Housing report says prices to rise after calm
Royal LePage CEO says Toronto’s trajectory mirrors Vancouver’s experience
The chill of Ontario’s new housing policies appears to have passed, with signs that Toronto real estate is recovering, according to a new report.
In fact, some corners of the GTA market are showing a return to the bidding wars that were commonplace only last spring, says the third-quarter report from Royal LePage.
It shows prices were up 1.5 per cent in the third quarter, compared to the same period last year, with the bright spots in the entry-level priced homes, notably condos, and some relatively affordable pockets such as Ajax and Oshawa.
Although the Toronto-area market has climbed 21.7 per cent year over year to a median home price of $860,295 in the third quarter, much of that growth occurred in the early months of 2017.
“We’re in the throes of a market shift . . . the tail end or bottom of a market correction,” Royal LePage CEO Phil Soper said.
But he said, “This particular correction doesn’t look to be either deep or long.”
At the brokerage level, the company is seeing more multiple offers on properly priced properties, Soper said.
“If you go back to July and August, the multiple offers had all but disappeared and houses were not attracting the kind of foot traffic one would expect in a robust market,” he said.
Toronto’s trajectory, following the introduction of market cooling policies, such as the foreign buyers tax, mirrors Vancouver’s experience, Soper said. But where Vancouver took about 10 months to turn around, six months seems to be Toronto’s recovery time following the April launch of the Liberal government’s Fair Housing policies.
Toronto’s bigger market and more diverse economy support a milder correction, he said. It’s also more affordable. As expensive as the Toronto region is, Vancouver prices are significantly higher, Soper said.
The concentration of foreign investment was also much higher in the Vancouver region, although some areas of the Toronto region, such as York Region, have sagged with the new foreign buyers tax.
More moderate price growth is a plus for home buyers, giving their incomes time to catch up with the cost of housing. Recent interest rate hikes and the possible tightening of lending rules could extend that trend, he said.
Condo prices in the Toronto region were up 2.9 per cent quarter over quarter to a median price of about $472,000, compared to 1.4 per cent growth in the $1-million median cost of a two-storey house and 0.2 per cent rise for bungalows, which had a median price of about $835,000.
The Royal LePage house price index showed that, for the first time since 2011, Canada’s five biggest cities were rising at a similar “healthy” pace in the low single digits.
Montreal is booming, Calgary appears to have moved out of its “oilbust blues” and Ottawa is "a picture of healthy market growth.”
“Canadian housing is enjoying a Goldilocks moment,” Soper said in a news release. “Not too hot and not too cold.”