National Post (National Edition)
‘It needed a jolt back to reality’
The slide in Toronto prices does not show any sign of abating. The average price of a detached home in GTA is close to breaking through the psychological $1 million barrier. TREB said the average detached home in the GTA sold for $1,000,336 last month, a 4.9 per cent increase from a year ago and well below the $1,205,262 average in April.
TREB statistics do show more moderately priced segments of the market like semi-detached homes and condominiums are performing better as the GTA market cools. The average condo unit in the GTA sold for $501,750 in July, up 23.2 per cent from a year ago. That price was off from $519,784 in June.
Christopher Alexander, regional director, RE/MAX INTEGRA Ontario-Atlantic Canada Region, said the government’s intervention has been a failure. “Maybe the intentions of the plan were good but I don’t know if what they really tried to do has taken effect — the whole purpose of the plan was affordable homes and condos are over $500,000. That was the affordable option. Sales under $500,000 across the board are down since the first quarter,” he said.
Doug Porter, chief economist with Bank of Montreal, said the “steep pullback” in the detached segment is much more a statement on how the market went too far earlier this year. “It needed a jolt back to reality. I think it’s far too soon to be thinking about reversing the measures. If Vancouver is any guide — and it is probably a good one — it suggests activity will soon stabilize,” he said, adding the Bank of Canada has to consider the national economy when it comes to further rate increases and not just the Toronto housing market.
The housing sector could face further cooling if the Office of the Superintendent of Financial Institutions follows through with changes that would impact low-ratio mortgages or people with more than 20 per cent down payments. New rules would force those consumers to qualify for mortgages based on the rate on their contact plus two percentage points.