Key Highlights
- Toronto home values increased +20% y/y in March
- New listings up +57% from March 2020
Toronto Home Prices on Tear
Toronto home prices are accelerating at its fastest pace since 2017, according to a report from the Toronto Regional Real Estate Board.
Home values increased +20% y/y and new listings jumped +57% y/y from March 2020 when the pandemic onset essentially froze real estate happenings.
Toronto’s benchmark price index indicated a +10.8% gain during Q1 2021.
The average price across Toronto’s metro area was US$878,000, an increase of +21.6% from March 2020. Prices for detached homes surrounding the city core came in just above that average price for an increase of +31.4%.
Some Economists Worried
“The potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale,” said Jason Mercer, Toronto real estate board’s chief market analyst. “This will become more apparent as population growth resumes over the next year.”
Frenzy for Larger Homes
As in the US, the pandemic, remote working conditions and cheap mortgages have ignited demand for more spacious homes in the Toronto area. Potential buyers are bidding up prices and, if disappointed in bidding wars, looking “further out” from Canada’s largest cities.
The revival of “more normal levels of immigration,” substantially slowed by the pandemic, is also driving demand for more spacious homes.
New Policy Actions Needed to Slow Things Down?
Canada’s largest banks are debating whether or not the government ought to step in to slow prices down. The concerns, of course, center around affordability, particularly for first-time buyers.
The Canada Mortgage & Housing Corp., Canada’s federal agency that monitors the housing market, upped its take on Toronto’s vulnerability to a sudden price drop and a potential housing “bubble.”
The chief economist of the Bank of Nova Scotia, Jean-Francois Perrault, cautioned patience if/when considering actions to slow price acceleration. He believes lack of inventory is driving price hikes and that the spring market will take care of itself.
Other economists at the Royal Bank of Canadaand Bank of Montreal are calling for more urgent action to stave off the possibility of a destabilizing crash in the future.
Thanks to Bloomberg.
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