Prices Continue to Rise in Toronto

Toronto’s real estate market continued at a torrid pace in May, setting a new sales
record and pushing detached home prices up by 18.9 per cent compared to last
year. The number of new listings for all types of housing to come on the market
was down by 6.4 per cent.
The average price of detached GTA home was $986,691 in May. In the City of Toronto,
prices rose by 15.2 per cent, to an average of $1,285,693. Buyers unable to afford a home
in the city are looking to the suburbs, where detached home prices rose by 21.2 per cent
compared to last May, to an average of $891,870. Multiple offers are being seen in both
the homes and condo markets across the GTA. For the entire market, the average
property spent just 15 days on the market in May and sold for 104 per cent of the listed price.
Recently Beata Caranci, chief economist of TD Bank Group,wrote about howthe lack
of real estate listings is creating buyer gridlock in Toronto for move-up buyers. She says
that although all homeowners are enjoying rising equity in their homes that “would-be
sellers of entry-level homes have seen less price appreciation relative to homeowners
within the trade-up segment.” Caranci says of the fewdetached homes that are available
on the market, a smaller share are listed for less than the median price. “The widening
price gap between an entry-level home and a trade-up home becomes a ‘barrier to entry’ for existing homeowners,” Caranci
says. “This reduces churn in the market, elevating prices and scaling back the selection of choices. This buyer gridlock effect is
made worse as homeowners respond by renovating their entry-level homes.”
The renovations often turn an entry-level home into the category of a trade-up home, further tightening availability at the lower
end of the market, she adds.
The latest forecast from Canada Mortgage and Housing Corp. (CMHC) predicts that
the conditions that created this roaring housing market are likely to continue for some
time. Most importantly, mortgage interest rates are expected to stay near current levels
until some time next year, according to CMHC. Other economists agree that any rate increasewill
not happen until late in 2017. CMHC believes thatOntario’s economy “is poised
to grow at one of the fastest paces during this post-recession period,” which means net
migration to the province will grow by more than 100,000 in each of the next two years.
For frustrated would-be buyers, the best bet is to work with a real estate
professional who knows the neighbourhood and the market and can help them find their
next home. For those who are thinking of downsizing or moving out of town, there’s
never been a better time to put their homes on the market.

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Charles Smith

Charles Smith

Sales Representative
CENTURY 21 Landmark Realty Ltd., Brokerage*
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