Toronto area home sales increased in September, indicating buyers are back in the market and have greater negotiating power as new listings climb.
Home sales were up by 8.5 per cent year over year in September after a subdued spring and summer market, according to the Toronto’s Regional Real Estate Board’s (TRREB) monthly market report. Last month’s data represents the biggest year-over-year sales increase since February, when sales went up by almost 18 per cent.
On a month-over-month basis, September home sales were up 8.2 per cent over August. The last time Toronto area’s sales were up from one month to the next was in May, when sales rose 3.56 per cent — the last monthly increase before they started to decline in the summer months.
“With every interest rate cut we’re expecting you’ll see a larger number of buyers wanting to purchase and move off the sidelines,” TRREB chief market analyst Jason Mercer told the Star. “There’s the benefit of lower borrowing costs but also more inventory. It’s a positive double whammy for buyers right now.”
Sales increased year over year for all property types with a 10.5 per cent rise for detached, 12.6 per cent for semi-detached, 14.3 per cent for townhomes, and 0.8 per cent for condos.
It will take some time for more buyers to enter the condo space as first-time homebuyers need to see an interest rate drop of around two per cent from the Bank of Canada, Mercer said.
“They need to see even more relief for them to make the move to purchase,” he added.
New listings were up by 10.5 per cent year over year, as more sellers entered the market wanting to take advantage of the influx of buyer activity, Mercer said.
The sales-to-new-listings ratio is around 27 per cent, indicating a strong buyers’ market — a buyers’ market is below 40 per cent.
“This resulted in a better-supplied market and increased negotiating power for buyers re-entering the market. The ability to negotiate on price, led to moderate year-over-year price declines, particularly in the more affordable condo apartment and townhouse segments, which are popular with first-time buyers,” Mercer said in the report.
The average selling price in September of $1.1 million was down by one per cent compared to the same time last year, with condos and townhomes seeing the biggest prices drops of 3.6 per cent and 4 per cent, respectively. However, the average selling price crept up from August by more than $32,000.
New mortgage lending rules announced by the federal government on Sept. 16 may also provide some relief for first-time buyers entering the market, the report said.
Starting in December, any purchasers of newly built homes will be able to stretch their mortgage an extra five years, allowing 30-year amortizations for insured mortgages. And buyers will be able to pay less than 20 per cent for a down payment for homes listed under $1.5 million, up from a previous threshold of $1 million.
“Longer amortization periods and the ability to insure mortgages for purchases over $1 million will give homebuyers more options as the GTA housing market recovers,” said TRREB CEO John DiMichele.
