Toronto’s hot real estate market isn’t showing any signs of cooling and a new report explains why.
As we have seen from numerous real estate reports, home prices continue to skyrocket across Canada. Some believe Toronto’s bloated housing market is on the verge of popping, but not until mortgage rates increase and discourage future foreign real estate investments.
A new report shows that the city’s home prices continue to rise and why they aren’t dropping just yet.
“Those hoping for a slow-down in the Toronto area’s housing market will need to wait a bit longer — all indicators from the past month’s data for October 2021 are showing a market that is actually heating up rather than cooling down,” reads the latest Move Smartly report from John Pasalis, president of the real estate brokerage Realosophy Realty.
There are fewer homes on the market. At the end of October, the Toronto area had only 3,687 houses available for sale, a 56 per cent decline from inventory levels last year and well below the roughly 12,000 active house listings that are more typical for the month of October, the report notes.
“Toronto’s housing market continues to be a market where demand significantly exceeds the supply of homes coming on the market for sale,” Pasalis says.
But he argues the strong demand today is different from the housing demand last year at this time in the first year of the pandemic.
“This time last year, the strong demand was largely driven by a surge in home buyers entering the market,” he says in the report. “This year, the surge in demand is coming from investors rather than end users.”
In fact, house sales were down 18 per cent on a year-over-year basis in October, but still above pre-COVID 19 pandemic levels for October in 2018 and 2019.
The average price for a house in October was $1,445,088, up 28 per cent over last year; the median house price in October was $1,265,000, up 33 per cent over last year.
Condo prices are also on the rise.
The average price for a condo in October reached $730,726, up 15 per cent over last year; the median price for a condo in October was $660,000 up 15 per cent over last year.
So when will Toronto see a decrease in home prices?
While many people suggest that an increase in mortgage interest rates will lead to a price drop, Pasalis suggests this is unlikely in the short-term. Many homeowners have fixed, five-year mortgages so the change in rates won’t have an immediate impact.
So, if you are looking to buy a home, you may want to hold off a bit. Looking to sell? Don’t wait too long.
“If we see a lot of demand come out of the market and more homes listed for sale, our market will start to slow down, but will continue to remain in seller’s market territory, with prices growing at a more modest rate than we are seeing now,” the report states.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
