Canada's Condominium Magazine
The year 2014 continues to unfold as almost a mirror image of 2013 as home sales in Toronto for the first half of March are “virtually unchanged” from the same time last year. The Toronto Real Estate Board (TREB) reports 3,459 transactions through its MLS system so far this month; last year at this time there had been 3,464. Sales in January and February were also nearly identical to the previous year’s sales in the same months.
Two familiar themes appear once more in the TREB report: bad weather and low inventory in the detached, semi-detached and townhouse categories. “An abundance of willing buyers,” according to TREB president Dianne Usher, “were actively searching for a home to purchase.” The scarcity of listings, however, meant that some buyers couldn’t find a home to make an offer on, or had to compete with other buyers. A number of bidding wars did erupt during this time.
The average price for all types of homes was up by almost 6 per cent over last year, now sitting at $560,948. The biggest price gain was seen in the semi-detached category, which rose more than 10 per cent.
After a couple of months of leading the sales in Toronto, the condo segment slowed down in the first half of March. Condo sales in the city of Toronto were off by 4.3 per cent compared to last year, and down 5.2 per cent in the GTA. Price gains on Condos were strong, however, rising 8.3 per cent in the 416 and 7.7 per cent overall. The average price of a Toronto resale condo reached $399,207 mid-March.
National figures released by the Canadian Real Estate Association (CREA) tell much the same story as the Toronto report. In February, national home sales were also virtually unchanged compared to January, rising just 0.3 per cent. They increased by1.9 per cent year over year. Across the country, there was an even split between markets where sales were up and those that saw declines. The larger markets saw little change.
Again, harsh winter weather was a factor in market performance in many places across Canada.
CREA president Laura Leyser echoes her TREB counterpart in saying that availability of listings is the key to the coming spring market. That activity will be supported by a lower benchmark five-year conventional mortgage rate, said CREA economist Gregory Klump.
The benchmark rate is the rate lenders use to qualify borrowers seeking a variable-rate mortgage. Typically the benchmark rate is 1.5 per cent higher than the best rates available through a mortgage broker. Borrowers putting less than 20 per cent down on the cost of a new home have to qualify for the higher rate to ensure that they can continue to make payments if the rate should go up. Thus, a borrower applying for a variable-rate mortgage with a rate of 2.25 per cent would still have to qualify for a mortgage with a rate of 5.34 per cent (the latest benchmark rate at CanEquity). Setting the benchmark lower gives such borrowers a bit of a break.
National inventory of homes for sale was down slightly from the previous month. There were 6.4 months of inventory at the end of February, down from 6.5 months at the end of January. The months of inventory measure continues to point to a well-balanced housing market at the national level.