Canada's Condominium Magazine
With the notable exception of 2018, year-by-year prices in the GTA rose consistently — and so far we’re only at February. Will 2018 end up higher than 2017? In February, comparing year-over-year, prices are down to $767,818 from $822,603 (average of 2017) — yet the prices are still higher than 2016, before the surge in first quarter 2017.
“When TREB released its Outlook for 2018, the forecast anticipated a slow start to the year compared to the historically high sales count reported in the winter and early spring of 2017. Prospective home buyers are still coming to terms with the psychological impact of the Fair Housing Plan, and some have also had to reevaluate their plans due to the new OFSI-mandatedmortgage stress test guidelines and generally higher borrowing costs,” said Mr. Syrianos.
“As we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year. Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments. This being said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability,” said Jason Mercer, TREB’s Director of Market Analysis.
In 2017, Ontario introduced Fair Housing rules designed to “cool” the market. At the same time, new mortgage rules made it more difficult to qualify for mortgages. Despite these interventions, year-over year 2017 still ended higher in price than 2016 — largely due to a strong first quarter. The average home price in the GTA is $767,818 (TREB, as of February 2017) — lower than 2017, but higher significantly higher than 2016. From a real estate investor’s point of view — as with stock market values — the overall trend is more important than month-by-month dips. Annualized data shows consistent upwards pressure on prices. So far, for 2018, we only have 2 months of real data.
In other words, as pointed out by TREB Market Watch: “putting aside the price spike reported in the first quarter of 2017, it is important to note that February’s average price remained 12 percent higher than the average reported for February 2016, which represents an annualized increase well above the rate of inflation for the past two years.”
Given a low inventory situation, the upward pressure on price is likely to sustain continued growth in values. From an investor point of view, good news, from a homeowner’s point of view, good news, from a buyer’s point of view it is not good news. The short supply and high prices have altered target home criteria for those who wish to live in the 416 or the close 905 — making condominiums the most popular choice.
For February 2018, the last month with monthly data (as of now) shows year-over-year drops in pricing for detached homes, semi-detached and townhouses, but increases on condos (as previously reported in Condo.ca). Condo prices still show a 10.1 percent year-over-year increase due to the high popularity of condos in the core 416 and close 905.