Average home price in Toronto up 25 percent from a year ago
The average price of a home in the Greater Toronto Area increased by roughly 25 percent between April 2016 and April 2017 — in March, home prices were up 33 percent from the same month, a year before.
But according to data released by the Toronto Real Estate Board today, the number of homes listed for sale in April 2017, was 33.6 percent higher than a year prior, a positive sign for a housing market struggling to keep up with the pace of demand for homes.
Dwindling supply, or generally a lack of homes available to buy has been one of the key drivers of home price growth in the GTA over the last two years. The average price of a single-detached residence in the Toronto area is approximately $1.2 million, $200,000 higher than what it was just a year ago.
As of April 2017, an average home in the GTA, (condos, townhouses, single-detached houses) cost $920,791.
“The fact that we experienced extremely strong growth in new listings in April means that buyers benefitted from considerably more choice in the marketplace,” said TREB President Larry Cerqua in a press release.
“It is too early to tell whether the increase in new listings was simply due to households reacting to the strong double-digit price growth reported over the past year or if some of the increase was also a reaction to the Ontario Government’s recently announced Fair Housing Plan,” Cerqua said.
This sudden upswing in home prices is the direct result of a real estate bubble that has been brewing in Canada’s largest city over the last seven to eight years. Under intense pressure from average Canadians priced out of Toronto’s housing market, the Ontario government intervened last week, releasing a set of 16 new rules aimed at taming the home price flare.
One of those rules is a 15 percent tax on home purchases made by non-Canadian citizens. There has been some evidence that foreign buyers are using Toronto properties as a parking spot for their investments, one of the major reasons why home prices have increased so dramatically of late. But that narrative is problematic, simply because there isn’t enough data to back it up.
According to TREB, the number of home buyers in the GTA with a mailing address outside Canada is less than one percent, and in fact, a bulk of these buyers have a mailing address in the United States.
Between 2008 and April 2017, the average share of foreign buyers in the Greater Golden Horseshoe Area (i.e. Toronto and its suburbs) was 2.3 percent. TREB also claims that the majority of foreign buyers bought Toronto homes as a place to live, not simply for investment.
“Honestly, nothing is going to really cool this market until interest rates go up,” Caldwell Securities analyst James Thorne told VICE Money. “Toronto and Vancouver, whether we like it or not, have become international destinations for foreign capital.”
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