Toronto’s real estate market is expected to remain extremely tight

What a wild ride the Toronto real estate market has experienced over the past 20 months!

At the start of the coronavirus pandemic, there was a widespread belief that one of the hottest housing markets in the world was going to see a sharp drop in sales and valuations. Still, fast forward to fall 2021: house prices are at record highs, sales activity is strong, the condominium market is rebounding and demand is strong.

If you thought the Toronto housing market was sizzling before the COVID-19 public health crisis, then you may not have seen the latest numbers, which suggest hotter than ever conditions.

Although this market strongly favors sellers, it is increasingly frustrating for potential buyers and home buyers trying to purchase residential property in the city or in the surrounding regional municipalities. Industry experts argue that the main panacea for cooling this environment and ensuring that more young families and first-time homebuyers can access a home is more housing supply.

Toronto’s real estate market is expected to remain extremely tight

According to the Toronto Regional Real Estate Board (TRREB), the number of active residential listings in the city of Toronto declined 43.85% year-on-year in September, totaling 4,821 units. New listings, according to TRREB, fell at an annualized rate of 31.36% to 5,964 units.

Inventory Months, which measures the number of months it would take to exhaust current inventory levels at the current pace of sales activity, stood at 1.4 at the end of September, up from 1 , 5 the previous one. This is also a decrease from 1.8 months at the same time a year ago.

The average time spent by an ad in the market was 16, unchanged from a year ago. In addition, the sales / new listings ratio (SNLR) was 64.3%.

These conditions have resulted in significant price growth in the Toronto real estate market. The MLS® Composite Home Price Index (HPI) benchmark, which industry watchers note is more accurate than average and median readings, rose at an annualized rate of 19.1%. The average selling price for all categories of homes combined increased 18.3 percent to $ 1,136,280.

“Demand remained incredibly strong throughout September, with many qualified buyers who would buy a home tomorrow if they find a suitable property. With new registrations in September down by a third compared to last year, buying a home for a lot is easier said than doneTRREB President Kevin Crigger said in a press release. “The lack of supply and choice of housing has reached a critical point. Band-aid policies aimed at artificially suppressing demand have not been effective. It is not a problem that can be solved by one level of government. There has to be federal, provincial and local collaboration to find a solution.

The positive development is that new housing construction is on the rise in the Toronto area. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts climbed 65.24% year-on-year in September to reach 4,612. Since the start of the year, housing starts totaled 30 909, up 2.73% from the first nine months of 2020.

Is tight supply the new normal in the Toronto housing market?

Despite the increasing number of cranes in the sky, from downtown to downtown and all around the Greater Toronto Area, some housing experts predict harsh conditions for the foreseeable future. But there are steps policy makers can use to make residential construction in the Toronto area even easier.

One of the factors that the housing industry regularly assesses is bureaucracy. The myriad of rules and regulations prevent the launch or acceleration of new projects, developments and proposals, which exacerbates the housing shortage. Municipal fees and charges also represent a higher percentage of house prices, which also contributes to the intensification of the affordability crisis.

Are 2016 and 2017 over again? That’s what Jason Mercer, chief market analyst for TRREB, thinks.

“The demand for owned housing remains high in the GTA, while the supply of housing remains very limited. The resulting competition among home buyers has resulted in sustained upward pressure on house prices. The market conditions we see today are similar to those of 2016 and the first quarter of 2017, ”he said.

Competition for limited housing options is also expected to intensify in the coming years. With the economy reopening, international and domestic students returning to university lecture halls and college classrooms, and Canada welcoming approximately 1.2 million newcomers to the country over the next three years, there will be even more demand for residential properties – both home ownership and rental.

The advantage for home buyers is that the substantial price growth appears to have stabilized. However, those looking to take over a single, semi-detached or row property may find fewer opportunities as some homeowners choose not to put their home up for sale for fear of not finding something to buy for. move in. Instead, they’re sitting on the sidelines and enjoying their skyrocketing (and ever-rising) valuations. Now, more than ever, working with an experienced and trusted real estate agent is essential to navigate these tight market conditions, whether you are looking to buy in the heart of Toronto or on the outskirts of the GTA.

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