If you’ve been waiting for Toronto’s house prices to drop, we have some bad news for you. Turns out, houses are only getting more expensive.
The good news, though, is that the increase is “modest,” according to Royal LePage. They predict Toronto home prices will rise by just 1.4 per cent this year.
The price increase is a direct result of the market making a rebound after its 2017 slump. Increased interest rates, the introduction of the foreign buyers tax, and stricter mortgage rules helped cool the market, but also discouraged people from buying.
But Toronto home sales are picking back up this year. Re-sale home transactions in June were up by 10.4 per cent, the Toronto Real Estate Board (TREB) reported. And month over month in June, sales rose by 0.2 per cent after climbing 19 per cent in the prior three months, according to RBC’s Monthly Housing Update.
“We’re starting to see [bidding wars] happen,” said David Larock, a Toronto-based mortgage broker, to BNN Bloomberg. “The sky not falling and interest rates falling have combined to bring some enthusiasm back to the housing market.”
This renewed interest is a contributing factor to rising prices since there is a lack of active listings available. This has created a tighter market.
“One of the things that gets forgotten in the discussion and especially the last couple of years, as sales have been off their peak, is that we really haven’t seen any movement in new listings,” TREB’s director of market analysis, Jason Mercer, told The Star.
“In fact, we’re starting to see a decline again on a year-over-year basis in the number of listings going on the system.”
Toronto has become a very unaffordable city for many. Although the average selling price jumped by only three per cent year over year in June, the number is now at $832,703. A recent report found that only one in five families are now able to afford home, and the stress test is often blamed for shutting these people out of the market.
However, on Friday, the Bank of Canada dropped the mortgage rate from 5.34 per cent to 5.19 per cent, marking the first decline in three years. This has given some prospective buyers new hope as the decreased rate makes qualifying for a mortgage a little easier, despite the rise in prices.