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.