Toronto’s real estate market has been at the heart of a recent resurgence of the Canadian housing market after it successfully shook its previous stupor. Toronto has also been affected by increasing affordability related concerns and regulations like the mortgage stress test for cooling property prices. However, customers are back in the market now and how!
As per reports, home prices increased by the highest percentage in the last 2 years in Toronto amidst steadily reducing supply levels. Benchmark prices increased by 5.8% (year-on-year) to touch a whopping $810,900 on the back of rising demand as per TREB (Toronto Real Estate Board) reports. This is the highest increase ever since December, 2017 and takes it close to the record threshold in mid-2017.
Canadian housing market regains its mojo
While Toronto’s successful real estate market has propelled national housing back into the black, even Vancouver has been doing pretty well in recent times. Last month, home sales went up by a whopping 45.4% in the city due to comparatively lower real estate prices. This was confirmed by the Real Estate Board of Greater Vancouver. 2,858 sales transactions took place last month in Vancouver which is 9.8% more than the 10-year average (sales) for October. Average home prices came down by 6.4% (year-on-year) to touch $992,900 yet remain at higher levels still.
Vancouver continues to be the second costliest global housing market after Hong Kong as per several reports. In such a scenario, growing home sales is definitely an indicator of the national housing market recovering its mojo in recent months. Toronto’s real estate market has been rebounding positively and several new projects continue to be launched. Even popular American musician Pharrell Williams has debuted as a developer of real estate with a project named Untitled in midtown which comprises of two towers. He is not alone; there are several big-ticket developments lined up for Toronto in the near future. TREB has already released figures confirming that typical home prices in the GTA (Greater Toronto Area) increased by 5.8% last month to touch $810,900 which is close to the all-time record levels touched in the year 2017.
Major market trends worth noting
The Canadian economy is being given a massive boost with the rebound in Toronto’s property market and the recovery of housing markets in Vancouver. This is a huge positive in a scenario where the national economy faces hurdles such as lower oil prices and trade wars which are already affecting provinces like Saskatchewan and Alberta. The Bank of Canada may take a new stance with a one-time cut in rates and its next meeting is slated for the 4th of December, 2019. This could boost the housing market even further.
In the meantime, construction continues unabated in Toronto. The number of cranes have already crossed triple digits in the city which is more than the three biggest cities in the US, namely Los Angeles, New York and Chicago combined! Approximately 5,000 units are listed for sale in the city and almost 50% have selling prices of at least $1 million or even higher. The positive rebound in property markets in the two cities of Toronto and Vancouver can be attributed to multiple factors including the fall in mortgage rates in sync with reducing yields from global bonds. Canada is also witnessing a swift growth in population from the year 1990 onwards and salaries and employment opportunities are also increasing likewise. The employment rates touched 83.6% for people between 25-54 years of age. This is the highest threshold ever since the year 1976 as per reports. Other markets in Canada are also recovering steadily in terms of housing sales and demand although Toronto and Vancouver lead the pack.
Bank of Canada has already announced its recent rates sometime earlier and experts have stated that these initiatives have helped in eliminating some of the stress from the housing market. Increasing home prices in Toronto are still spawning affordability related issues though. This is spurring a shift towards other GTA areas and suburbs with comparatively affordable housing prices. Prime Minister Justin Trudeau has however promised to tackle the affordability issue with a program that will enable access to government funding for first-time home buyers. The government funds will be available for a portion of the down payment in return for an equity stake in the property.
If implemented well, this could well become a game changer for the Toronto real estate market. The national housing agency in Canada has already shifted Toronto’s housing sector into the moderate yellow zone from the red high-risk zone for the very first time since the year 2015. This in itself points to the growing stability and recovery of the city’s housing market, something that is boosting the Canadian housing sector as a whole in recent times.