By: Susan Pigg Business Reporter, Published on Wed Feb 05 2014
January is always a volatile month for home sales, and there’s no doubt the unrelenting cold and snow of the polar vortex had an added impact.
In fact, new listings plunged almost in line with the weather — down 16.6 per cent, year over year, with just 8,822 new For Sale signs staked in front lawns across the GTA, driving up competition, fuelling bidding wars and, with them, prices.
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The average sale price of a home in January was $526,528, up more than 9 per cent from $482,080 in January of 2013, says TREB.
Even resale condos saw price spikes averaging 8.7 per cent across the GTA, with prices up a surprising 11.2 per cent in the 905 area (to an average of $299,118) and 7.6 per cent in the 416 region (to $366,020), which has typically seen the biggest price gains in the past.
Sales were up 1.6 per cent and 7.4 per cent, respectively.
“Looking forward, it is possible that strong price growth, and therefore an increase in home equity, will act as a trigger for more households to list their homes for sale,” said TREB president Dianne Usher in a statement.
But realtors remain concerned that the GTA market, and the City of Toronto in particular, is being almost paralyzed by a number of factors: the fact more homeowners are opting to renovate rather than move because the costs can hit $100,000 or more when you factor in realty fees and Toronto’s double land-transfer tax; baby boomers are staying put longer than expected despite the fact their kids have moved on; and high demand even for fixer-uppers, which is driving up prices of what used to be affordable housing stock.
Yet they are seeing pent-up demand, particularly from young buyers who have sat on the sidelines much of the last two years, anticipating — as did many market watchers — that prices would take a tumble in the wake of tougher mortgage lending rules and a slight bump up in interest rates.
Now, with some indications that rates may be headed down again — some lenders appear to be testing the market with 2.99 per cent mortgage rates — there are concerns that competition will further pick up and continue to far outpace new listings that should come on the market in the lead-up to the peak March-April-May spring home-buying spree.
Already in early 2014, there has been an outbreak of almost irrational bidding wars, with a Perth Ave. end row house going last month for $210,000 over asking in a flurry of 32 bids.
And realtors are seeing a perplexing trend really taking hold now: buyers who don’t have the confidence to bid on a place unless they know others are, too. That means solid properties that aren’t HGTV showcases can languish on the market for weeks, while a crowd lines up to bid on super-staged properties that end up selling for far beyond their real market value, further driving up prices.
For the month of January:
- Sales of detached homes were down 4.3 per cent in Toronto and 6.5 per cent in the suburbs, in large part reflecting the shortage of those most sought-after properties for sale.
- The average sale price of a detached house in Toronto hit $888,210, up almost 15 per cent, according to TREB. That compares to a 10.5 per cent price jump to an average sale price of $620,654 for a detached home in the suburbs.
- Semi-detached sales were down 5 per cent in the 416 region and almost 9 per cent in the 905 area, with average sale prices up 6.1 per cent (to $622,319) in Toronto and 6.3 per cent (to $416,441) in the suburbs.
- Townhouse sales were up 7.4 per cent in the 416 and flatlined in the 905, with prices up 4.6 per cent (to an average $439,401) and 10.4 per cent (to $396,320), respectively.
- Active listings also plummeted by 16.4 per cent, down to 11,903 properties still for sale across the GTA in January, compared to 14,231.