Tight Toronto housing market pushes prices to record highs with biggest gains in three years
Home sales dropped in Toronto in December, but prices continued to rise as demand outstripped a dwindling supply of units available for purchase.
The number of homes sold in Canada’s largest city fell 3 per cent from November, the biggest decline since February, the Toronto Real Estate Board said Tuesday. Still, benchmark prices kept climbing, rising 0.5 per cent last month to record highs and bringing gains to 7.3 per cent from the previous year, the fastest pace of year-over-year growth since 2017.
Toronto’s housing market has tightened considerably over the past year as buyers took advantage of lower interest rates and adjusted to mortgage stress tests, but there are fewer homes to be bought. In December, the sales to new listings ratio — a measure of market balance — reached 1.25, pointing to a market tilted heavily in favor of sellers.
Coupled with a shrinking pool of active listings, which are down 35 per cent from a year earlier, the upward pressure on prices could continue. “Tighter market conditions translated into accelerating price growth,” Jason Mercer, TREB’s chief market analyst, said in a statement. “Expect further acceleration in 2020 if there is no relief on the supply front.”
The disconnect between sluggish sales and rising prices — a reflection of a tightening supply — had been ongoing for much of last year. Seasonally adjusted monthly sales have been little changed since May, even as prices continued to rise. Average sales prices have increased 10 straight months, according to data released Tuesday.
Still, even with the recent flattening in transactions, sales are above decade-lows recorded in 2018. For all of 2019, transactions in Canada’s largest real estate market totalled 87,825, up 12.6 per cent from a year before.