Toronto home prices tumble, but market shows signs of stability
Toronto’s housing market continued to show signs of stabilizing in April, but sale prices remain significantly below the record levels hit last spring.
New sales data from the Toronto Real Estate Board (TREB) shows the average home sold for $804,584 in the Greater Toronto Area in April, a 12-per-cent drop from $918,184 in April last year, when the market hit a record peak before beginning a steep slide in May.
April’s average sales price was 0.2 per cent below the average sales price in March this year, based on preliminary seasonally adjusted numbers. TREB said the month-over-month sales trend “has flattened out” over the past two months after the market saw a steeper drop in January and February.
The numbers suggest that recent policy changes – including tougher new mortgage-qualification rules that took effect Jan. 1 – have not sent the housing market into steep decline as some analysts had feared, and the impact may already be moderating.
TREB also said part of the year-over-year decline in average sales prices is due to the changing composition of home sales, with far fewer detached houses over $2-million selling this year than last year, pulling the average sale price lower. The MLS Home Price Index, which adjusts for the changing mix of homes sold in each period, shows a 5.2-per-cent drop in average sale prices in April compared to a year earlier.
Jason Mercer, TREB’s director of market analysis, said he believes the market should see a moderate increase in home prices in the second half of 2018, especially for the condominium sector and “higher density low-rise home types.”
“Once we are past the current policy-based volatility, home owners should expect to see the resumption of a moderate and sustained pace of price growth in line with a strong local economy and steady population growth,” he said in a statement.
Condominiums have remained the strongest market segment in Toronto as buyers continue to favour the lowest-price housing option.
TREB said the average GTA condominium sold for $559,343 in April, up 3.2 per cent compared to the same month last year. The average condo sold for $601,211 in Toronto, an increase of 3.8 per cent compared to a year ago.
While prices are holding up, the pace of sales in the GTA has remained slow. A total of 7,792 homes sold in April, a 32-per-cent drop from 11,468 homes sold in the same month last year. TREB said 16,273 homes were newly listed for sale in April, a drop of 25 per cent over the same month last year.
On a seasonally adjusted basis, the number of homes sold in April fell 1.6 per cent over March, TREB said.
But the month-over-month drop in sales volume was far less significant than it was earlier this year after the new mortgage stress test rules were first introduced.
Sales in January, for example, were down 24 per cent compared to December on a seasonally adjusted basis. Total sales fell 9 per cent in February compared to January, and sales were down 1.4 per cent in March compared to February, based on seasonally adjusted numbers, TREB said.