Buyers anticipating the new year will bring a surge of new listings to the Toronto area real estate market will find disappointment in the predictions of many industry professionals. The market ended 2019 with only 7,406 active listings which a 35 per cent decline in inventory over last year at the same time. These continued tight market condition translate into accelerated price growth that we saw through 2019. Further price acceleration is anticipated through 2020 if there is no relief on the supply side.
The number of homes sold in the Greater Toronto Area (GTA) for December 2019 were up by 17.4 per cent year-over-year to 4,399 recently reported by the Toronto Real Estate Board (TREB). Total sales for the 2019 calendar year amounted to 87,825, an increase of 12.6% compared to the decade low sales of 78,015 reported in 2018.
The disconnect between somewhat sluggish sales and rising prices reflects the tightening supply that has 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 the data TREB reported.
The average price of a resale home in the GTA (including both houses and condos) rose to $819,319 in 2019 from $787,856 in 2018. This is an increase of 4 per cent year over year. In the City of Toronto, the average price rose 6 per cent to $883,520.
Detached houses and condos led the price gain during the month of December in the GTA with a rise of 12 per cent in the price of resale homes to $837,788. In the City of Toronto, detached homes saw an increase in average price year-over-year of 19.5 per cent to $1,363,357 followed by condos with a 10.3 per cent rise to an average price of $656,233.
Over the past year as buyers took advantage of lower interest rates and adjusted to mortgage stress tests, Toronto’s housing market tightened considerably as there are fewer homes to be bought. In December, the sales to new listings ratio which is a measure of market balance, reached 1.25 pointing to a market tilted heavily in favor of sellers.
Toronto is one of the fastest growing cities in North America due to net migration from other parts of Canada and the rest of the world. People are moving here as there are great job opportunities, it is the county’s financial hub and Toronto’s neighbourhoods are nice places to live. Rentals are not really a substitute right now with the vacancy rate at approximately 1 per cent. With all this in mind, it is anticipated we will see very similar market conditions for Toronto’s real estate market through 2020 with increased pressure on prices to rise approximately 6 per cent.