The housing market in the GTA has broke through an important financial threshold as the average price of detached homes topped $1-million for the first time. Realtors say that despite the cold winter, the spring market has come early this year as buyers rush to battle over the limited number of listings. Across the GTA, homes sales were 11.3% in December, which is no different from last year. According to the Toronto Real Estate Board, prices rose 7.8% to an average of $596,163. Across the GTA, average prices for detached homes jumped 9% this past February from last year to $1,040,018.
Detached houses are currently going for nearly three times the price of the average condo. This past February’s housing market was driven by the combination of a rush of buyers coupled with a shortage of listings by sellers who were put off by record cold temperatures, according to realtors. Even as sales rose this past February, new listings fell by nearly 3%. This year it felt like the spring market came in mid-January. There were a number of buyers’, who were eager to buy a home, but there was nothing available to buy, and as soon as there were houses being listed, a lot of transactions were occurring.
This led to many bidding wars occurring this winter, before sellers started coming onto the market in May or June. Several buyers sit around the table at the end of the year a make the decision if they’re going to buy a home in the New Year. Come New the Year, buyers start looking for a new home on MLS morning, noon and night to find new listings and have a hard tome finding anything. By February many buyers felt they’re ready to blow it out of the water because they’re getting nervous that they won’t be able to find the home they’re looking for.
The market for homes above $1-million in and around the GTA is mainly buyers who want to ‘upsize’. They are selling their condos or smaller semi-detached homes in favour of larger detached homes. But with so much competition, even buyers who want to upsize are struggling to afford the expensive price tag. Many buyers are holding off on listing their homes, due to the lack of listings trickling down into the first-time buyer’s market. Bidding wars are also causing headaches for realtors who are competing to get their buyers into the few available homes and earn their commission.
Industry experts say the $1-million price tag represents a hurdle for many GTA home buyers, given that the federal government has limited mortgage insurance to below that level, meaning buyers spending above $1-million must put down a 20% down payment. It will become a dividing line for buyers between those who can actually offer that $1-million plus a penny and buyers who cannot. That’s unlikely to cool the GTA’s market any time soon. At today’s mortgage rates, many dual-income couples with decent jobs can afford the roughly $3,000-$4,000 monthly payment it takes to buy a detached home in the GTA. It just means that many households can afford the carrying costs of a million dollar property.
Source: Globe & Mail
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