Recently, different headlines surfaced claiming that Toronto's housing market is in a "cooling down phase." Well, someone looking to buy a house and seeing more than ten offers on their potential home does not consider the housing market as "cooling." So, what exactly does cooling down mean?
Followed by a peak in the Spring, the Great Toronto Area's housing market has experienced a decline in average home prices and sales activities. The housing market was a little uptight in July 2021 since the new listing ratio grew from 61% to 75%, converting Toronto into a seller's market. The prices fell 2.5% from June 2021 till date; however, an yearly basis analysis showed that the prices remained up by a good 12.6%. This is the cooling down phase.
Toronto's housing average sold price was $1,062,256 for the month of July 2021. Here is a quick breakdown:
- The most significant increase was seen in detached homes, i.e., a whopping 21.7%, ending at $1,405,478.
- Another increase was seen in the semi-detached home prices that rose to a 12.2% yearly comparison, ending at $1,027,895.
- The prices of townhouses increased by 29% annual comparison, ending at $950,039.
- The lowest growth was seen in Condo apartments. They increased by 6% year over year, ending at $674,490. Their sale was increased by 8.2%
Although the sales activity of Toronto's housing market is down by 14.9% yearly and 15.2% monthly, thanks to the new CMHC rules, the market is currently a "seller's market." One of the main reasons for being a seller market is the period, i.e., people are coming back from vacations, workers are coming back to offices, and students are coming back to school, likewise increasing immigration and the need for houses.
Low inventory has been common all across Ontario in 2020, likewise putting an upward pressure on prices; the supply shortage has resulted in an increase in prices, likewise making Toronto a seller's market. Looking back at 2020, the Toronto housing market rose to an average price of $918,883, whereas in 2019, they were at $819,823.
This low supply, rising prices, and growing demands are the three factors likely to affect the housing prices and activities in 2021.
Recently CMHC also decreased its standard for insured mortgages; this reversed the increase for credit scores, reducing them from 680 to 600. On the other hand, the Office of the Superintendent of Financial Institutions also raised the benchmark for mortgage stress test rate, and this limited the affordability for the marginal buyer.
Moreover, the mortgage rates have also risen as compared to 2020. The low interest rate is expected to change by 2022 as the market rate hits its peak.
However, Toronto's housing market is flexible and fluctuates rapidly. Look out for more significant opportunities as the future of Toronto's housing market looks optimistic.
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