March 8, 2019 | Market Update

There were 5,025 home sales reported in the Greater Toronto Area (GTA) this February. The average price across housing types was $780,397. These numbers reflect some of the ongoing issues that have been impacting the market over the last two years…

Current conditions

On a year-over-year basis, February’s sales activity in the GTA was down. The number of transactions last month was 5,025, a decrease from the 5,148 home sales that occurred during the same month of last year. These numbers reflect a 2.4 per cent drop. It’s worth noting that the decline in Toronto’s home sales didn’t extend to the 905 region (where transactions were actually up slightly).

With regard to home prices, this February’s average was $780,397. That sum is up by 1.6 per cent from last February, when it sat at $767,801. This price growth was supported by an increase in market competition as the number of new listings on the market went down (by 6.2 per cent year-over-year).

Affordability Issues persist

The fact that the market was less active year-over-year isn’t altogether unexpected. The activity we’re seeing now is part of a story that’s well-known to housing market analysts in the GTA.

The stress test set by the Office of the Superintendent of Financial Institutions (OFSI) has had an ongoing impact on mortgage affordability. The result is that many buyers have been unable to purchase homes (particularly detached houses) because they don’t qualify.

Affordability issues help explain why the condo segment remained the main driver of market price growth last month. As compared to the same month in 2018, this February saw average condo prices jump by 7.4 per cent in Toronto (and 3 per cent in other TREB areas).

The overall picture

Put simply, the OFSI’s stress test has had a major impact on the housing market. Many home buyers have been sidelined as a direct result of these measures, and some have been pushed into the lower-density segments. In turn, the home and rental markets have become tighter. Inventory is also an issue, as there were only 9,828 new listings reported in the GTA in February (down from 10,473 during the same month of last year).

What’s happening in the housing market is bound to have an impact on the economy overall. In order to improve the current situation, policymakers should look closely at the effects of the stress test—and think about ways of fostering more affordable homeownership. Given that a federal election is on the way, it’s the perfect time for candidates and government officials to review existing policies.

Looking to better understand the market? We interpret the data as it becomes available to determine how it impacts buyers and sellers. Get in touch to learn how our up-to-the-minute knowledge can help you get the best price.