The latest data from the Toronto Real Estate Board (TREB) show Toronto’s housing market has hit a deep freeze as sales have tumbled and prices for single-detached houses have fallen 9.1% compared to last year.
The average home in the Greater Toronto Area — which includes all housing types such as townhouses and condos — sold for $736,783 in January 2018, compared to $768,351 in January 2017 — a 4.1% drop.
Detached homes were responsible for much of that decline. Prices have yet to recover from the peak hit last March and April, when many homebuyers found themselves bidding on houses for hundreds of thousands of dollars more than they would sell for today.
That mania, while largely gone, has led to many broken hearts as those buyers have found themselves with houses worth less than the mortgage they’re stuck paying for.
Condos are the one housing segment that’s bucking the trend of falling prices. Condo prices rose 14.6% in January 2018, compared to the same time last year. Many buyers have turned to condos after being locked out of buying detached homes, which continue to see their average selling price hover around $1 million.
Overall, the number of homes sold in Toronto continues to decline — suggesting fewer buyers are now in the market. Last January, TREB reported 5,155 sales. In January 2018, the board only registered 4,019 sales, or a whopping 22% decline from the same time last year. Fewer people are buying, even as the number of properties for sale have increased by 17.4% in the same time frame.
Much of this slowed activity can be attributed to strong action that the municipal, provincial, and federal governments have taken to cool the housing market throughout 2017. In addition to the OSFI stress test rules, which have made it harder for many prospective homebuyers to qualify for mortgages, Toronto introduced a foreign buyer’s tax and approved regulations on Airbnb that are set to come into effect this summer. An empty homes tax may also be on the table.
But maybe it’s something else. In Vancouver, which was one step ahead of Toronto in adopting all of these regulations, both home sales and prices went up in January 2018 compared to January 2017, according to a report released by the Real Estate Board of Greater Vancouver on Feb. 2. The number of properties on the market also declined.
Some had predicted that Toronto would rebound much the same way Vancouver did following the new regulations. But Toronto’s freeze has now gone on longer than the latter city’s, and there’s no end in sight.
Home prices in Toronto haven’t seen an annual decrease since 1996, when the average price of a sold home went for less than the average price seen in 1995. If current trends are any indication, we may see a repeat of that — for the first time in more than 20 years.
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