POPPING THE TORONTO HOUSING BUBBLE MYTH
It seems to be in everyone’s conversations: the Toronto housing bubble. Many speak of it in hushed tones and worried glances, yet when pressed about it they cannot explain why. One reason for this is because they may not have taken the time to read the research. I am here to quell any concerns and pop the Toronto housing bubble myth.
Is the Toronto Housing Bubble Real?
Many people will read a headline such as “property transactions are at their lowest level since the 2009 recession”. This is, indeed, a true statement but it is not an accurate barometer for the health of the housing market. We need to look at relative comparisons and more specific indicators. For example, there were positive signs in the Toronto housing market this summer when it came to average selling prices of homes, as well as the number of homes for sale.
If we zoom in on sales in July 2018, we can see that sales were up by more than 18% when compared to July 2017. That is a great jump and an uplifting statistic. The average price of these transactions was $782,129, which is an almost 5% increase from the average price of a property in Toronto in July 2017.
Positivity in the Toronto Real Estate Market
A key gauge of a real estate market’s health is the sales-to-listings ratio. While it is all well and good that relatively speaking there were more sales and the price of those sales were a substantial increase from July of the previous year, we want to make sure that there are almost as many listings as there are sales. In Toronto, this has been relatively stable, despite the fact property transactions are much lower than they have been in the past. Despite a decrease in listings by nearly 30% from a year ago these properties are still selling at a similar pace, indicating that people are confident in the Toronto housing market and are secure in their home’s value.
Another toast to the Toronto housing market’s health is the fact that prices have increased by almost 5%, again despite the low transaction rate. This goes to show that the number of transactions is not the only variable in the state of the Toronto housing market.
We walk into autumn with a new provincial government whose housing goals are to increase the supply of housing, especially in the income bracket that includes those who are seeking a condo lifestyle and those who want a detached home. Additionally, they will be tasked to continue providing relief with the provincial land transfer tax.
Will the Bubble Burst?
Also you should keep in mind that Toronto will be having municipal government elections soon and many of the candidates are focused on increasing housing affordability. Make sure that when you do vote in this upcoming election that you choose someone you believe will make a positive impact in the Toronto housing market to continue this upswing it is enjoying. I hope this helps you better understand that in fact there is no Toronto housing bubble, but rather, a healthy and cyclical market that is enjoying growth at the moment.
Courtesy of the Elli Davis Team
(Copyright Elli Davis – 3rd October 2018 – originally published at https://www.ellidavis.com/toronto-housing-bubble-myth/)