TREB: Supply Dynamics Impacting GTA Home Prices
According to a study by the Toronto Real Estate Board (TREB), the continued strong demand for home ownership in the GTA combined with the housing supply, are impacting prices and defining the market.
In terms of supply, through the first 10 months of 2015, the total new home inventory levels have remained close to the 1o-year average with 26, 388. However, in 2015, just over 81% of those homes are high-rise condominiums. New low-rise homes, including detached, semi-detached and town homes were at 4,980 homes at the end of October – a record low.
This record low new-supply, combined with strong demand for low-rise homes has resulted in an increased competition for low-rise homes, and a strong price growth.
At the end of October 31, 2015, the average low-rise home was $802,376. This was more than double the average price in 2005, which was $387,369.
For new homes, single-detached homes saw the largest year-over-year price increase in October. The average price of a new detached home in the GTA was $962,312.
“To comfortably afford that home with a 20 per cent down payment, the buyer would need an annual income of $174,854,” said BILD Chair Steve Deveaux. “With a smaller down payment, the required income would be even higher. According to Statistics Canada, the average total family income in the Toronto area in 2013 was $107,200.”
TREB president Mark McLean said the industry is concerned about the disconnect between some current government policy initiatives and homeownership affordability. TREB cites the Ontario government’s plan to allow municipalities to charge their own municipal land transfer tax as the most recent example.
“Homebuyers in the GTA presently benefit from a diversity of new and existing home options that are affordable at different income levels,” said TREB President Mark McLean. “Sadly, the provincial government seems bent on hampering home ownership affordability. Studies have shown that municipal land transfer taxes will have a negative impact across Ontario, not only from an affordability perspective, but also by undermining our economy and costing thousands of jobs.”
Average Home Prices up to October 2015