The Toronto housing market doesn’t seem to be heading towards a hard landing, as the Toronto Real Estate Board figures released on Thursday, October 3 suggest. There were 7,411 residential transactions recorded through the TorontoMLS system in September 2013, which is an increase of 30 per cent from he 5,687 transactions reported in September 2012.
Demand for housing in Toronto is still alive and quite well despite Ottawa’s efforts to tighten mortgage lending rules and cool the market. So far, after the first nine months of 2013, the total number of residential sales reported through the TorontoMLS reached 68,903. That’s just 1 per cent less than the number of homes that changed hands over the same period in 2012.
Some of the increased resale housing activity still comes from prospective homebuyers who want to take advantage of their pre-approved low mortgage rates before they rise. Another factor was the weak spring season, which was dampened by bad weather. The usual peak season for sales was therefore pushed into late summer as well as into the beginning of fall. Benjamin Tal, Canadian Imperial Bank of Commerce (CIBC) economist, remarked,
People are talking about whether the market’s had a hard landing or a soft landing, but so far there’s no landing whatsoever. My sense is that activity is too strong for the liking of regulators, and maybe the government. The market is stronger than it should be at this stage of the cycle. Part of what we’re seeing now is people stealing activity from the future, out of fear of higher interest rates.
The highest increase in sales was recorded in the detached houses segment, which was up almost 34 per cent, followed by 30.9 per cent growth in townhouse sales and a 28.8 per cent surge in the condo segment. The number of semi-detached homes that traded hands in September went up by 20.4 per cent year-over-year. Dianne Usher, Toronto Real Estate Board president, noted,
It’s great news that households have found that the costs of home ownership, including mortgage payments, remain affordable. This is why the third quarter was characterized by renewed growth in home sales in the GTA. We expect to see sales up for the remainder of 2013, as the pent-up demand that resulted from stricter mortgage lending guidelines continues to be satisfied.