Sellers emerge as market heats up
CREA says new listings rose 17%, as February prices raise alarm
Soaring home prices in Toronto have triggered a flurry of real estate activity in the city, the latest sales data suggest.
Transactions jumped 6.4 per cent in February on the month, the most in three years, as sellers emerged with new listings rising 17 per cent, the Canadian Real Estate Board said in a release.
Benchmark home prices were up 3 per cent last month, the second biggest monthly gain in the past decade.
The recent jump in home prices in Toronto, with prices up 24 per cent from a year ago, has raised considerable alarm, in part because it coincided with a dearth of new listings.
Even with last month’s gain, new listings are down 13 per cent from year ago levels.
“Any lingering debate that Toronto is now in a bubble was put to rest by February’s cannonading 24-per-cent” rise in benchmark prices and “razor-tight inventories,” Bank of Montreal chief economist Doug Porter wrote in a draft note to clients. Even some Canadians earning $225,000, which puts them on the cusp of
“Any lingering debate that Toronto is now in a bubble was put to rest by February’s cannonading 24-per-cent” rise in benchmark prices and “razor-tight inventories.”
DOUG PORTER BANK OF MONTREAL CHIEF ECONOMIST IN A DRAFT CLIENT NOTE
wealthiest “1-per-centres,” would be shut out of the market for homes worth more than $1 million when taking into consideration mortgage qualification and insurance requirements — even if they’ve saved for a hefty down payment, Porter said.
Still, such obstacles don’t appear to be slowing the region’s housing boom.
New listings in Toronto have posted monthly gains of more than 17 per cent only four other times in the history of data, going back to 1988.
Porter said amid such frothiness, a tax on non-resident purchases is a reasonable way to cool the market.
“That tax seems to have done exactly what policy-makers hoped to achieve in Vancouver — cool the market without crashing it.”
“Homes are selling briskly throughout the Greater Toronto Area and nearby communities,” Cliff Iverson, president of the Ottawa-based realtor group, said in the statement Wednesday.
Sales in Canada were down 2.6 per cent from February 2016, due to a slowdown in B.C.’s Lower Mainland region
“Elsewhere, competition among potential buyers is less intense, so listings take longer to sell,” Iverson said. CREA reported the number of newly listed homes rose 4.8 per cent in February, led by the Toronto area and nearby markets following a sharp drop in January. But the amount of time homes were on the market dropped nationally to 4.2 months in February from 4.5 months in January.
TD Bank economist Diana Petramala said markets in Ontario have been heating up at an unsustainable pace.
“While TD Economics still doesn’t believe we’re in a bubble territory, we do think that the market has the potential to increasingly approach one,” she wrote in a report.
“In light of mortgage rates remaining low and mortgage regulation changes having negligible impact on home demand, there appears to be no visible brake that would stop this train in this year.”
Compared with a year ago, sales in Canada were down 2.6 per cent from February 2016 due to a slowdown in B.C.’s Lower Mainland region, which has seen a significant drop in the pace of sales.
The B.C. government brought in a 15-per-cent foreign buyers tax in Vancouver last August amid concerns about housing affordability.