Despite jacking up interest rates to combat inflation and thinking the move might make housing more affordable, the latest real estate market numbers indicate that the opposite is happening. Real estate is no more affordable now that mortgage costs have skyrocketed and sellers continue to sit on the sidelines keeping supply low.
According to the new real estate statistics released by the Toronto Regional Real Estate Board (TRREB), sales for the month of September reached 5,038 — down by 44.1 per cent compared to September 2021. New listings were also down on a year-over-year basis by 16.7 per cent to 11,237 — the lowest number of new listings reported for the month of September since 2002. And that has TRREB concerned that the supply is dangerously low despite concerted efforts to build more and more housing.
“We must ensure that the temporary dip in housing demand is not allowed to mask the critical shortage of homes available for sale in the GTA. Candidates running in the upcoming Ontario municipal elections must ensure home buyers and renters have adequate housing options in the years to come,” said TRREB President Kevin Crigger. “Municipal council decisions have a direct impact on housing affordability, in terms of the protracted development approval processes, high development fees and other related policies that preclude timely housing development.”
Of course, as anyone in Toronto that has left their home in the last year knows, the city is building a massive amount of housing, likely as much or more than any other city in North America. So is housing supply the key or are other factors at play such as the number of investors buying up homes, and easily turning the homes over to rentals to take advantage of high rents instead of selling them? Or perhaps the record-setting pace of immigration?
To say housing supply, and building more and more homes is the only answer seems naive. Of course, Elton John buying a condo here did add some excitement.
Yesterday, Benjamin Tal, a CIBC economist and member of the Post City Real Estate Roundtable, said in an interview on BNN that the housing crisis is “just beginning,” citing both housing supply and immigration as just two factors.
A new RBC report suggested that housing is actually more unaffordable now than ever before in cities such as Toronto, Vancouver and Victoria.
The current economic and housing situation combined with the coming municipal election has allowed TRREB to advocate for more housing, cutting the time to approve development applications, cutting high development fees, and even cutting the land transfer tax.
“We must ensure that the temporary dip in housing demand is not allowed to mask the critical shortage of homes available for sale in the GTA. Candidates running in the upcoming Ontario municipal elections must ensure home buyers and renters have adequate housing options in the years to come,’ said TRREB President Kevin Crigger. “Municipal council decisions have a direct impact on housing affordability, in terms of the protracted development approval processes, high development fees and other related policies that preclude timely housing development.”
Of course, the development industry is also cancelling thousands of units of housing thanks to rising costs.
As a result, at least partly, of low supply, the average home price is up from August, but down 4.3 per cent from last year to $1,086,762.
“Hovering just below $1.1 million, the average selling price may have found some support during the last couple of months of summer. With new listings down quite substantially year-over-year and well-below historic norms, some home buyers are quite possibly experiencing tighter market conditions in some GTA neighbourhoods. October generally represents the peak of the fall market, so it will be important to see where price trends head over the next month,” said TRREB Chief Market Analyst Jason Mercer.
