Last month, the Canadian Real Estate Association (CREA) released its October home sale numbers, showing that home prices were up 5% on average in October year-over-year, and home sales are similarly on the rise. But in Toronto, the price increase was more dramatic. The Toronto Real Estate Board said home sales in the Greater Toronto Area climbed 12% in October—the biggest month-over-month growth in sales since the city’s red-hot housing market hit a peak in March and the provincial government enacted cooling measures. The Toronto Real Estate Board (TREB) said 7118 homes were sold in October. Forecasters expect prices to rebound across the country in 2018, led by a Toronto resurge.
Heating up again after cooling down
After the Foreign Homebuyers Tax was implemented in August 2016 in Vancouver in order to cool the sizzling hot market, it did cool down for a short time. Toronto, similarly, enacted a foreign buyer’s tax in April 2017 and saw a cool-down. According to Jason Mercer, director of market analysis at TREB, the Toronto market, which has begun recovering discernibly, has continually followed in the footsteps of the Vancouver market, which commenced their recovery period in January 2017.
Upcoming boom in Toronto?
Deputy chief economist at CIBC World Markets, Benjamin Tal, has predicted that Vancouver and Toronto are both heading into a housing boom. Many buyers no longer seem concerned about a housing bubble burst and are back on the market for a new home. Also, some buyers-to-be are eager to make a move before upcoming changes put forth by the Office of the Superintendent of Financial Institutions (OSFI) takes effect on January 1, 2018—including a mandatory stress-test for insured and non-insured mortgages alike. Although market demand is still thriving, the stress-test does affect what amount people can spend on their mortgages, which throws a slight twist into 2018 housing market forecasts. But Royal LePage chief executive officer Phil Soper believes most buyers will not be aware of the stress-testing rules and are not trying to avoid them. Super believes the Toronto market is being driven by a legitimately high demand for housing due to the area’s strong economy and continual growth, and that if there is anything to worry about, it’s the possibility of another huge surge in prices.