Canada's Condominium Magazine

Calls for policy change as Toronto real estate market soars in March

Looking at March resale numbers for detached homes in the GTA one might be left with the impression that the market is in pretty good shape. A total of 5,887 single detached homes were resold, representing an increase of almost 20 per cent year over year. Other than in the condo resale market, where the year-over-year increase in sales was close to 24 per cent, (29 per cent in the 416), singles were the top seller by far, especially in the 905. March even saw a rare increase in the number of new listings coming onto the market, a quite strong increase of 15.2 per cent, most of them in that detached segment. But the new listings still fell short of sales, with the result that market conditions continued to tighten, reports the Toronto Real Estate Board. And the relatively strong singles resales don’t tell the whole story.

In all, March saw 12,077 residential sales through TREB’s MLS system, up 17.7 per cent compared to March 2016. About twice as many buyers bought condos as single detached homes in the 416 (2,324 v 1,215). In the 905, the ratio was about five to one for detached homes to condos.

Source: TREB

Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings. A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.  As policy makers seek to achieve this balance, it is important that an evidence-based approach is followed.

Average year-over-year prices, of course, were up steeply in every category of home. A single detached in the 416 now costs $1,561,780, 32.8 per cent more than a year ago. The average condo the city, meanwhile, reached $550,229, 32 per cent higher than the same time last year. Condos in the 905 rose even more, 33.2 per cent, to $440,950. Measured by the Toronto Real Estate Board’s Home Price Index Composite Benchmark, the composite price for all home types in the City of Toronto rose 24.13 per cent. The composite price for all TREB regions and home types was up 28.59 per cent.

Source: TREB

 

TREB president Larry Cerqua expressed satisfaction that policymakers have so far stayed out of the market and have not implemented any “knee-jerk” policies to influence the GTA housing market. He noted that different levels of government are holding consultations with market stakeholders, including TREB, adding that policy makers must remember that price growth is a function of supply and demand. TREB analyst Jason Mercer added that a “substantial period of months” in which new listings growth is greater than sales growth will be needed to bring the market back into balance.

Other observers see greater urgency for government action. Bank of Montreal economist Robert Kavcic, as reported in the Globe and Mail, said that every week policy makers wait to take action brings the market closer to the kind of major correction that occurred in 1989. Scotiabank’s James O’Sullivan also thinks policy is needed, though his bank has not developed a specific position as yet. He believes the question is not if but when the long-rising market finally ends, and wants to see it end smoothly. To ensure this, policy action should occur sooner rather than later, probably at the end of the spring market.

Source: TREB

Developers, meanwhile, continue to press their point that it is current government policy favouring densification that is behind the shortage in new home supply. Bryan Tuckey of the Building Industry and Land Development Association (BILD) said bluntly that the industry is not building enough new housing to keep up with demand. “Housing supply needs to be a priority for all levels of government,” Tuckey told CBC news. Most new housing built in the GTA, as much as 80 per cent, is now high-density. That does not necessarily reflect what most consumers want, however, as many families would prefer a home with a backyard.

OREA CEO Tim Hudak wants the government to create a panel of experts to study the Toronto real estate market thoroughly. He believes mid-density housing, which would not impact the greenbelt, is part of the solution to the supply problem.

Tim Hudak, CEO of the Ontario Real Estate Association, repeated his argument that between high-rise condos and single detached homes is the “missing middle,” a type of housing that would not impact the greenbelt but would be appealing, and affordable, to Millennials and others. He calls for a housing expert task force to examine policy options and the entire range of factors affecting the Toronto market.

Ontario will get a budget sometime in the coming weeks, and the finance minister, Charles Sousa, has indicated that it will contain measures to cool the Toronto market. And Mayor Tory has hinted that a vacant property tax could be in the offing, though this would not necessarily directly affect housing supply. Others believe the government should make it harder for investors, both foreign and domestic, to buy single family homes if it wants to cool the market.

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