In line with the forecast contained in the Toronto Regional Real Estate Board’s recently released Market Year in Review and Outlook Report, TRREB announced a very strong year-over-year sales and price growth in February 2020.
Let’s move on to details!
1. Toronto GTA Real Estate – Sales
Whopping 45.6% year over year increase in number of Sales
A total of 7,256 real estate transactions were reported in the Greater Toronto Area in February. Incredible year over year increase of 45.6%. But frankly speaking February 2019 was 10-year sales low for month of February.
Sales are 14,8% above 10-year average
That’s the best result for many months. January 2020 showed Sales 2.5% above 10 year average, but February was way better. Though it is still lower than record breaking February 2017.
Toronto GTA Real Estate Sales – Breaking Down the numbers by home type
Now, let’s take a look at the structure of Sales.
| Sales Toronto (416) | Sales GTA (905) | Sales Toronto GTA | |
|---|---|---|---|
| Detached | 716 | 2,760 | 3,476 |
| year-over-year | +54.0% | +64.0% | +43.5% |
| Semi-Detached | 180 | 467 | 647 |
| year-over-year | +4.7% | +67.4% | +43.5% |
| Townhouse | 229 | 911 | 1,140 |
| year-over-year | +44.9% | +44.8% | +44.9% |
| Condo Apartment | 1,355 | 571 | 1,906 |
| year-over-year | +26.2% | +21.7% | +24.8% |
Low Rise segment is on demand!
The Low Rise segment shows a strong pace of growth during the last months.
Highest increase was registered in the segment of Townhouses +44,9%. Though the Sales of Detached and Semi-Detached homes saw same pace of growth +43,5% up. Meanwhile, Condo Apartment segment continued to see double-digit improvements in sales with 24,8% up.
Toronto Real Estate heads on
After a number of months of Buyers being focused on Toronto, a backward to the suburbs is seen. Probably Buyers feel that prices in Toronto are too high.
Though the highest pace of increase in Sales was in the segment of Semi-Detached homes in 905 area + 67.4%. Detached homes in suburbs were so close too, +64% increase in number of sales.
2. Toronto GTA Real Estate – Active Listings
The number of Active Listings is what determines how wide the choice of properties for Sale is. Of course, the more choices, the more comfortable the position of the Buyer and vice versa, the lower the supply on the market, the stronger the position of the Seller.
Supply of new listings is close to record low
Toronto Real Estate Market is still experiencing under-supply. There were 10,613 New Listings in month of February 2020. That’s 7.9% more than at the same month year ago, but still not enough. This moderate annual growth rate was much smaller than that reported for sales, which means market conditions tightened considerably over the past year.
Active Listings amounted to 8,816 in February 2020, a 33,6% decrease compared to February 2019. Supply dynamic is almost exactly the same as during previous two months. Just a reminder – the normal amount of Active Listings for Toronto Real Estate Market is 20,000. But now, we can barely find less than half of this amount.
3. Toronto GTA Real Estate – Sales to New Listings Ratio
The Sales-to-New-Listings ratio compares the number of sales to the number of New Listings. Expressed as % ‘age, it helps clarify if market conditions are balanced or tipped toward a seller’s or buyer’s market.
68,4% – Sales-to-New-Listings Ratio (SNLR) in February 2020
Let me remind you that the market is considered balanced, when this indicator is in the range of 50-55%. If this indicator is higher, then it indicates that the market favors the seller. So at the moment, the market is still more in the hands of the Buyer than the Seller.
Another fact that Toronto GTA Real Estate Market favors Sellers again. It is hard to imagine what will be going on during the spring market season.
4. Toronto GTA Real Estate – Property Days on Market
Average Property Days on Market (Avg. PDOM) refers to the average number of days a property was on the market before selling irrespective of whether the property was listed more than once by the same combination of seller and brokerage during the original listing contract period.
23 days required to sell the property in February 2020
In February of 2019, the average selling time was 36 days, while in the past month, the PDOM indicator shows that we need only 23 days on average to sell that property.
5. Toronto GTA Real Estate – MOI (Months of Inventory)
Months of inventory reflects an estimate of the amount of time it would take to sell all of the current listings in a given area if no new listings became available.
Months of Inventory in February 2020 dropped to 1.2
The Market is hot if this indicator in under 3,0 months.
For last three months this indicator set on the very low level – 1.7. Now we see 1.2 months of inventory. How do you think, when did we see same low inventory last time? On the peak of the market on April 2017 it was even lower, at 1.1.
Well, another fact which favors Sellers.
6. Toronto GTA Real Estate – Average Price
Average Price in Toronto GTA up by 16,7% – $910,290
The average selling price for all home types combined was up by 16.7 per cent to $910,290. Double-digit average price growth was experienced for most major market segments, including detached houses and condominium apartments.
It is $70,000 increase from the month of January and 16,7% up compare to February 2020.
Do you know when did we see the Average Selling Price higher? In April 2017 – on the peak of Toronto Real Estate Market.
Toronto GTA Real Estate Average Price – Breaking Down the numbers by home type
| Avg. Price Toronto (416) | Avg. Price GTA (905) | Avg. Price Toronto GTA | |
|---|---|---|---|
| Detached | $1,485,304 | $1,017,573 | $1,113,918 |
| year-over-year | +14.4% | +14.1% | +13.7% |
| Semi-Detached | $1,208,073 | $743,602 | $872,821 |
| year-over-year | +10.6% | +9.9% | +4.5% |
| Townhouse | $846,465 | $702,077 | $731,081 |
| year-over-year | +10.5% | +16.4% | +14.9 |
| Condo Apartment | $722,675 | $534,688 | $666,358 |
| year-over-year | +18.0% | +19.3% | +18.6% |
Average Sale Price in Toronto had sharp spike
Toronto (area 416) Average Selling Price for all home types increased in February compared to the previous month: Detached home up by $115,500; Semi-Detached increased by $204,000 ; Townhouse up $64,000, same as month ago; Condo Apartment up $33,000.
Year over year price change: Detached +14,4%, Semi-Detached +10,6%, Townhouse +10,5%, Condo Apt +18,0%.
Toronto suburbs prices increased as well
Considering the Toronto suburbs – area 905, all segments showed increase in the Average Selling Price compare to the previous month: Detached up $60,000; Semi-Detached up $25,000; Townhouse $35,000 up and Condo Apartment up by $13,000, same as month before.
7. Toronto GTA Real Estate – Price HPI Benchmark
MLS® HPI Composite Benchmark – is the most advanced and accurate tool to gauge a neighbourhood’s home price levels and trends.
Average or median prices can change a lot from one month to the next and paint an inaccurate or even unhelpful picture of price values and trends. The MLS HPI is based on the value home buyers assign to various housing attributes, which tend to evolve gradually over time. It therefore provides an “apples to apples” comparison of home prices across the entire country.
New Record High HPI Price for Toronto GTA – $846,100
As market conditions tightened over the past year, competition between buyers has clearly increased. This resulted in a further acceleration in year-over-year price growth in February. The MLS Home Price Index Composite Benchmark was up by 10.2 per cent to the new absolute record high – $846,100.
8. Conclusion
Toronto GTA Real Estate Market reaches new heights
Toronto Real Estate market has flipped again and favors Sellers now on most of the local markets. Catastrophic continuous decrease in number of Active Listings has converted into more competitions between Buyers, decrease of selling time (PDOM) and sharp spike in Selling Price in all types of homes and all geographical areas of the Greater Toronto Area.
Sales
New record high increase in pace of sales growth registered in February 2020, up 45,6% compared to the same month of 2019. But take to consideration that sales in February 2019 were at 10-year low level, so it was easy to beat that result.
New Record High HPI Price for Toronto GTA
HPI Price for Toronto GTA demonstrated new absolute record high – $846,100, increased $17,900 since January 2020.
What else? TRREB forecasts that real estate price growth pace will be around 10% in 2020.
Low mortgage rates
Low mortgage rates, which are at the historically low levels is not the only cause of growth in the Toronto real estate market, but it plays its own, part.
Moreover, to soften blow of coronavirus COVID-19, Bank of Canada is cutting its key interest rate target by half a percentage point, dropping it to 1.25 per cent. It didn’t take much time to announce that top five banks slash prime rates. Lower mortgage rates will definitely help save some money to Canadian borrowers, especially those who have variable rate mortgage.
More importantly, the recent changes to mortgage qualification rules combined with lowered rates will definitely give cumulative effect, which will allow real estate Buyers get higher mortgage amounts. On the one side Buyers will be happy about it, but on the other side more buying power will push real estate prices even higher and that won’t make most Buyers happy.