A significant proportion of those planning to buy homes in the Greater Toronto Area this year are going for detached housing, according to a new report by the Toronto Residential Real Estate Board.
The share of those seeking this type of property stood at 42% as of fall 2019. This was markedly lower than the 54% reading in fall 2015, mainly due to the impact of the OSFI-mandated mortgage stress testing.
“In order to adjust to the more stringent qualification standards, intending buyers followed a number of different paths. The most common responses involved changing home price, type or location,” TRREB said. “Some intending buyers also looked to alternate lenders, such as credit unions or the secondary lending market.”
Overall, however, sustained demand will continue driving activity in the detached segment this year. The trend is expected to further amplify the market’s already severe inventory issues, which were already quite apparent in 2019.
“After more than three years of slower market activity brought on largely by changes in housing-related policies at the provincial and federal levels, home sales will move closer to demographic potential in 2020. The key issue, however, will be the persistent shortage of listings. Without relief on the housing supply front, the pace of price growth will continue to ramp up,” TRREB Chief Market Analyst and Director of Service Channels Jason Mercer explained.
“Policy makers need to understand that demand side initiatives on their own will only have a temporary impact on the market.”
The TRREB predicted that the region’s home sales numbers will likely reach 97,000 this year, which will be 10.5% larger on an annual basis. Price growth will also see similar gains, with a near-10% increase to reach an overall average sales price of around $900,000.
“This forecast rate of growth presupposes that price growth will continue to be driven by the less expensive mid-density low-rise home types and condominium apartments,” TRREB stated. “If the pace of detached home price growth starts to catch up to that of other major home types, the average selling price for all home types combined could push well past the $900,000 mark over the next year.”