GTA real estate market on pace for another year of record-breaking sales

By SUNNY FREEMANBusiness Reporter

Sales in the first quarter of 2016 rose 15.8 per cent from the opening three months of last year, according to the Toronto Real Estate Board.

Toronto real estate agent Elli Davis just closed a “bully offer” for $300,000 over a $2.65 million listing price, a type of deal she’s making more often in the busiest market she’s seen in nearly 30 years.

The increasingly competitive Greater Toronto Area real estate market is on pace for another year of record-breaking sales and double-digit price growth as buyers bid aggressively for the few houses on the market. Sales in the first quarter of 2016 rose 15.8 per cent from the opening three months of last year, according to the Toronto Real Estate Board

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Davis, a Royal Lepage agent in upscale central Toronto, said a lack of housing supply is pushing more buyers to make hard-to-resist deals days before the seller is slated to accept bids. These are also known as bully offers.

“There were no conditions and the owner said ‘thank you very much, I’ll take it,’” she said of the home that went for $300,000 over asking.

The 10,326 homes sold in March was a 16.2-per-cent increase from the year earlier and accounted for nearly half the 22,575 homes that changed hands in the first quarter.

The average selling price across all housing types in the Greater Toronto Area rose 12.1 per cent year-over-year in March to $688,181.

The market could have experienced even stronger sales growth if it were not constrained by a deficit of new listings, said Jason Mercer, TREB’s director of market analysis.

“That’s why we’re seeing strong increases in selling prices, yet on the other side, if we did see more listings come online, they’d be absorbed in short order because of pent-up demand,” he said.

“I think the first quarter certainly suggests that we could be on track for another record year and likely the only thing that could slow that down is if we continue to see a dip in listings.”

The number of new listings was down compared to the same period last year, meaning there were more buyers competing for fewer homes. The number of homes listed for sale in the first quarter fell to its lowest level for a first quarter in at least 12 years, according to an analysis by National Bank.

A competition among buyers for fewer homes often results in bidding wars that drive prices higher. In March, the average detached GTA home inched closer to the $1 million mark, sitting at $910,375.

Davis said she is astounded at the prices. Nearly half of the 23 agents’ open houses listed for Tuesday in Toronto’s central core were for properties valued between $3.5 million and $16.8 million, she said.

Toronto is a seller’s market, with sales-to-new-listing ratios hovering around 70 per cent — the highest ratio since the 2008-2009 recession, said Robert Kavcic, senior economist at BMO.

He doesn’t see this abating any time soon as strong job and population growth in the GTA will continue to drive demand, while few new detached homes are being built.

“This has been more of a sustained gradual increase in demand and no new supply coming on board, so this is probably going to persist longer than back in 2009.”

Davis said the market is stronger now than it was coming out of the recession, adding she’s the busiest she’s been since 1989.

“We didn’t have a terrible winter, I think that helped, mortgage rates helped, and demand is high and supply is low,” she said.

“All those things together make a busy time.”

Canadian home resales slip in May from April: CREA Craig Wong OTTAWA — The Canadian Press

Canadian home sales started off the year at a torrid pace, fueled by Vancouver and Toronto, but the Canadian Real Estate Association says sales in the country’s hottest markets are expected to slow in the second half in the face of high prices and a shortage of available properties.

“Activity should begin to rebalance away from B.C. and Ontario as supply shortages put upward pressure on home prices and constrain transactions even as housing demand remains strong in these provinces and interest rates remain low,” CREA said in its latest outlook Wednesday.

“Accordingly, sales activity over the second half of the year is expected to ease in B.C., Ontario and on a national basis.”

Still, due to the strong start to the year, the association raised its full-year forecast for home sales to a record 536,400, an increase of 6.1 per cent. That compared with its March forecast calling for an increase of just one per cent to 511,400.

The new forecast came as CREA reported that home sales through its MLS system dropped 2.8 per cent month-over-month in May. But compared with a year ago, sales in May were up 9.6 per cent and stood 15.1 per cent above the 10-year average for the month.

TD Bank economist Diana Petramala said even with the drop in sales in May, the spring selling season has been a hot one for Ontario and British Columbia.

“In fact, May’s decline looks more like a supply story rather than a demand story, with not enough homes on the market to fulfil what appears to be insatiable demand,” Petramala said.

For May, the number of newly listed homes fell 3.2 per cent.

The national sales-to-new-listings ratio climbed to 64.8 per cent in May, suggesting a seller’s market and the highest reading since October 2009.

CREA says a ratio between 40 and 60 per cent is generally consistent with a balanced market.

The national average price of a home sold in May was $509,460, up 13.2 per cent from a year ago.

Excluding Vancouver and Toronto, the average price for a home sold in May was $375,532, up 9.1 per cent from May 2015. The average price for Canada, excluding the provinces of British Columbia and Ontario, was $310,007 in May, down 0.7 per cent year over year.

Last week, the Bank of Canada warned that house prices in Vancouver and Toronto were climbing at an unsustainable pace and that they had outpaced local economic fundamentals.