Move Smartly points out that the Toronto housing market was particularly competitive during the first four months of 2014, which they attribute to two factors: A steep decline in inventory from Q4 2013 that lead to a shortage of homes available for sale, coupled with a strong demand for houses at the time, which Move Smartly believes, is also a carry-over from the year before. The review illustrates that the competition for homes was specific to semi-detached and attached row houses, which had begun to significantly decline in inventory since September, 2013.
Both average sale price, and overall sales records were broken during the month of May. The Toronto Real Estate reported that 11,070 existing homes were sold that month, representing an 11.4% hike in sales from a year before, with the average sale price increasing over that same year long period by 8.4%, to $585,204. Not to be outdone in the record-breaking department was Calgary, which continued its impressive growth with another 2,948 homes sold in May alone, a new record for the month. The median and average MLS sale price in Calgary also reached record highs of $435,000 and $486,531 respectively.
The latter part of the year did not see the escalation of average sale prices for homes across Canada, or in Toronto in particular, slow down. A study published by Desjardins in early November stated the average price of a home in Canada had increased faster than income growth in Q3, with prices up 5.3% when compared to a year before. Desjardins’ “Affordability Index” is calculated by using the ratio between average household income and income needed to get a mortgage on an average-priced home. And according to their metric, the Canadian housing market is, on average, the least affordable it has been in the past 25 years. Toronto is not the least affordable housing market in the country, according to their study, with Vancouver taking the crown, boasting an average home price of $820,753. Windsor, Ontario, not surprisingly, is still the country’s most affordable city to buy a home, with the average price sitting at $568,384.
Housing affordability continued to decline right up until mid-December, with a published statement from the Bank of Canada, claiming that they believe the real estate market is overvalued by as much as 30%. The average price for a new construction low-rise home in the GTA, according to Bryan Tuckey of The Toronto Star reached $700,779, another record high. Tuckey accounts by examining supply and demand factors linked to population growth, arguing that the increase in units under construction, as well as average sales price, are a direct result of the intensification objectives outlined in the provincial growth plan, Places to Grow, aimed at increasing population density in urban centres and along transit corridors.