The number of resale home listings grew 15 per cent in March compared to the same month last year, but competition among buyers nevertheless remained fierce, pushing prices up 33 per cent year over year across the region.
The Toronto Real Estate Board (TREB) statistics are deeply troubling to people trying to buy homes in the city, said Toronto Mayor John Tory on Wednesday.
The average home price for the Greater Toronto Region across all housing types was $916,567 last month — $228,556 higher than the same period last year. Detached homes in the city of Toronto, meanwhile, sold for $1.6 million on average.
Tory said responsible, effective action is needed to tackle the issue.
But the real estate board, which participated in a mayor’s roundtable on housing last week, urged governments to step carefully and base any policy decisions on empirical evidence, which doesn’t yet exist in some areas.
There’s evidence of a shortage of homes listed on the market but no corresponding upward trend in the number of listings, said Jason Mercer, TREB’s director of market analysis.
“On the demand front, when we’re talking about different groups of people that may be purchasing a home — foreign buyers or people purchasing as an investment — we haven’t seen a lot of evidence,” he said.
In a survey late last year, the real estate board found fewer than 5 per cent of transactions by its members involved foreign buyers.
Time, not government intervention, will bring the gravity-defying market back to Earth, said Dianne Usher, senior vice-president of Johnston and Daniel, a division of Royal Lepage.
Although a very tight market means “a lot of disappointed buyers out there,” she predicts prices and sales will continue to soar this spring.
Usher says she’s already seeing the evidence in every housing category, including condos. She cited a 1,500 sq. ft. downtown Toronto condo listed at $699,000 that drew nine offers and sold this week for $893,000.
“So we’re not talking seven-digit properties. We’re talking under $1 million,” she said.
Although the situation is unsustainable, Usher said she doesn’t believe the bank economists warning that the Toronto region is in a real estate bubble.
“I believe government intervention — whether it’s a foreign buyers’ tax or raising interest rates or creating vacancy taxes — that’s not going to have the desired outcome,” she said.
Increasing the supply of housing would be more effective in tempering the market although it’s not a quick fix.
“It takes a while for builders to develop land, but it could be done more expeditiously if zoning bylaws were adjusted, if they weren’t quite as draconian, if the processes were streamlined a little bit,” said Usher.
Additionally, Toronto “is plagued” with both a municipal and provincial land transfer tax, said Usher.
“In our view it is unfair. Ease off one of them,” she said.
Although an increase in listings may be encouraging as the busy spring real estate season approaches, it takes a sustained period of 12 to 24 months in which listings outstrip sales, to bring an over-heated market back in balance, said Mercer.
There were about 113,000 sales last year. In a balanced market that would have corresponded to about 200,000 listings,” he said.
“Instead we are in the 150,000 to 160,000 range,” said Mercer.
March also saw an increase in the number of sales of about 18 per cent — 12,077 compared to 10,260 in March 2016.
Detached houses in Toronto sold for $1.6 million on average. In the 905 areas outside the city, the average price rose 34 per cent to $1.12 million.
The cost of condos in the Toronto area also rose about 33 per cent to $518,879 on average.
Provincial Finance Minister Charles Sousa has suggested he is considering cooling measures as part of the provincial budget this month.
The Ontario Real Estate Association (OREA) said the steep housing prices are evidence that the Liberal government needs to allow for the building of more homes.
“First-time buyers and young families are counting on the government to put a plan into action that will bring more new and resale homes on the market, particularly in areas that are struggling with critical housing shortages,” said a press release from OREA CEO Tim Hudak, former leader of the Ontario Progressive Conservative Party.