We have seen a very hot housing market in the month of February. Homes listed under $1M are quite often selling in bidding wars and often selling for over asking. The shortage of listings and a dramatic spike in demand for the home is placing significant pressure on home prices in the Greater Toronto Area. The recent softening of the mortgage stress test scheduled to come into effect on April 1st and the recent announcement by the Bank of Canada of a 50 basis points reduction in the prime rate will most likely continue to fuel demand for housing.
In the month of February 2020 in the GTA there were 7,256 residential housing transactions which are a 45.6% increase in sales compared to a 10-year sales low in February 2019. This is the strongest sales growth for GTA. The average sales price of all housing types has increased by 15.4% in comparison to February 2019.
The steady population growth, low unemployment, and low borrowing costs continue to place pressure on prices as we see aggressive buyer competition to purchase the limited supply of housing – resulting in many homes selling in bidding wars.
It is clear that many buyers who were on the sidelines due to the introduction of the mortgage stress test in 2016 are moving back into the market and driving very strong year-over-year sales growth, particularly in the detached housing segment. Strong demand against limited supply continues to put upward pressure on prices.