Homebuying

Toronto detached home prices tumbled 8.8% in January as sales flat

By: Jessica Mach on February 6, 2019

Greater Toronto Area (GTA) home sales picked up again in January after a holiday season that saw them decline substantially across every home type.

Compared to January 2018, sales increased by a modest 0.6% last month, or from 3987 to 4009 transactions, according to report released by the Toronto Real Estate Board (TREB) on Wednesday. The increase also represents a 3.4% uptick from December.

It also only applied to two home types: detached homes (which saw a 3.5% year-over-year boost in sales) and townhouses (2.5%). Meanwhile, sales numbers continued to decline for condos (-2.4%) as well as semi-detached homes (-5.3%).

In January, prices in the GTA increased marginally across every home type except for detached homes, which fell by 2.8% compared to January 2018, or from $970,823 to $941,488, after experiencing a small uptick over the fall. However, when looking at just Toronto and not the GTA, the average price for a detached house fell 8.8% to $1,174.13.

Condos saw the biggest, yet not necessarily notable jump in prices: in January 2019, the average sat at $548,176, up from $507,492 in January 2018, representing a 7.9% increase. Average townhouse prices grew by 4.6% to $641,028, while semi-detached home prices increased by 3.6% to $742,738. 

These figures follow the biggest year-over-year decline in sales since the 2018 summer homebuying season wrapped up. As homebuyers adjusted to the introduction of OSFI’s mortgage stress test on Jan. 1, 2018, the first five months of the year persistently saw year-over-year sales fall by percentages in the double digits. The stress test requires buyers to prove that they can afford either their bank’s five-year posted mortgage rate, or two percentage points higher than the rate offered by their bank or broker — whichever one is higher.

While sales began to pick up again in June, November saw a dip again. The year-over-year decline only intensified in December — TREB explained the decline was due to the “temporary upward shift in demand” that occured in the final months of 2017, when homebuyers were scrambling to secure their purchases before the stress test kicked in.

Nonetheless, TREB is reassured most by the growth in sales — even though that growth was tiny — after the stress test introduced uncertainty and declines over the past year.

“It is encouraging to see the slight increase in January transactions on a year-over-year basis, even with the inclement weather experienced in the GTA region during the last week of the month,” said TREB president Garry Bhaura.

“The fact that the number of transactions edged upwards is in line with TREB’s forecast for higher sales in calendar year 2019.” 

 

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