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Home prices up

Toronto home prices are surging, with no end in sight of satisfying the “pent-up demand.”

Sales in the area climbed 6.3 per cent in May to 11,706 from a year earlier, the Toronto Real Estate Board said today, while the average price for all types of homes rose 11 per cent to $649,599.

 

The average price for a detached home in the so-called 416 area code now tops $1.1-million, up more than 18 per cent from a year earlier, the realtors group said.

 

You can see what’s happening by looking at new and active listings, which fell from a year earlier by 0.8 per cent and 10.1 per cent, respectively.

 

“Tight market conditions, especially for singles, semis and town homes in the [Greater Toronto Area], have resulted in strong price growth regardless of the price metric being considered,” Jason Mercer, the group’s director of market analysis, said in today’s report.

 

“With no relief so far on the listings front, expect similar rates of price growth as we move through the remainder of 2015,” he added.

 

“At this point, a number of months where listings growth outstrips sales growth would be required to satisfy pent-up demand.” Toronto and Vancouver are Canada’s two hot spots. As The Globe and Mail’s Brent Jang reports, prices for detached homes in the Vancouver area climbed 16.3 per cent in May to more than $1.4-million.

 

Economists, too, see Canada’s housing markets holding up, though those in Alberta and other oil-producing regions have been hit by the slump in crude prices. “The Bank of Canada’s decision to cut interest rates in late January led to mortgage rates being notched downward and likely contributed to the revival in activity,” Royal Bank of Canada said in a report today, referring to sales levels in March and April.

 

“Another annual rise in average home prices would exert pressure on affordability; however, the deterioration will likely be limited by historically low interests,” its economists said.

“In 2016, the combination of price gains and rising rates will likely put sufficient stress on affordability levels that resale activity will begin to soften.”

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