Photo: James Bombales
GTA home sales have been falling year-over-year for months now — most recently by 32.1 per cent to just 7,792 sales in April. But as sales continue to drop, prices in one property type aren’t falling nearly as drastically. The price of a detached home in the GTA fell just 14.4 per cent year-over-year in April to $1,030,103.
The reason for the relatively small year-over-year dip? According to Realosophy president John Pasalis, there’s still a low level of supply for those looking to secure a detached home in Toronto.
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“If our market is balanced today and sales fall and/or inventory rises, then prices will likely fall,” he writes, in a recent report. “But what happens when we are starting from a market that is not balanced, like last year when demand and supply were so disconnected that prices were rising 33 per cent per year?”
Pasalis says it’s important to take into account months of inventory, or MOI, which compares how many homes are available for sale against the number of sales in a given month. If there are 30 homes for sales in the month, and 10 houses sell, you have an MOI of three. A high MOI usually leads to lower prices, as there is enough supply to meet demand.
“The MOI for detached houses has been declining since July 2017 which has helped bring some stability to the market,” writes Pasalis.
He also notes that, despite the new mortgage stress test that came into effect on January 1, the balance of supply and demand has remained relatively stable in the detached home segment.
“The stability between the supply and demand for houses has helped keep the price of a detached home relatively flat since June 2017,” he writes.