Photo: James Bombales
While GTA home sales dipped slightly last month, they should post stronger numbers in the coming quarter, according to TD economist Rishi Sondhi.
In his latest note, Sondhi points out that while sales fell 1 percent month-over-month in October, the market remained largely balanced, with a sales-to-new-listings ratio of 52. (A ratio of between 40 to 60 percent is considered balanced, with readings above and below indicating sellers and buyers markets, respectively.)
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“Toronto’s market has been balanced for over a year now, manifesting in slower price appreciation,” he writes. “Indeed, the Toronto Real Estate Board reported that average prices were up a tame 3.5 percent year-over-year in October.”
Looking ahead, Sondhi says that the back-to-back sales declines in September and October may be a sign that the market has finally adjusted to the effects of stricter mortgage rules, which came into effect in January. He predicts that sales will “grind higher” in the coming months.
But, not too much higher — a lack of affordability in the region should keep activity from reaching the heights seen in the spring of 2017.
“Strained affordability conditions, exacerbated by rising borrowing costs, will continue to restrain demand,” he writes.
Sondhi also notes that the homebuilding sector has cooled in recent months, and should continue to do so heading into 2019.
“Peering even further ahead, rising interest rates should constrain homebuilding in coming years, switching the role of this component from growth enhancer to neutral contributor,” he writes.