WILD: Tight GTA housing supply to last for foreseeable future

Toronto-area real estate is in the midst of an affordability crisis that can only be fixed through government cooperation, says TRREB

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Average home selling prices, listings and transactions were up across Toronto and the GTA in September.

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Good for sellers, not so good for buyers.

The local real estate market has settled into a perpetual tight supply cycle, the likes of which we haven’t seen in years and forcing many would-be homebuyers to take an extended break or give up completely on finding a home.

The latest report from Toronto Regional Real Estate Board (TRREB) highlights the fact that tight market conditions in the GTA housing market are sustaining strong price growth as we head into the fall season.

August saw 8,596 sales with a $1,070,911 average sale price but an anticipated September rebound saw sales rise to 9,046 and the average sale price to $1,136,280 – gains not seen since last spring.

Compared to last year, market conditions tightened noticeably, with sales representing a substantially higher share of listings, and a significantly lower number of new listings across the board.

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On the ground, we may not be seeing as many frenzied bidding wars and bully offers as the most overheated months earlier this year, but sellers are still calling the shots.

And many homebuyers, especially first-timers, are finding it difficult to get a foot in the door.

The sustained low supply of housing inventory in Toronto and the GTA is a key reason home prices remain at such high levels — a scenario that will likely last into the foreseeable future.

“Demand has remained incredibly robust throughout September with many qualified buyers who would buy a home tomorrow provided they could find a suitable property,” said Kevin Crigger, TRREB president.

Crigger has stated for months now that the Toronto and GTA real estate markets are in the middle of a housing affordability crisis that can only be remedied if all three levels of government collectively look at long-term solutions together.

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“With new listings in September down by one third compared to last year, purchasing a home for many is easier said than done,” Crigger said.

“The lack of housing supply and choice has reached a critical juncture. Band-Aid policies to artificially suppress demand have not been effective. This is not an issue that can be solved by one level of government alone. There needs to be collaboration federally, provincially, and locally on a solution.”

Easier said than done.

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Municipal fees and charges make up a significant chunk of new housing prices.

Red tape ties up new projects sometimes for years and developable land in and around the GTA is in short supply.

Going up is always an option, but tight supply and rising prices continue to define Toronto’s condo market.

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TRREB’s second-quarter condo market report released in July showed the average condo apartment selling price was up by 10.8% year-over-year in the second quarter of 2021, to a lofty $686,312.

This also represented more than a 6% increase compared to the previous three months.

In the City of Toronto, which accounted for close to 70% of second-quarter condo transactions, the average selling price was $721,109 –— up by 9% compared to a year earlier.

“Price growth in September continued to be driven by the low-rise segments, including detached and semi-detached houses and townhouses,” said TRREB’s chief market analyst Jason Mercer.

“However, competition between buyers for condo apartments has picked up markedly over the past year, which has led to an acceleration in price growth over the past few months as first-time buyers re-entered the ownership market. Look for this trend to continue,” Mercer said.

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Fast forward to 2022 and industry experts are keen to know how housing affordability will be addressed next year when our provincial and municipal elections get underway in the province.

“Housing was a key issue in last month’s federal election. Ontario provincial and municipal elections are on the horizon in 2022,” said TRREB CEO John Di Michele.

“Much of the heavy lifting required to bring more housing online, from a policy perspective, happens at the provincial and local levels,” Di Michele said.

“These levels of government need to be on the same page. This should be an important topic for debate during the upcoming elections.”

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One thing homebuyers can take to the bank is the market doesn’t appear poised to course-correct anytime soon.

Patience, preparation and taking time to pad savings and research target neighbourhoods will pay off for today’s buyers.

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