'Troubling trend': Average resale price for a Toronto home hits $709,825
Toronto's downtown skyline is pictured in this file photo.
Alexandra Posadzki, The Canadian Press
Published Thursday, August 4, 2016 11:26AM EDT
Last Updated Thursday, August 4, 2016 3:54PM EDT
Toronto's blistering real estate market continued to burn hot last month, with sales hitting a new record and prices continuing to skyrocket, the Toronto Real Estate Board said Thursday.
TREB said the average resale price of a home in the Greater Toronto Area climbed to $709,825 last month, up more than 16 per cent compared to a year ago.
The average price of a detached home soared even higher, up a whopping 21 per cent from July 2015 to $952,983, while the average price of a condo rose 9.2 per cent to $406,865.
Jason Mercer, the director of market analysis at TREB, said limited availability is one of the leading factors that has been fuelling price growth in Toronto's housing market over the past couple of years.
Nearly 10,000 homes changed hands in the Greater Toronto Area last month -- 9,989 to be exact, the highest number ever recorded in the month of July. That compares to 9,813 in July of last year.
But new listings have dwindled by about seven per cent to 13,542 last month compared to a year ago, reflecting what the real estate board calls a "troubling trend" as demand outpaces supply in the Toronto area.
"We're seeing a record level of demand for all home types in the Greater Toronto Area," said Mercer.
"But at the same time we've actually seen the level of inventory drop off. And so the problem there is that you have a record number of people out there looking to purchase a home, yet at the same time they're up against constrained supply, and so obviously there's more competition between these buyers and you're seeing stronger upward pressure on prices."
The sales data comes as experts caution that a new 15 per cent tax aimed at foreign investors in Vancouver's real estate market could end up further driving up house prices in Toronto.
The B.C. government implemented the tax, which took effect Tuesday, in the hopes of improving housing affordability. Ontario's finance minister, facing growing pressure to address rising house prices in Toronto, has said he is examining the tax "very closely."
Some realtors have voiced concerns that investors looking to dodge the Vancouver tax could park their money in other areas of the country, particularly Toronto.
Mercer said it remains to be seen whether Vancouver's tax will have repercussions in other markets, but it's a definite possibility.
"Generally speaking, when you're looking at policies that are pointed at demand, you'll usually see unintended consequences as well," said Mercer.
Mercer said that rather than focusing solely on demand, policy-makers should also take a look at the supply side of the equation.
The Toronto market is on track to see 110,000 sales this year, said Mercer, which means there need to be 200,000 new listings in order for the market to balance out.
"I think different levels of government, whether at the provincial level or the local level, need to look at initiatives or putting policies in place that could help alleviate the supply situation."