Toronto area prices rose again in May, for the fourth month in a row, and were also higher than last May. Freehold prices in particular were significantly higher than the previous month, and have now pulled even with last year after being lower for the first four month of the year. Condominium apartment prices also went up, and set another all-time high.
The strength in the market for freehold properties was not uniformly distributed across the GTA, however. The largest increases were in lower-priced areas to the east (e.g., Pickering, Ajax, Whitby, Oshawa), where prices were up about 3% from last month, while prices in areas to the north of the city (e.g., Markham, Aurora, Richmond Hill) were down about 2.5% from last month.
The former is due to declining affordability, which has buyers ever more attracted to lower prices and especially to price points under $1,000,000 where CMHC insured mortgages can still be obtained with down payments under 10%. For selling prices above $1,000,000, the minimum down payment is 20%.
The latter is largely due to ongoing weakness in York region since the introduction of the foreign buyers’ tax, as there was extensive speculation in that area by Asian buyers in particular prior to the introduction of this tax in 2017.
There were a total of 9,989 homes sold in May, up sharply as compared with both last month and last year, and close to the 10,196 homes sold in May 2017, just as the 2016/2017 bubble was beginning to pop. Listings were also up significantly, and so the inventory of home for sale remained steady at about 2 months’ supply, comfortably inside ‘sellers’ market’ territory without yet getting overheated.
The Toronto area always undergoes a seasonal slowdown during July and August, as many buyers and sellers take time off to enjoy our limited summer season. Because the spring weather has been unusually cold and wet, it’s possible that the strong market could extend a little bit longer than usual this year. Preliminary data for the first half of June suggest that the price trends are continuing though sales volumes are down significantly. We’ll see what the rest of the month brings as the summer weather (hopefully) arrives.