types combined was $768,220 during the first two weeks of November, representing a 20.9 per cent increase compared to a year earlier. Average annual rates of price growth were strongest for low-rise home types, but average condominium apartment prices continued to increase strongly as well.

novembermarketwatchmidmonth2016

Source: Toronto Real Estate Board

October 2016 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 4,460 home sales through TREB’s MLS® System during the first 14 days of October 2016. This result represented a 15.5 per cent increase compared to the first two weeks of October 2015. Similar to September, the strongest annual rate of sales growth for the TREB market area as a whole was recorded for the condominium apartment segment. While the market is tight for condo apartments, there is comparatively more inventory available, which has allowed for stronger growth in sales compared to the low-rise market segments.

The number of new listings was also up on a year-over-year basis during the first two weeks of October, but by a much lesser annual rate compared to sales. This means that, on the whole, the market continued to tighten with more competition between buyers. Intense competition between buyers in many neighbourhoods throughout the GTA continued to underpin double-digit annual gains in average selling prices. Due to the persistent lack of inventory, low-rise market segments experienced the strongest rates of price growth. However, it is important to point out that the condominium apartment market, particularly in the City of Toronto, also experienced year-overyear price growth in excess of 10 per cent.

marketwatchmidmonthoct2016Source: Toronto Real Estate Board

September 2016 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 9,902 sales through TREB’s MLS® System in September 2016.  This result was up by 21.5 per cent compared to September 2015.

For the region as a whole, strong annual rates of sales growth were experienced for all major home types.  The pace of detached sales growth was slower in the City of Toronto and the number of semi-detached sales was down compared to last year.  In both cases, the year-over-year dip in new listings was likely the issue.

“We continued to see strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September.  The sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types,” said Mr. Cerqua.

Both the MLS® Home Price Index (HPI) Composite Benchmark and the average selling price for all home types combined were up strongly on a year-over-year basis in September.  The MLS® HPI Composite Benchmark grew by 18 per cent compared to September 2015.  The average selling price was up by 20.4 per cent to $755,755.  It is important to remember that the MLS® HPI provides a price growth measure for a benchmark home, thereby allowing for an apples-to-apples comparison from one year to the next.  The average selling price can be influenced by changes in both market conditions and the mix of homes sold.

“The Toronto Real Estate Board will be closely monitoring how the recent changes to Federal mortgage lending guidelines and capital gains tax exemption rules impact the housing market in the Greater Toronto Area.  While these changes are pointed at the demand for ownership housing, it is important to note that much of the upward pressure on home prices in the GTA has been based on the declining inventory of homes available for sale,” said Jason Mercer, TREB’s Director of Market Analysis.

marketwatchseptember2016Source: Toronto Real Estate Board

Ottawa Tightens Mortgage Requirements and Targets Foreign Money

Ottawa has announced new rules aimed at limiting foreign money into Canadian real estate and ensuring that borrowers take on mortgages they can afford.

“Overall, I believe the housing market is sound, but as minister of finance, I want to make sure we are proactive in assessing and addressing the factors that could lead to excess risk,” Finance Minister Bill Morneau said in making the announcement Monday in Toronto.

They include a move to close a loophole in the tax laws that allows non-residents to buy homes in Canada, and then get a tax exemption to avoid paying capital gains when they sell the home by claiming it as a principal residence.

Starting now, “an individual who was not a resident in Canada in the year the individual acquired a residence will not be able to claim the exemption for that year,” Morneau said.

Canadians who were legitimate residents at both the time of purchase and time of sale will still be able to take advantage of the principal residence tax exemption, Ottawa says.

Toronto real estate lawyer Bob Aaron says the move is a reasonable step to prevent tax leakage.

“There’s a lot of people who are declaring their homes as principal residences when they’re not,” he said in an interview. “I think it’s more of cracking down on the existing law rather than plugging a loophole.”

In addition to cracking down on tax leakage by foreign money, another change is that from now on, all insured mortgages must undergo a “stress test” that ensures a borrower’s ability to make their mortgage payments at a higher interest rate.

Effectively, that means borrowers will be tested against their ability to pay their mortgage if actual rates were as high as the big bank’s five-year posted mortgage rates, which the Bank of Canada says currently average 4.64 per cent.

That requirement was already in place for many borrowers, including so-called “high-ratio” mortgages for people with small down payments, and borrowers who borrowed money on terms of less than five years.

But from now on, any insured mortgages will be tested against that higher bar. Anyone who already has a mortgage, or who has already applied for mortgage insurance, is exempt from the new rules, which will formally kick in on Oct. 17.

That could have a big impact on buyers.

According to interest rate-comparing website RateHub, a hypothetical borrower with $100,000 in annual income and $40,000 to put down on a house today could qualify for a house worth $665,435 with a mortgage at 2.17 per cent, which three lenders are currently offering, according to the site.

But under the new rules, that same buyer could only qualify to buy a home for $505,762, or 24 per cent less than before the rules kick in. The lender is still willing to offer that lower rate, but the borrower would no longer be allowed to get it under the stricter rules, because his or her finances would be tested as though the mortgage rate is more than twice as high as it is in reality.

That’s why BMO economist Sal Guatieri thinks the new stress test is the more significant change of those announced Monday.

“This measure will make it harder for buyers to qualify for a loan, especially in high-priced regions,” he said.

“This means that many potential buyers won’t qualify for an insured mortgage, which requires the total carrying costs of a home … to consume no more than 39 per cent of gross family income,” Guatieri said.

“The measures announced today should help to reduce the risk of a housing market correction in Vancouver and Toronto and a broader retrenchment in Canadian household spending arising from elevated debts.”

The issue of foreign money’s impact on Canadian housing has come under intense scrutiny in recent months as housing prices have been increased at double-digit annual paces in the two large markets: Toronto and Vancouver.

This summer, the government of B.C. slapped a 15 per cent surtax on foreign buyers in the Metro Vancouver area in an attempt to cool runaway price inflation.

CIBC said it expects that Toronto will have “no choice” but to do the same at some point.

September 2016 GTA REALTORS® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORS® reported 3,847 home sales through TREB’s MLS® System during the first 14 days of September 2016. This result represented a 19.1 per cent increase compared to the first two weeks of September 2015. Annual sales growth was strongest for condominium apartments, but double-digit increases were also noted for low-rise home types on a GTAwide basis.

The supply of listings, or lack thereof, continued to be an issue in the TREB Market Area. The number of new listings was down by 4.4 per cent compared to the same period last year. The decline for the TREB Market Area as a whole was entirely due to a dip in new listings in the City of Toronto. This lack of listings in the ‘416’ area code likely played a role in the slower annual rate of sales growth in the City of Toronto versus the surrounding regions.

Average selling prices were up strongly year-over-year for all major home types. This speaks to the widespread market tightness in the GTA today, with intense competition between buyers of all types of ownership housing.

The conditions underlying strong demand for ownership housing, including relatively healthy labour market conditions and the continuation of low borrowing costs, remain in place. With this in mind, the persistent lack of inventory should result in further robust price growth for the remainder of 2016.

september2016midmonth

Source: Toronto Real Estate Board

July 2016 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that TREB REALTOR® Members reported 9,989 home sales through TREB’s MLS® System in July 2016. At just shy of 10,000 transactions, this was the best result on record for the month of July.

While sales were up on a year-over-year basis, the number of new listings was down over the same period, representing the continuation of a troubling trend in the GTA.

“GTA REALTORS® have been working very hard on behalf of their buyer clients to help them find a home meeting their needs. Unfortunately, listings for single-detached and semi-detached houses and town houses continue to be in short supply. The result has been an increase in pent-up demand and annual rates of price increases well above the rate of inflation. Housing policy is now top of mind for all levels of government. Policy makers need to be focusing on solutions to the sustained lack of low-rise inventory throughout the GTA,” said Mr. Cerqua.

The MLS® Home Price Index (HPI) Composite Benchmark was up by 16.7 per cent in July 2016 compared to the same month a year earlier. Similarly, the average selling price for all home types combined was up by 16.6 per cent year-over-year to $709,825.

“Relatively strong labour market conditions, above-inflation average income growth, and record low borrowing costs have kept many households confident about purchasing a home. As long as very strong buying intentions are up against an extreme shortage of listings, expect home price growth to greatly outpace the rate of inflation,” said Jason Mercer, TREB’s Director of Market Analysis.

June 2016 GTA REALTORS® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 12,794 residential transactions through TREB’s MLS® System in June 2016. This result was 7.5 per cent higher than the 11,905 sales reported in June 2015. In line with the prevailing trend so far this year, the number of new listings was down by 3.8 per cent.

“As I start my term as TREB President, we are certainly in an interesting environment for ownership housing. There is no doubt that demand is at a record level, but would-be home buyers continue to face an uphill battle against a constrained supply of listings, which has perpetuated strong price growth. Buyers and sellers alike continue to benefit from the value a REALTOR® brings to a transaction,” said Mr. Cerqua.

“As the federal, provincial and local levels of government discuss housing policy in the coming months, issues affecting the lack of supply in the GTA should be of paramount importance. TREB will be undertaking, and making public, results of additional research in the second half of 2016, with the goal of proactively adding to the housing policy discussion,” added Mr. Cerqua.

The MLS® Home Price Index Composite Benchmark was up by 16 per cent on a year- over-year basis. The average selling price for all home types combined was up by a slightly higher annual rate of 16.8 per cent to $746,546. The single-detached, semi- detached and townhouse market segments led the way in terms of price growth.

“When TREB surveyed consumer intentions for 2016, we found that the majority of GTA households who were likely to purchase a home continued to be pointed towards some form of ground oriented housing. This is why we continue to see strong competition between buyers in many neighbourhoods where supply remains constrained,” said Jason Mercer, TREB’s Director of Market Analysis.

julymarketwatch2016Source: The Toronto Real Estate Board