Toronto's housing market might enter a vicious cycle - TREB
New data from the Toronto Real Estate Board showed that the market’s sales volume fell by 14.7% year-over-year in November, while new listings declined by 26.1% during the same period.
Coupled with average sales price growth of 3.5% annually (up to $788,345), the trend points to a vicious cycle in the very near future, TREB president Garry Bhaura wrote in a thought piece for Toronto.com.
“These numbers reflect a tighter marketplace, which will translate into increasing competition between buyers and also likely provide the foundation for renewed price growth,” Bhaura warned.
He added that among the major contributing factors to this possible crunch would be the stricter mortgage qualification rules introduced earlier this year, which are steadily becoming more of a burden than a boon to the market.
“We’re seeing strong rates of price growth on homes with lower average price points, such as condos and semi-detached homes. This is largely due to the impact of the OSFI-mandated mortgage stress test and higher borrowing costs, which have impacted affordability and pushed many consumers to consider a lower-priced home.”
More importantly, whatever kind of additional housing and how much of these are built will impact affordability only when location is also taken into account.
“Not only is it important to build more housing, it’s important to consider the kind of housing we build and where it’s built in relation to access to transportation alternatives,” Bhaura explained.
“Specifically, we must focus on producing an adequate supply and appropriate mix of housing types, where ‘missing middle’ housing (home types that bridge the gap between a detached home and a condo) and transit supportive housing developments should be priorities.”
“We feel the time is right to have a conversation about the level of provincial and municipal responsibility to ensure that we’re working efficiently toward realizing the goal of subway expansion in Toronto and throughout the GTA, in conjunction with the broader GO network. Better transit will have a huge impact on the housing market, and we will continue to be a part of this conversation, as well.”
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