Toronto Market Continues to Power Upward

House prices risingPrices for through the first three weeks of May were 8% higher than last year for the Greater Toronto Area, continuing the strong upward trend that we have seen since January. The numbers were even higher for the City of Toronto, where prices were almost 10% higher than last year. Sales were also up significantly, approximately 20% more than last year, while new listings were actually slightly lower. This suggests that the downward trend in the inventory of homes for sale continued in May, and that the already extreme sellers’ market (less than 2 months’ inventory) is continuing to intensify. We will have the May inventory data in early June.

As the charts below show, both prices and inventory levels will probably moderate somewhat as we get into the summer months; but this is just the normal seasonal pattern, and not in any way an indication that the market is slowing. Now that interest rates are actually decreasing somewhat, and in any case extremely unlikely to move upward for at least another year, we will almost certainly see a strong rebound in the September-November period, similar to what we saw in 2013. The fall market in 2012 was less vigorous, but that was only because of the mortgage rule changes that were made in June of that year.

So, expect more of the same over the next 6-12 months, including another hot spring market next year. Eventually, the market will have to slow down, as prices cannot continue indefinitely to increase more quickly than incomes. Affordability must eventually become strained. Barring some sort of catastrophic change in the world economy, however, that time still seems distant.

Prices Late May 2014

 Inventory April 2014