Toronto’s housing market is behaving a bit like a seesaw. New data released Wednesday by the Toronto Real Estate Board (TREB) shows that, in November, average home prices went up while the number of sales and new listings went down.
The release of TREB’s Monthly Resale Market Watch Report showed home prices (including condos and houses) rose an average of 3.5% this November — to $788,345 — compared to last. There were only 10,534 new listings for the month, however — a 26% decline.
This drop in new listings contributed to fewer home sales, with overall sales falling 3.4%, to 6,588 units in November from the previous month, making for the biggest drop in monthly sales Toronto’s market has seen since March, according to the Financial Post.
“New listings were actually down more than sales on a year-over-year basis in November,” TREB’s president, Garry Bhaura, said in the release. “This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth.”
This drop in sales was determined on a “seasonally adjusted basis.” Because the residential real estate market is seasonal (i.e. stronger sales in the spring and the fall, and slower sales in the winter and summer), this seasonal pattern needs to be removed in order to reveal underlying trends. Seasonal adjustment has been used by organizations like Statistics Canada and the Canada Mortgage and Housing Corporation for decades, TREB says.
“Once the seasonal pattern is removed, we can see the underlying trend, allowing us to have a more meaningful discussion on how the market has changed over shorter periods of time, like months or quarters,” TREB states in its primer on seasonality and seasonal adjustment.
TREB’s report also revealed that the condo apartment and semi-detached market saw relatively stronger rates of price growth in November. It saw average prices rise 8.3%, year-over-year, to $791,760. Condos prices also rose by 7.5% year-over-year, to $556,723.
Jason Mercer, TREB's Director of Market Analysis, pointed to new rules that went into effect this year as driving buyers who could normally be able to buy a home to opt for a condo instead.
"Given the impact of the OSFI-mandated mortgage stress test and higher borrowing costs on affordability, it makes sense…” he said.
In July of this year, nearly one-in-five Canadian home buyers were failing the mortgage stress test.
TREB is hopeful that the Ontario government will make housing supply a priority, and said that creating an appropriate mix of housing types has to be part of the discussion. It also shed some light on how the future of Toronto’s public transit system will affect the market.
"TREB is also encouraged that the provincial government remains committed to public transit expansion. TREB has long advocated for improvements to the Greater Golden Horseshoe transit and transportation network, and feels the time is right to have a conversation about the level of provincial and municipal responsibility that would be the most efficient arrangement to realize subway expansion sooner in Toronto, and the GTA, as this will impact the housing market.”