Home Realty: Don't Believe Everything You Read

By NextHome Staff
June 01, 2018

Context is key when seeking to understand the GTA real estate market

If you only pay attention to what is reported in the mainstream media about the GTA real estate market, it’s likely you’ll be getting an inaccurate picture of what’s actually happening.This past March saw a total of 1,960 new home sales across the region, according to Altus Group. Of those sales, 1,649 were condominium apartments in lowrise, midrise and highrise buildings and stacked townhouses. This was down 67 per cent from March 2017, and down 21 per cent from the 10-year GTA average.In the single-family home market, there were just 311 sales of detached, linked and semi-detached houses and townhouses (excluding stacked townhouses). This was up from the 265 homes sold in February, but down 77 per cent from March 2017, and down 79 per cent from the 10-year average.At first glance, this might seem like a drastic drop in sales and the media tends to cite these sorts of figures as evidence that the GTA market could at long last be experiencing a correction.But context is tremendously important here when it comes to understanding what is really going on.For example, some of the demand that might have been seen in the early part of this year was brought forward last year, largely in anticipation of new mortgage restrictions. This contributed to a record year for condo apartment sales in 2017, the fourth strongest year for GTA new home sales since Altus Group started tracking the market in 2000.And it’s likely that the cumulative effects of the government measures to cool the housing market are continuing to keep potential buyers out of the housing market, with many purchasers opting to take a wait-and-see approach. But the Toronto Real Estate Board (TREB) and Altus Group say they expect home sales to be up relative to 2017 in the second half of this year.
While new home sales may have dropped compared to last year — again, 2017 was a record year and somewhat of an anomaly — prices have remained more or less consistent, although in the case of condos, they have been rising significantly.
In March, the benchmark price for new single-family homes was $1,207,832, which was 7.4 per cent above last year, and the benchmark price for new condos rose to $742,801, 39.4 per cent above last March.But again, context is important here.It’s primarily the low supply of new housing that is keeping prices high. The supply of both condos and single-family homes dipped in March, with the total new home remaining inventory at 12,457 units (8,756 condos and 3,701 single family homes). This represents about four months of inventory. A healthy new home market would have nine to 12 months of inventory available for sale.The Building Industry and Land Development Association (BILD) notes that in order to fix the region’s housing supply problem, it’s essential that we remove barriers to development, including outdated zoning that doesn’t support intensification, government red tape and a lack of critical infrastructure.New home sales have dipped, but rest assured they’ll be back up again soon. And if supply issues are rectified in accordance with BILD’s recommendations, price increases will moderate, as well.So don’t believe everything you hear from the media: the GTA housing market is strong, resilient and — in the long run — as good a bet as they come.Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years.In2ition.ca

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