Toronto home prices soar a record 33%, pushing average house to $916,000

As reported by the Financial Post April 5 2017

Toronto’s residential housing market showed no signs of cooling last month, with the average sale price soaring a record 33 per cent from a year ago, pushing the cost of a detached home in the heart of the city to almost $1.6 million.

In Toronto and surrounding suburbs prices climbed by a third in every major housing category, including townhouses and condominiums, as demand rose and listings failed to keep pace, according to figures from the Toronto Real Estate Board. The average home price in the metropolitan area rose to $916,567 from $688,011 a year earlier. Unit sales jumped 18 per cent to 12,077, the board said in a statement Wednesday.

“Annual rates of price growth continued to accelerate in March as growth in sales outstripped” listings, said Jason Mercer, head of market analysis at the real estate board. “A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.”

The soaring prices and limited supply are sparking debate among policymakers on how to ensure there is enough affordable housing while trying to avoid a market crash. Options under consideration by the city and province of Ontario include a new tax on foreign buyers or a tariff on vacant homes to curb speculation.

No Consensus

“I have a deep concern about the frustration that must be faced by young homebuyers trying to get in this market and just by people trying to move up in their housing,” Toronto Mayor John Tory told Bloomberg Television on Tuesday.

Tory said there’s no consensus yet on “the nature of the forces that are pushing the prices up the way they are” and what is best to do about it.

Toronto Real Estate Board President Larry Cerqua said it’s encouraging that government officials haven’t introduced any “knee-jerk” housing policies.

“Policy makers must remember that it is the interplay between the demand for and supply of listings that influences price growth,” Cerqua said in a statement.

The Toronto Real Estate Board is among opponents of the idea of implementing a foreign buyers tax to curb price gains. The group says the real problem is a dearth of housing inventory.

Bank of Nova Scotia’s Canadian banking head James O’Sullivan said governments may have to intervene in the housing market if prices remain “overheated.”

Toronto’s market is of prime concern because of unsustainable and unhealthy price increases, he told reporters Tuesday after Scotiabank’s annual meeting. He’d like to see how home sales play out between April and June before pushing for further measures.

A foreign-buyers tax, such as the one British Columbia imposed last year to cool Vancouver’s housing market, and a speculation levy should be “on the table,” he said.

Vancouver, formerly Canada’s hottest housing market, saw benchmark home prices rise 13 per cent last month from a year ago, the Real Estate Board of Greater Vancouver said on Tuesday. The average benchmark selling price of a single-family detached home in the Greater Vancouver Area rose 11 per cent to $1.49 million.