06/03/2015 02:23 EDT | Updated 06/03/2015 02:59 EDT

Toronto House Prices Hit Another Unbelievable Record

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Canada’s economy may have been in the doldrums in the early months of this year, but you’d never know it looking at Toronto’s increasingly frenzied real estate market.

The price of a single-family home jumped by 18.2 per cent in the past year, according to new data from the city’s real estate board.

The average price for a standalone home in the city was $1,115,120 in May of this year, up from $943,055 a year earlier, the result of a worsening shortage of single-family homes in the city.

“Tight market conditions, especially for singles, semis and town homes in the GTA, have resulted in strong price growth,” said Jason Mercer, the Toronto Real Estate Board’s director of analysis.

Prices for Toronto condos also grew, albeit at a slower pace of 5.5 per cent over the past year. The average condo in the city now costs $422,947. The average price for all homes sold reached $718,350, up about 10.1 per cent in a year.

The number of home sales in Greater Toronto hit a record 11,706 in May, up 6.3 per cent from a year earlier. Single-family home sales in the city of Toronto were actually down about 6 per cent, largely thanks to a lack of new listings.

Mercer sees “no relief so far on the listings front” for single-family homes, and he expects to see continued strength in price growth for the rest of the year.

Demand for standalone homes is so pent up in Toronto it would take “a number of months” where new listings outstrip home sales before it could be satisfied, Mercer said.

But it looks unlikely that the supply of single-family homes will increase in Toronto anytime soon. With restrictions on land development around Greater Toronto and municipal policies in place requiring higher density housing, construction of single-family homes is expected to continue declining.

Despite rising prices and strong demand, the number of single-family homes built in Toronto this year, will drop by 13 per cent compared to last year, Canada Mortgage and Housing Corp. said in a recent study.

Of 32,400 housing starts forecast for the city this year, only 7,700 will be single detached homes, the study said.

It showed similar declines in single-family home construction in many of Canada’s major cities, including Vancouver and Montreal. But future home buyers are likely to be more interested in condos than they have been in the past, the CMHC predicted.

“Demand for condominium apartments [is] expected to remain strong as affordability erosion in the low-rise market pushes buyers (especially first-time) further into the condominium market,” the report said.

“A growing millennial population (aged 20-35 years) looking for an urban lifestyle will look towards condominium purchases within Toronto’s downtown core. ... So too will wealthy baby boomers looking to downsize choose the condominium lifestyle, which is characterized by low maintenance [costs] and close proximity to amenities and transit.”

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