The GTA and Toronto real estate market is continuing its upward trend, according the Toronto Real Estate Board’s Market Watch for May 2016. Both total number of home sales and prices are up across the board.
The big news – 15% overall increase in home prices
The MLS® Home Price Index Composite Benchmark was up over May 2015 by 15%. The MLS Home Price Index is a set of software tools that provides indices on markets in various areas across Canada, and is the most accurate indicator of home price data in Canada. Overall transactions were also up by 10.6% year-over-year in May 2016.
Average prices were up across the board on every property type, with the largest increases being in detached homes in both Toronto and the GTA, represented by the 905 area code on the above chart. The GTA saw the largest increases in home prices in all categories.
The real story is the shortage of inventory
According to the President of the Toronto Real Estate Board, Mark McLean, the story these numbers tell is about the dwindling supply of homes under the Toronto Real Estate Board’s jurisdiction.
“While the record number of home sales through the first five months of 2016 is not necessarily surprising, it does sometimes mask the larger story in the GTA: the shortage of listings, which has resulted in strong upward pressure on home prices.”
While builders are incentivized by the steady upswing in home prices as the result of a lack of supply, they may meet future roadblocks with the Province of Ontario’s plan to expand the Greenbelt, which would minimize areas for new builds in the GTA.
Condominiums see higher price inflation than usual
As supply of the generally more desirable low-rise homes decreases and their price increases, many buyers in both downtown and the 905 area are looking more seriously at condominiums. Jason Mercer, the Toronto Real Estate Board’s Director of Market Analysis, notes in May’s Market Watch that the price growth of condominiums is “well above the rate of inflation.”