Contrary to popular belief, the GTA real estate market is showing resilience.
Prices began to rise at the beginning of 2018. This trend continues this year as average prices rose 1.6% compared to February 2018. Prices have risen 6.2% since December of 2017, when prices were at their lowest after reaching an all-time high in March of 2017.
The upward pressure on price is a direct reflection of the tight supply of homes available for sale of 2.7 months of inventory (prices have been higher year over year for eight of the past nine months). Industry insiders view anything under 4 months as tight supply and a sellers’ market, 4 to 6 months as balanced market and above 6 as a buyers’ market.
The key factors leading to the increasing prices continues to be the combination of strong employment rate, historically low interest rates, and strong population growth*.
The increase in prices was driven by the condo and semi-detached segments. The price changes varied between the 416 and 905. Appreciation of the condo and townhome markets were dramatically higher in the 416 compared to the 905, while the detached segment is showing moderate increases in the 416.
Sales activity for February was down slightly year over year for the month of February.
Brampton
Brampton continues to be among the strongest markets in the GTA as prices rose 3% over February of 2018. This was driven by increases across most housing types.
Supply tightened significantly as there were only 1.8 months of inventory on hand at the end of February compared to 2.4 months of inventory on hand at the end of the year. This tight supply will continue to create upward pressure on average prices moving forward.
Days on market have decreased to 22 and represents an improvement from the end of last year, when days on market reached 27.
The number of homes trading hands rose slightly (0.6%) to 488.
Mississauga
Mississauga market was the best performer in the GTA as there was significant improvement in February. Prices and number of homes sold increased by almost 9% each compared to February of 2018.
This improvement was a direct result of a very tight supply of homes available for sale of only 1.8 months. This level of supply will continue to put upward pressure on price moving forward.
Days on market for the month of 20 was also a dramatic improvement over the end of 2018 as days on market reached 29.
Caledon
As there are very few homes traded in Caledon, and a clearer picture of the real estate market will appear as we get further into the year.
Average price of $852,736 is mostly a reflection of the mix of homes traded rather than the trend of where prices are headed.
Supply eased to 5.3 months of inventory on hand and thus is in balanced market territory which should result in low single digit price increases moving forward.
Days on market of 37 is an improvement from the 44 days on market experienced in January.
Milton
Milton market continues to strengthen as there was a 10% increase homes traded in February. Prices for the month were up slightly to 718,130 representing a 1.4% increase over February of 2018.
Supply tightened up to 1.7 months of inventory on hand, and thus should continue to create upward pressure on average prices moving forward.
Days on market improved to 22 from 36 experienced in January of 2018.
Oakville
Average price of $986,404 is down 3% from February of 2018.
Year over year sales have also decreased to 158 in the month (down 30%).
Supply eased up to 4.6 months of inventory on hand and is in balanced territory and as a result prices should increase a modest low single digit moving forward.
Days on market improved to 31.
Burlington
Number of homes traded is off to a strong start of 151 for the month (increase of 11% over February of 2018).
Prices were down slightly to $692,680 (down 1%).
Supply tightened to 2.4 months of inventory on hand. This tight supply should put upward pressure on prices moving forward.
Days on market have improved to 30.
Georgetown
As there are very few homes traded in Georgetown, and a clearer picture of the real estate market will appear as we get further into the year.
Average price of $705,035 is mostly a reflection of the mix of homes traded rather than the trend of where prices are headed.
Supply was 2.4 months of inventory on hand and thus is in tight market territory which should result in mid-single digit price increases moving forward.
Days on market of 24 is an improvement from the 33 days on market experienced at the end of 2018.
Conclusion
Upward pressure on home prices in the GTA will continue as available housing in most parts of the GTA remains in a short supply.
*Some Key Economic indicators for a healthy real estate forecast:
Peel Region expected to grow by 500,000 people in next 2 decades https://www.insauga.com/500000-new-residents-expected-in-mississauga-and-surrounding-cities-over-next-two-decades
BOC holds rate March 6 2019 https://www.bankofcanada.ca/2019/03/fad-press-release-2019-03-06/
Key economic indicators – Statistics Canada https://www.statcan.gc.ca/eng/start
Consumer confidence index https://www.conference-board.org/data/consumerconfidence.cfm