2014 is quite an exciting time to be involved in the Greater Toronto real estate market. Sales are up, as are home prices. The beginning of the year was quite a frenzy compared to past years, with numerous bidding wars creating lots of excitement and keeping the media buzzing about the GTA housing market.
2014 Market Review
The Toronto Real Estate Board (TREB) has released its latest numbers for the GTA. In their most recent issue of Market Watch, tight market conditions and higher prices are shown.
Year-over-year sales are up to 11, 079 from 9,946, an increase of 11.4 per cent. This is a new high in the GTA for the month of May. The strongest growth was in detached home sales, followed by townhouses.
With lots of demand and more active buyers in the first half of 2014, average prices are up 8.3 per cent year-over-year for the month of May. The average price of homes sold was $585,204, compared to $540,544 in 2013. Townhouses saw the highest increase in their prices, up by 9.1 per cent. Condo prices increased the least at 6.4 per cent, which still represents a healthy average price growth over 2013.
New Listings and Active Listings
New listings were down slightly from 2013 by 0.8 per cent. Active listings were down more significantly with an 8.8 per cent drop year-over-year. With listings down and sales numbers going up, the GTA market is getting more competitive.
Average Days on Market (DOM)
With more buyers and less listings, the number for the “average days on the market” is down to 21 days from 23 in 2013, an 8.7 per cent decline.
June Mid-Month Review
TREB’s mid-month review for June 2014 shows a continuation of the year’s trends. New listings are up compared to this time last year, but growth in house sales are up even higher. TREB president Diane Usher explained “… sales growth outpaced growth in new listings, which suggests that there is still a lot of pent-up demand yet to be satisfied, so sellers’ market conditions will likely remain in place for the remainder of 2014.” In the first two weeks of June alone, sales are up 11.3 per cent over the same period in 2013.
Year-To-Date New Home Sales
RealNet released new home sales year-to-date numbers (from January to end of May) for the Greater Toronto Area. Their statistics show new home sales are up significantly over 2013. Total new home sales are up by 42 per cent year-to-date, with 15,821 sales. Low-rise buildings have sale numbers of 7,516, an increase of 52 per cent year-to-date. High-rises are up 33 per cent year-to-date with 8,305 sales.
A Seller’s Market
The first half of 2014 has proven to be a strong seller’s market in the Toronto area. Sales show no signs of slowing down; neither do the rising home prices. Buyers are still coming out in droves to check out new listings and hoping they will be the ones to win the bidding war. Can this continue for the rest of 2014?
Outlook for the Second Half of 2014
As to be expected, there are mixed predictions of what is to come for the rest of 2014. Some expect the real estate market to keep going strong, as it has in the first half of the year. Others are forecasting a possible slowdown, and report noticing recent changes.
Signs of a Slowdown
A recent article in The Star states Canada’s hot housing market shows signs of slowing. Some Toronto area real estate agents are noticing a change in buyers’ approaches. They report more buyers are walking away from bidding wars and are waiting until after the deadline for offers has passed to see a new listing. The feeling is less frantic, and sellers seem less overconfident.
CREA Resale Housing Forecast
The Canadian Real Estate Association (CREA) has updated their 2014 resale housing forecast. At a national level, sales were strong in April and May, partly due to a delay in listings after a long, hard winter. They predict this may lead to a transient momentum on summer sales.
CREA forecasts that the economy, income and jobs will continue to improve across the country, which is good for real estate sales. They also foresee a slow increase in interest rates. CREA predicts that together, these factors should still benefit “softer” real estate markets but may have a more important impact on more expensive markets since qualifying for a mortgage will be more difficult with higher interest rates.
The Canadian Mortgage and Housing Corporation (CMHC) predicts the Ontario Housing Market Will Remain Balanced. In specifics to the Toronto market, they believe “…cheaper bedroom communities surrounding the more expensive GTA market are also expected to outperform.” They credit an improving economy and less population migrating to Western Canada for their positive outlook on the Ontario market.
Housing Boom Ending?
Some experts are once again predicting an end to the housing boom. In a Huffington Post article, Scotiabank senior economist Adrienne Warren is quoted: “rising mortgage rates, combined with high home prices and stricter mortgage regulations, will strain affordability, especially for first-time buyers in major urban centres.” The report predicts the level of home sales will fall in 2014 and 2015.
With so many different outlooks, it will be interesting to see what happens next in the Toronto real estate market. Do you see the market reaching new highs in the coming months or do you think a slowdown is inevitable?