Real Estate Prices Ontario Continue to Fall

Real Estate Prices Ontario

As the national housing market numbers drop, Ontario’s real estate prices are the biggest culprit. Sales and prices in most markets are declining significantly, says economist Rishi Sondhi of TD Bank. Ontario, like British Columbia, was hit hardest by the pandemic that ravaged the Canadian housing market. Before the pandemic hit, Ontario’s housing market had seen the largest run-up in prices, but it also suffered from a severe affordability breakdown.

Toronto’s housing market has been hot for two years

It’s no secret that Toronto’s housing market has been on fire for the past two years, but it’s now starting to cool down. The decline in home prices this month is a result of back-to-back hikes in interest rates by the Bank of Canada. Compared to a year ago, the number of properties listed for sale in Toronto fell by 8.9% in February. But the housing market in the core of Toronto has not slowed down. In fact, prices increased 5.2% between February and April.

Recent national sales trends have improved more than expected, and the number of new listings has rebounded to their five-year average. This has eroded active inventory in many markets, which was already low. Nonetheless, it is unclear what the future holds for Toronto’s housing market. The government is hoping to steer the housing market back toward its normal annual cycle, which shows an average price increase of one to three percent per year.

One reason the Toronto housing market has cooled off is because of reverse migration, which has spurred demand for condominiums and higher-density homes in the city. Many people who moved to the suburbs a year ago, such as young professionals, are returning to the city. Meanwhile, the number of immigrants coming to Canada has increased, and the government has increased immigration targets, which will increase the country’s population by about 1% per year. The city should be receiving a large proportion of these newcomers.

As a result, the Toronto housing market remains extremely competitive. As a result, bidding wars are expected for virtually every available listing. Purchasing a home in Toronto is a big financial decision – and not everyone can afford a large house. With a growing number of Canadians working from home, a bigger space is essential. As prices go up, demand will begin to exit the market.

Prices continue to rise despite global uncertainty. Although many economists have warned that Canada’s housing bubble could burst, the recent rise in interest rates has tempered the upward trend. While the price of detached homes in the suburbs increased by 33%, the cost of townhouses and condominiums have remained steady. The downtown core, condominiums and townhouses have continued to rise less ferociously.

Condo prices are rising faster than houses

While the price of a detached house in Ontario is expected to rise by about 8% per year between 2011 and 2021, a recent study has revealed that condos are rising much faster. The average price of a condo in Toronto increased by 12 per cent last month, compared to just 1% for houses. A recent report by Zoocasa points to the fair housing plan as a contributing factor. The ratio is now higher than it’s been since the B-20 mortgage stress test in 2017.

According to Zoocasa, detached homes in the GTA were worth an average of $1,741,318 while the average condo was $748,566. This is indicative of the growing role of foreign capital in Ontario real estate. The rising tide of capital has shifted demand in certain areas, driving prices up. The study also found that after the levy was implemented in British Columbia, condo lending increased in Ontario.

This trend is not surprising considering that house prices are increasing. This trend is a result of demographics. A recent Ipsos survey shows that only 7% of Canadians have increased their savings. While the rise in prices is a result of higher incomes, many people are using their money for online purchases or to upgrade their homes. Furthermore, with inflation increasing faster than incomes, Canadians will not be able to save as much as they’d like.

Home prices in Ontario have hit a record high in the month of November, despite a drop in new listings. The average home price in Toronto increased by 21.7 per cent year-over-year in October. The national average increased by 19 per cent over the same period. Meanwhile, sales in Vancouver increased by 11.9 percent from September to October, while in Montreal, they jumped by 8.6% in a month.

Foreign capital is fueling price growth

The growing number of multi-property buyers is pushing first-time homebuyers out of the market in Ontario. According to the Teranet’s Quarterly Market Insight Report, more than 25% of all real estate transactions in Ontario are made by multi-property owners. This group has steadily increased in size, as opposed to the small percentage it held ten years ago. By 2021, however, first-time buyers will make up a small portion of Ontario real estate transactions, with only 22% of purchases made by first-time buyers.

The federal government is considering implementing a foreign homeowner tax. While the intention is to curb housing prices, Ontario and British Columbia experience shows that such taxes have little impact. Rather, they merely reduce the distorting effect of foreign capital flows. The Ford government said it would work with municipalities to introduce taxes on vacant homes and land speculation. A spokesman for the Ford government did not respond to an email seeking comment on the matter.

As Canadian housing prices rise, foreign capital is driving up the prices. Earlier this year, Deputy Governor Paul Beaudry acknowledged that the increasing number of foreign investors was one factor behind the rapid increases in Ontario. But these inflated prices are not necessarily the result of new jobs, as the employment picture has improved. For many young residents of Ontario, home ownership is no longer a realistic goal. As of last year, the average selling price of a home in the Greater Toronto Area had risen by nearly 50 percent. Despite this increase, however, Ontario’s property tax rate has been raised by only three percent, indicating that foreign capital is fuelling the rise.

The government’s fiscal update released this month warns of an affordability crisis in Canada. The lower short-term interest rates created fertile conditions for asset price inflation and a frenzied “search for yield.” Foreign capital saw the value of Canadian homes rise and sought out the safest, most profitable investments. Developers were able to respond by building “safe deposit boxes” in the sky to cater to the needs of foreign capital.

Active inventory is eroding

A lack of active inventory is a potential market spoiler, as sellers will be more cautious about listing their properties. The number of active listings dropped by more than half since November 2019. Pent-up demand is also a significant limiting factor, with sellers reluctant to list their properties if they aren’t sure they can sell them quickly. The resulting shortage of properties is causing prices to fall across the province.

Despite the eroding active inventory, prices in Toronto and Vancouver have increased by more than 18 per cent this year. While this increase reflects a booming local economy, it is likely to be offset by eroding affordability in the second half of the year. With less inventory on the market, average prices are expected to rise moderately over the second half of the year. While the average price in Toronto and Vancouver may continue to increase, it is unlikely to exceed the $1 billion mark that it reached last year.

A tight supply/demand balance has impacted most Canadian markets. While transactions on either end of the price spectrum can have a significant impact on average home prices, benchmark prices strip out these impacts and report only a m/m increase. During April-June, average home prices increased between 1.3% m/m. These increases have come in spite of the tight supply. The current supply of homes in Toronto is the lowest in more than a decade.

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