With 8,595 sales reported through TREB's MLS System in July 2019, up 24.3 per cent on a year over year basis, it's clear that demand for ownership housing has certainly strengthened and that more buyers are coming online after coming to terms with the OSFI mortgage stress test over the course of the last year-and-a-half.
Yet, with new listings growth lagging far behind sales at just a 3.7 per cent when compared to this time last year, it's clear that market conditions are tightening and we're beginning to see a case of growing pent-up demand with more competition between buyers in many neighbourhoods.
Increased competition between buyers has resulted in stronger price growth for many home types. In July, the average selling price increased by 3.2 per cent to $806,755 compared to July 2018.
Building more housing key to addressing affordability issues
The disparity between demand and supply is creating pent-up demand for ownership housing increase as well. This is largely the result of GTA residents continuing to see homeownership as both a goal and a sound long-term investment on the one hand, and need for GTA housing supply sitting at 40,000 to 50,000 each year due to strong population growth on the other hand.
As more buyers come back to the market in the coming months and years, we could end up with a marketplace that is chronically undersupplied and price growth reaching unsustainable levels. It is encouraging that both the City of Toronto and the provincial government are working on ways to address our housing supply issue and meet pent-up demand head-on.
For instance, a recent motion by Mayor John Tory has given City staff a strong mandate to report back on how to develop a greater diversity of housing options in traditional single-family neighbourhoods, including timelines. Similarly, the provincial government has launched consultations to spur on and speed up the development of different forms of housing in conjunction with its More Homes, More Choice Plan.
A focus on different forms of housing is key; we're seeing price growth become increasingly driven by higher density lowrise home types, yet these are not the types of houses that have been commonly constructed over the past two decades.
With consumer preferences changing, in part due to the impact of the mortgage stress test, we need to see the development of a greater diversity of mid-density housing. With the recent announcements from the City of Toronto and Province of Ontario in mind, it seems that government policy is heading in the right direction.
Michael Collins is president of the Toronto Real Estate Board, a professional association that represents 54,500 professional realtor members in the Greater Toronto Area. You can contact him at firstname.lastname@example.org
. For updates on the real estate market, visit trebhome.com