Barbara Shecter - Financial Post
Home prices continued to climb in the hot Toronto area residential real estate market in September, hitting the third-highest mark on record for the month, according to data released Tuesday by the Toronto Regional Real Estate Board.
The average selling price for all home types combined was up by 18.3 per cent year-over-year to $1,136,280.
The board and other real estate organizations are calling on government to take stronger measures to address supply shortages to help take the wind out of red-hot prices that are keeping many out of the market and could hurt the economy in the longer term.
The average selling price in the Greater Toronto Area was up both month-over-month and year-over-year, though the number of sales was down 18 per cent from September 2020’s record result.
Greater Toronto Area realtors reported 9,046 sales as market conditions tightened, with a significantly lower number of listings — down 34 per cent from the same time last year — and sales representing a substantially higher share of listings.
The period included a resurgence in the condo market, which contributed to sales representing a greater share of listings, TRREB said.
“Demand has remained incredibly robust throughout September with many qualified buyers who would buy a home tomorrow provided they could find a suitable property,” the real estate board said in a news release Tuesday morning.
“With new listings in September down by one third compared to last year, purchasing a home for many is easier said than done.”
TRREB said the lack of housing supply has reached a critical juncture, adding that “bandaid policies to artificially suppress demand have not been effective.”
The real estate board called on all three levels of government to create stronger policies to address a shortage of new housing supply.
“This is not an issue that can be solved by one level of government alone,” said Kevin Crigger, TRREB’s president.
“There needs to be collaboration federally, provincially, and locally on a solution.”
Scarcity of supply continues to put upward pressure on home prices in Vancouver as well, data published this week by the Real Estate Board of Greater Vancouver show.
The real estate board also called on the newly re-elected Liberal government to address the issue.
“The total inventory of homes for sale remains insufficient to meet the demand in today’s market. This scarcity limits peoples’ purchasing options and ultimately adds upward pressure on home prices,” said REBGV economist Keith Stewart.
“With the federal election now behind us, we hope to see governments at all levels work with the construction industry to streamline the creation of a more abundant and diverse supply of housing options.”
The Multiple Listing Service (MLS) composite benchmark price for residential properties in Metro Vancouver is $1,186,100, which represents a 13.8 per cent increase over September of 2020 and a 0.8 per cent increase over August of this year.
The real estate board noted that analysts expect downward pressure on home prices only once the ratio of sales to active listings falls below 12 per cent for a sustained period.
In September, the overall sales-to-active-listings ratio for all property types in the market was 34.1 per cent, with detached homes at 25.5 per cent, townhomes at 53.1 per cent, and apartments at 36.7 per cent.
There was more housing news on Tuesday, with real estate franchise RE/MAX predicting that demand from young families will help drive a five per cent increase in the average residential sale price for all home types between now and the end of the year.
“Housing activity throughout the pandemic has remained strong, so it comes as no surprise that the outlook for the remainder of the year continues on an upward trajectory, which is great for homeowners and their equity, but challenging for first-time buyers who have been priced out of the market,” said Elton Ash, executive vice president of RE/MAX Canada.
RE/MAX’s Fall Housing Market Outlook Report noted that single-detached homes experienced the biggest price gains over 2020, rising between 6.8 per cent and 27.3 per cent across 26 markets surveyed.
“As our brokers and agents predict, the fall market activity is expected to remain steady, which is promising, despite the ongoing challenges presented by the Delta variant,” says Christopher Alexander, senior vice president of RE/MAX Canada.
“This is particularly relevant given housing markets in Canada are often a good indicator of economic activity in the country.”
While it may be good for the economy in the short term, Alexander said there is “no doubt that the rapid price growth we’ve experienced recently is cause for concern.”
While there are indications single-detached-home price acceleration may be starting to level off in some urban centres, prices are continuing to rise in many smaller cities and communities that were once “havens for affordability.”
“Our current government needs to stop applying band-aids and cure the problem at its root,” Alexander said, noting that there is not enough new home construction.
While low supply and high demand have created challenging conditions for many homebuyers across Canada, especially in cities such as Toronto and Vancouver, affordable options exist for homebuyers who are considering alternative markets due to the continued ability to work remotely, according to RE/MAX.
In the fall outlook, prices in Calgary and Regina are expected to remain relatively flat, while Edmonton, Saskatoon, Vancouver, Victoria, Winnipeg, and Nanaimo are expected to see price gains of between four and nine per cent through year end, according to RE/MAX brokers and agents.
The outlook is not uniform for Ontario, which has seen some of the highest average residential price increases across single detached homes in the country. RE/MAX is predicting a two per cent price decrease in North Bay, with increases across the other regions ranging from two to 15 per cent.
Atlantic Canada, which has weathered the pandemic better than much of the rest of the country, has seen significant increases in cities such as Halifax, N.S., and Moncton, N.B., and this trend is expected to continue for the remainder of 2021.
The average price of a single detached home in Halifax increased by 24.3 per cent year-over-year to $500,147.
In Moncton, prices rose from 21.2 per cent to $282,886, and continues to have one of the highest price outlooks for the remainder of the year, according to RE/MAX.
The condo and townhome markets in the Atlantic provinces has also performed well, with these markets in Halifax, Saint John, N.B., and Moncton experiencing price surges of between 12.5 per cent and 48.9 per cent year over year.
Moncton is expected to continue strong, with one of RE/MAX’s highest price outlooks for the remainder of 2021.
Saint John is expected to see more tempered price growth, ranging between one and three per cent across all property types, while Halifax could see a six-per-cent increase in average sale price for the remainder of the year.
Meanwhile, British Columbia’s Nanaimo, Victoria and Vancouver all experienced significant price growth, at 23 per cent, 19.1 per cent and 16.4 per cent, respectively. Nanaimo also saw one of the largest price surges in its condo and townhome segments when compared to other Western Canada regions, with average condo prices currently sitting at $343,713, a 17.6 per cent year-over-year increase. The average townhome price has climbed to $511,549, a 65.8-per-cent increase.