A recap of April 2019
It’s spring – and Toronto is very much a seller’s market. Buyers and renters, on the other hand? They’re facing an uphill battle over price and availability.
The spring market is well underway, and we’re seeing more activity than we did last year. Although the average price of a detached home has only increased by a marginal 1.9%, the number of sales is dramatically higher – it’s up by 16.8% over April 2018. The number of active listings is more or less the same as it was – in other words, very low – so we can expect to see prices climb, especially if inventory doesn’t increase. Lack of inventory has become a serious problem for Toronto buyers – it has turned our city into a sellers’ market, and it’s really limiting the options for buyers at all levels.
The largest growth segment lately in terms of sales has been detached homes in the 416. They’re up 20% over least year. Interest rates likely have something to do with that – they were expected to go up earlier this year, but they’ve actually gone down – the Bank of Canada reversed their messaging around the need to increase rates, and right now, 5-year fixed rates are even lower than they were in January.
Why the shift? Markets outside Toronto are still struggling, and the Bank of Canada is looking at things on a national level, and are factoring in the sluggish growth outside the GTA.
Toronto: a market in distress
The current market situation is affecting buyers and renters. There’s a serious shortage of affordable rentals (and even the not-so-affordable ones are seeing bidding wars – yes, you heard that right. Rentals are getting multiple offers now too). Plus, the lack of quality, affordable homes means there’s an aging population that’s handcuffed when it comes to living options. And infrastructure like transit and schools isn’t keeping pace with the growing city.
Understandably, there’s a lot of stress around real estate in the city right now. A number of my contacts sent me this BlogTO post about an apartment for rent near Dufferin and Finch. It’s $985 a month and is (no typo) 180 square feet. In a basement. Not exactly the most appealing place.
The same day, this article appeared in the Star: Souped-up basements fetching condo-style rents in Toronto’s heated housing market. It talks about how basements (albeit nice ones) are going for $3,000 a month plus – that kind of pricing definitely contributing to the stress I’m hearing when people talk about looking for a place to live. Unless you’re a “choice” tenant with money to spend, it’s tough to get into a rental – and it’s particularly hard on people of colour, who face discrimination they can’t prove – or do much about.
People looking at the top end of the market aren’t really affected. But people looking at more affordable options? They’re out of luck – and that’s wrong. If we aren’t careful, we will turn into a city only the wealthy can afford.
The provincial government has made some noises about helping. They’ve announced reduced red tape through their Housing Supply Action Plan, which sounds like a good start, but they haven’t revealed anything about what that actually entails. It would be great if they loosened up mortgage eligibility restrictions – especially for people who are retired. If my parents, for example, who are retired and still have a small mortgage, wanted to downsize, they’d be stuck. Based on their income, they wouldn’t even qualify for a mortgage on the home they live in now. So a lot of older folks are staying put in homes that are more than they need – and that’s contributing to the lack of inventory that’s keeping younger buyers out of the market.
It’s a tough situation. From a sales standpoint, things are continuing to move along – the market is very healthy from a seller’s perspective. But for buyers and renters, it will only get tighter and more expensive unless the government steps in in a significant way.
Got questions about neighbourhoods, market trends, investment options or anything else real estate related? Let’s talk.
