Entering the Market

The first two months of 2019 have not been very memorable for the GTA’s housing market. Prices are up nearly 2% while sales are down by the same amount. In many ways it would seem that very little has changed from last year; however, a closer look shows that it continues to get harder to enter the market, with fewer and fewer homes sold for under $500,000. At an increasing pace, the price floor has been rising in the GTA, so while the average price might have stalled, the entry-level price continues to increase.

Price Breakdown YSource: TREB, Six Housing Sense

Reviewing the sales figures of the first two months from each of the past five years, we can see that the amount of homes sold for under $500,000 has fallen from 53% to 24%. In comparison, sales over $1 million have risen from 9% to 17%, though they are down from 2017 when that price bracket peaked at 24%. The drop in the lower range’s market share is bad news for any first-time buyer hoping to enter the market. A higher entry price results in needing to accumulate greater savings to have a down payment and then manage the monthly responsibility of larger mortgage payments – not to mention buyers are getting less for these higher prices.

Price Breakdown RangeSource: TREB, Six Housing Sense

The second graph best demonstrates how the over $500,000 but under $1 million price bracket has been the steadily growing performer. While this price bracket has always been a significant amount of the market, it now makes up more than half of all sales. The price range has increased from 38% five years ago to 59% last month. This number has grown entirely at the expense at the under $500,000 range, demonstrating that the entry point to the GTA’s housing market just keeps rising.

Comparing these numbers against the 2% average price gain we see that the average price change does not paint the full picture. Home prices at the top of the market are remaining flat, while the prices at the bottom are experiencing healthy growth. As industry experts propose various options to make housing more affordable for the average family or first-time buyers, the main issue remains the shrinking supply of affordably priced homes. All the support mechanisms in the world cannot hide that fact that entry prices just keep going up.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s