Toronto home prices, sales rise in competitive spring market

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Prices climb 4%, sales up 9% from month before

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Toronto home prices eked out a third consecutive monthly gain in April as the market showed continued signs of rebounding amid tight supply conditions.

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The average price of a home in the Greater Toronto Area rose four per cent month-over-month to $1.153 million in April, according to data from the Toronto Regional Real Estate Board. Still, prices remain below the $1.25 million average posted in April 2022. The number of homes exchanging hands also rose by about nine per cent to 7,531  month-over-month, but remained down just over five per cent from a year ago.

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The aggressive pace of interest rate hikes has kept many would-be buyers on the sidelines, but market data for  spring –— typically a busy time for home buying — so far reveals that some prospective buyers are getting back in the game at a time when supply is still low and fewer listings are hitting the market.

In an interview, TRREB chief market analyst Jason Mercer said a lot of those households that initially put their decision to purchase on hold have recalibrated and adjusted to current higher interest rates, either by pursuing different types of homes, different parts of the Greater Toronto Area or a combination of both, as they move back into the market.

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“Certainly, as we move through the spring, I would expect to see demand increase and the number of sales increase. I’d also expect to see market conditions tighten (because) we really haven’t seen a lot of movement on the listing front,” Mercer said.

Buyers coming back to the market will be up against a relatively constrained supply of available homes, he said, likely leading to increased competition and further upward pressure on pricing.

Penelope Graham, director of content at mortgage site, said better mortgage rates may have explained some of the increased demand in April.

“The April numbers show buyers are getting used to the tougher borrowing environment, and some may have been spurred to make a move due to the slightly lower fixed rates offered over the last month,” Graham said.

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Detached home sales were up significantly from March with 3,448 units sold for an average price of $1.403 million, but volumes remained down slightly from last year. Condominium sales were up only slightly month-over-month with 2,160 units sold, close to flat from last year.

In a press release, TRREB president Paul Baron said that the supply issue requires a policy response from all levels of government, one that many market watchers argue has been left unaddressed even as the federal government plans to welcome 1.4 million immigrants over a three-year period.

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Lauren Haw, chief executive of Toronto-based online real estate listings firm Zoocasa, told Financial Post’s Larysa Harapyn last month that the federal government’s 2023 budget fell short of addressing the housing market supply gap. She added that despite the housing downturn that had Toronto posting double-digit declines from its pandemic highs, she anticipated in early April that more homebuyers would return to the market.

“I think (we will) see some investor sellers coming into market because they have to,” Haw said during an April 8 interview. “Those things — increasing supply combined with these decreasing mortgage rates — I think we’re going to see a lot of buyers come off the sidelines (get) that feeling of confidence in the market. So, I do predict a pretty busy spring market.”

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