The average selling price for all types of homes jumped to $762, 975, leading at least one expert to expect further action by Ottawa.
Toronto’s real estate sales climbed more than 11 per cent in October compared with a year earlier, despite the introduction of new federal mortgage rules aimed at cooling the region’s overheated housing market.
The average price of all homes across the Toronto region rose 21 per cent to $762,975 last month, compared to October 2015, according to the Toronto Real Estate Board (TREB) on Thursday. Real estate sales climbed 11.5 per cent in October, compared to the same month in 2015.
In Toronto the average home — including all types of houses and condos — was $770,480, higher than the $758,369 average in the 905-area communities surrounding the city.
But the average cost of a detached home in Toronto was up 22 per cent year-over-year, pushing past $1.3 million and bringing the regional average for a house with a yard beyond the important psychological mark of $1 million. A detached home in the 905 communities averaged $948,191.
The continued climb of sales and prices in Toronto, contrasts sharply with a 40 per cent drop last month in Vancouver real estate activity. It shows that governments must carefully balance consumer protections against healthy market activity, say Toronto realtors.
Cam Forbes, general manager of Re/MAX Realtron Realty, expects Ottawa will take further action next year to cool the market and protect consumers from adding more debt to their household burdens.
“Prices are going up at a fairly rapid rate in the Greater Toronto Area and the mortgage changes aren’t going to have a huge impact,” he said.
Last month, Finance Minister Bill Morneau introduced more rigorous stress testing of insured mortgages and eliminated a tax exemption for non-resident sellers.
But the new rules affect a relatively small number of mortgages in the Toronto region, said Forbes. Consumers buying homes over $1 million have lots of equity.
Although he doesn’t expect more stringent downpayment rules, Forbes says the government has other options.
“They can increase the price of mortgage insurance, or continue just to tighten the underwriting conditions for mortgages.”
TD Bank’s announcement Tuesday that it is raising its mortgage prime is the first indication of banks passing on the cost of Ottawa’s new mortgage rules to consumers, said Royal LePage CEO Phil Soper.
“We’ll see that adjustment roll through the industry but the impact of that will be small relative to the impact of home prices rising by 20 per cent,” he said.
Soper also cautioned against a Vancouver-style 15 per cent tax to foreign real estate transactions.
Vancouver’s 40 per cent drop in real estate activity last month, shows that tax dealt “a body blow” to West Coast consumer confidence, he warned.
A gentle rise in interest rates, coupled with the continued increase in home prices, will combine to be the best mechanism for slowing the market, said Soper.
But government interference that manipulates real estate prices such as the Vancouver tax is confusing to buyers.
“Left to its own devices, (Vancouver) home prices would have slowed and the market would have corrected mildly. When you slap a huge tax on a market you shock people,” he said.
That kind of tax here could threaten the contribution real estate makes to the Ontario economy, not just on property transactions, but consumer goods and costs associated with moving.
“I don’t think any politician in Ontario is looking at the Vancouver situation and saying, ‘I wish we could abruptly take half the transactions out of the market,’ ” he said.
Although new listings were up slightly in the Toronto area in October, it remains a seller’s market, said TREB.
“Buyers of all home types experienced intense competition,” said TREB director of market analysis Jason Mercer.
“Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments,” he said.
Toronto region real estate in October
Increase in Halton region home prices in October year-over-year to an average of $770,600
Increase in Peel region home prices in October compared to the same month last year, to an average of $584,300
Increase in Toronto home prices year-over-year in October to an average of $705,600
Increase in York Region prices in October year-over-year to an average of $892,200
Increase in October home prices in Durham Region to an average of $505,900
Source: Toronto Real Estate Board benchmark price index, including all house and condo prices
By TESS KALINOWSKI -Real Estate Reporter – Toronto Star
Thu., Nov. 3, 2016