After hibernating over the winter, Toronto homebuyers emerged in the spring — and they didn’t relent this June, pushing prices higher.
In June, 8,860 homes changed hands across the GTA, up 10.4 percent annually, while the average price climbed 3 percent to $832,703, according to Toronto Real Estate Board (TREB) data published this morning.
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“Buyers started moving off the sidelines in the spring, as evidenced by strong year-over-year price growth throughout the second quarter,” says Jason Mercer, TREB’s chief market analyst.
“However, because we saw virtually no change in the number of new listings, market conditions tightened and price growth picked up, especially for more higher density home types, which, on average, are less-expensive than traditional detached houses and therefore provide more affordable housing options under the new OSFI stress test regime,” he continues.
The Office of the Superintendent of Financial Institutions created Guideline B-20, which included a mortgage stress test that was introduced in January 2018.
The test requires uninsured-mortgage borrowers to qualify for their loans at a rate that is 200 basis points beyond their lender’s contract rate.
One expert estimates this policy has reduced affordability by 20 percent, in terms of what those facing the test can qualify for.
The resultant move toward more affordable housing types is reflected in recent price growth in the condo-apartment segment.
Condo-apartment prices averaged $590,274 in June, up 5.2 percent from the same time a year ago.
Compare that to the pricey detached-home segment. Although May saw prices for this kind of home increase for the first time this year, the June average was down 1.4 percent annually to an average of $1,018,987.
Of all segments, last month TREB’s Mercer said it would likely be the detached home corner of the market that would take the longest to see the kind of mid-single-digit price gains already seen for condos.
With slackened demand, he did note one positive for homebuyers determined to purchase a detached house.
“There’s more choice out there for buyers in the detached market,” Mercer added.