JANET MCFARLAND - REAL ESTATE REPORTER
September 8, 2019
Sales of detached houses in the suburban 905 region outside Toronto are leaping higher after a two-year slump, posting gains of 20 per cent or more in every month since April.
When home sales began a downturn across the Greater Toronto Area in the spring of 2017, no category was harder hit than detached houses in the suburban 905 swath surrounding the city of Toronto. In the summer of 2017, the number of detached houses sold in the 905 fell by almost half compared with a year earlier, as a real estate bubble decisively burst across the region.
After two years of weakness, however, the long slump appears to have come to an end. In August, sales of detached homes in the 905 climbed by 25 per cent over last year, accounting for almost 40 per cent of all homes of any type sold in the GTA.
August marked the fifth consecutive month the 905 region has seen the number of detached houses sold climb by more than 20 per cent, with sales soaring by 30 per cent in July, according to data from the Toronto Real Estate Board.
While detached-house sales have also climbed in the city of Toronto, the recovery is even greater in the huge 905 region, where sales had fallen more sharply. The region encompasses an array of communities such as Oakville, Brampton, Mississauga, Newmarket, Pickering and Oshawa.
Chris Slightham, owner of Royal LePage Signature Realty, which has three offices across the GTA, credits the strong recovery in the 905 to a change in sentiment among suburban sellers.
Until earlier this year, he said many people were reluctant to list their homes for sale at realistic market prices and were still holding out hope they might get the kind of windfall gains they had seen neighbours reap in early 2017.
The result was a disconnect between sellers and buyers and a low volume of sales in 2018 as the inventory of unsold homes climbed, he said. But with the market now stabilizing, more have accepted prices are not likely to return to prior levels in the near term and are listing their homes at prices that attract buyers.
“There’s a point where you have to make decisions in life,” Mr. Slightham said. “Life happens, kids grow up and it’s time to downsize, or new kids come along and it’s time to upsize. So for regular life reasons, you finally have to say, ‘Okay, it looks like those peak prices are not coming back any time soon.’”
While sales volumes have climbed since April, price increases have remained modest. In the 905 region in August, for example, detached-home prices climbed 1.3 per cent compared with a year earlier to an average of $918,242. Prices were up 2.5 per cent in July compared with a year earlier, but that came after average prices fell 0.7 per cent in June.
Mississauga real estate agent Carlo Racioppo said prices are growing slowly because of the mortgage stress-test rules introduced in 2018, which make it harder for buyers to qualify for mortgages. While buyers are finding ways to cope with the tougher rules, many can only afford homes at the lowest end of the price range.
“The mortgage rules have sort of settled into the marketplace, so that’s been kind of dealt with, but they still make it very challenging,” he said. “That’s why you don’t see big price increases now.”
Monthly average sale prices for detached homes in the 905 are still well below the market peak in March, 2017, when the average sale price hit $1,124,088, a stunning 34-per-cent increase from the same month a year earlier.
The following month, in April, 2017, the Ontario government announced a series of measures to curb runaway price increases in the GTA, including a new tax on foreign buyers. As the market cooled, average prices for detached homes in the 905 dipped below $900,000 in December, 2017, and January, 2018 – a drop of about 20 per cent from their peak. Average prices still remain about 18 per cent below their 2017 high.
Shawn Zigelstein, a real estate agent based in Richmond Hill, north of Toronto, said sales are improving the most on the outskirts of the 905 area, where homes are most affordable, including parts of Brampton, Mississauga and more distant parts of Peel Region such as the town of Bolton.
More expensive areas in York Region, such as Richmond Hill and Markham, have not seen the same sales increases, he said.
“York Region is not kicking into that recovery mode as of yet,” Mr. Zigelstein said. “I think they are still struggling because of a large amount of inventory that seems to be sitting around right now.”
Original article here.