Resale condo transactions saw the biggest increase of any sector of the housing market, with sales up 27.8 per cent in December, year over year, the Toronto Real Estate Board said Monday. Pictured are condos in Toronto's Liberty Village.
Neither weather nor warnings that Toronto’s housing market is overpriced managed to dampen a market that continued to defy the naysayers through a surprisingly strong 2013.
Total home sales were up 2 per cent last year over 2012 and house prices ended the year up 5.2 per cent, despite a wet spring and one of the snowiest pre-Christmas months in years, according to figures released Monday by the Toronto Real Estate Board.
The average selling price was $523,036 across the GTA, compared to $497,130 in 2012. Even the resale condo sector ended the year on a high, despite widespread warnings in 2012 around oversupply and dwindling demand.
“Both those numbers (gains in overall sales and prices) were high-side surprises,” says BMO chief economist Douglas Porter.
“The market is definitely too hot for comfort, but that’s more of a Toronto story than a Canadian story. I just can’t believe we will get another year where we will see a 5 per cent price increase. I suspect the gains will be more moderate this year.”
Sales were up 14 per cent across the GTA in December alone, year over year — in part reflecting the fact that December of 2012 was an even softer time for sales than usual — with the average sale price coming in at $520,398 compared to $477,756, says TREB.
The one thing that could take some heat out of the market — an increase in interest rates — could come later this year, but increases are likely to be gradual, economists and mortgage brokers predict.
Finance Minister Jim Flaherty warned in an interview with CTV on Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.
Even last year’s slight, and unexpected, bump up in long-term rates had an almost immediate impact on the Toronto housing market as buyers rushed to get in before 90- and 120-day mortgage commitments expired. That helped drive up sales for 2013 but is likely to result in somewhat dampened demand, especially among first-time buyers, in 2014, housing watchers expect.
The country’s largest real estate board predicts price growth will continue and exceed inflation in 2014, largely because demand for lowrise houses continues to far outstrip supply: New listings were down almost 4 per cent in December, which helped fuel frantic bidding wars in some highly sought after Toronto neighbourhoods close to the downtown and transit lines.
“The seller’s market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA. Some neighbourhoods, especially those characterized by lowrise house types like singles, semis and townhomes, will continue to have less than two months of inventory,” noted TREB senior manager of market analysis Jason Mercer.
Six months’ supply of housing inventory for sale is considered a healthy, balanced market. A shortage of listings has plagued the GTA market for more than three years now as baby boomers stay put and homeowners opt to renovate their homes rather than pay hefty real estate fees and land transfer taxes for properties that, in many cases, end up in bidding wars that have further pushed prices into the stratosphere.
Resale condo transactions, especially in the more affordable 905 regions, saw the biggest increase of any sector of the housing market: Sales were up 27.8 per cent in December year over year — 46.1 per cent in the 905 regions (accounting for just 374 transactions) and 20.7 per cent in the 416 region.
Resale condo prices were up 6 per cent in December over a year earlier, to an average of $343,943 across the GTA.
The biggest gains were in the City of Toronto, where sale prices were up about 7.6 per cent to $367,376, according to TREB’s figures, compared to price increases in the 905 regions averaging 4.6 per cent, bringing the average condo sale price in the suburban regions to $293,883.
Sabrina Wong, Sales Representative
Century 21 Atria Realty Inc., Brokerage