As listings continue to dry up in the Greater Toronto Area, more people wanting to buy homes and beat the coming interest rate increases in 2022 have caused average home prices in the region to spike up a whopping 28.3 percent over the last year, according to the Toronto Regional Real Estate Board.
To illustrate the supply issue in the market, last month, just 283 semi-detached homes were sold, which is a 15 per cent drop from last year, which was also described as a tight market. Overall, new listings are down 13.2 per cent year-over-year.
Once again last month, price growth outside the city of Toronto outpaced the 416 market. Right now, the average price of a detached home in Toronto is just over $300,000 more than outside of the city in the 905 with the gap narrowing each month.
— Kian Mousavi Broker (@Kian_Mousavi) December 3, 2021
TRREB, once again, pointed to an increase in supply as one way to resolve the increasingly challenging market conditions.
“Governments at all levels must take coordinated action to increase supply in the immediate term to begin addressing the supply challenges of today, and to work towards satisfying growing demand in the future,” said TRREB President Kevin Crigger, in a statement. “The GTA remains the primary destination for new immigrants and is at the centre of the Canadian economy. For far too long, governments have focused on short-term bandaid policies to artificially suppress demand. Current market activity highlights decisively that these policies do not work, and unless governments work together to cut red tape, streamline the approval processes, and incentivize middensity housing, ongoing housing affordability challenges will escalate.”
Although, it is worth noting that not everyone agrees that more and more housing supply is the only answer, especially when it means unchecked urban sprawl, which carries with it high environmental costs amongst other things.
A recent report by Teranet showed that 25 per cent of real estate transactions are investor-driven. The argument might be that if investors are buying more homes than any other segment of the market, including first-time home buyers, an increase in supply with no other measures wouldn’t be as effective as predicted
For clarity, I’m all for policies that improve the supply of homes including putting an end to exclusionary single-family zoning.
But I’m also not drinking the Kool-Aid dreaming that this along will make housing affordable again. 7/
— John Pasalis (@JohnPasalis) November 23, 2021
According to TRREB’s Jason Mercer, chief market analyst, a key difference between this year and last year, in terms of price appreciation is the tightening of the condo market both in downtown Toronto and in suburban areas.
“This speaks to the broadening of economic recovery, with first-time buyers moving back into the market in a big way this year,” said Mercer. “The condo and townhouse segments, with lower price points on average, will remain popular as population growth picks up over the next two years.”