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Tight Market Conditions Prompt Strong Price Growth
TORONTO, May 6, 2014 –

Toronto Real Estate Board President Dianne Usher announced that during April – the first full month of spring – Greater Toronto REALTORS® reported a 1.8 per cent year-over-year increase in sales through the TorontoMLS system. Total April 2014 sales amounted to 9,706, compared to 9,535 transactions in April 2013.

“April marked the beginning of the spring market, during which time we generally see the highest monthly sales totals in a given year. Despite the persistent shortage of listings, a substantial number of GTA residents were able to come to terms on a home that met their needs. However, sales levels would have been higher, but for the lack of supply,” said Ms. Usher.

“A number of factors underlie the constrained supply of listings. Studies and polling suggest that the additional upfront land transfer tax in the City of Toronto has prompted some households to stay put and renovate rather than list their home and move. In the broader GTA context, above-trend home sales in the years leading up to the recession have meant that many households who purchased during this period simply aren’t ready to move again,” continued Ms. Usher.

The average selling price for April 2014 sales was $577,898 – up by 10.1 per cent compared to the April 2013 average of $524,868. The MLS® Home Price Index (HPI) Composite Benchmark was up by seven per cent year-over-year. The MLS® HPI strips away price fluctuations resulting from a change in the mix of home types sold from one period to the next.

“Price growth for the GTA as a whole was driven by the single-detached, semi-detached and townhouse market segments in the City of Toronto. So far this year, there has been no relief on the listings front for these home types in many neighbourhoods in Toronto and surrounding regions. Until we see a marked and sustained increase in listings, we should expect to see the annual rate of price growth above the long-term norm,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.

Housing Market Indicators
	April '13	April '14	% change
Sales	9,535	9,706	1.8%
New Listings	18,160	17,315	-4.5%
Active Listings	20,866	19,118	-8.4
Days on the Market	23	20	-13%
PRICE	$524,868	$577,898	10.1%

 

 

 

 
My Opinion

The housing market is a perfect illustration of the law of supply and demand. These numbers show that there are still more Buyers (demand) than Sellers (supply) out there, and therefore, home prices continue to increase. Demand will always be higher as long as borrowing costs (interest rates) stay low. Economists are anticipating an increase in interest rates to be implemented sometime in 2015. They’ve been saying this since 2011…we’ll see what happens.