As the comedian said, “There’s good news and there’s bad news”.
The good news
There was a huge year over year jump in home sales in April, up 16.8 % to 9,042 compared to 7,744 in April 2018, with a significant 1.9 % price increase. Price growth continued to be driven by the condominium apartment segment which is up 5% since the start of the year, followed by semi-detached homes up 2.1%. Despite the 2% mortgage stress test, detached and luxury homes are selling, and as of the end of April, 1,433 homes sold over $1,500,000 with 593 in excess of $2,000,000. Last year, experts were concerned that mortgage rates would increase, it appears that those concerns were unfounded as longer term borrowing costs have trended lower this year and appears will continue for the rest of the year.
The bad news
Listings are down by 1% from the same time last year. Lack of inventory, demand and the resulting bidding wars and increasing prices are the result. Household formations and immigration are running ahead of home construction and the reality is that Toronto is in and will continue to experience a continuous scarcity of inventory. This scarcity will cause prices to continually rise ahead of household incomes, causing affordability to be under pressure and will push both purchasers and renters outside of the GTA. This will not be their first choice but a choice created by necessity.
More good news….maybe.
In response to the tight market, the provincial government announced in April their Housing Supply Action Plan to reduce red tape and improve the mix of housing types, in an effort to increase housing inventory. While the ideas are long overdue, announcing and implementing are two different things. As we have been pointing out for the last 10 years, Toronto has to build and complete 110 new condominium towers EVERY YEAR just to meet new demand, and that has not been happening.
It’s an opportune time to invest in real estate. Either in rental properties or in trading up your personal home. Great opportunities exist today in both. Please give us a call to discuss if you are interested, we would love to help you secure your and your family’s future.
Have a great May!