The Greater Toronto Area just experienced its strongest August on record, with sales booming in the suburbs beyond city borders.
A whopping 9,813 homes exchanged hands in the GTA, the Toronto Real Estate Board (TREB) revealed in today’s Monthly Resale Housing Market Figures report – up 23.5% from last year.
TREB points to August’s two additional working days as a reason for the spike in Toronto real estate, noting sales would have grown 13% without them. However, it’s clear the board is keen to gauge whether foreign investment is driving prices in the region; it announced it will release third party data, along with consumer and realtor survey results, this fall and winter on “foreign buying activity and issues affected supply of ownership housing”, according to TREB Director of Market Analysis Jason Mercer.
Are Foreign Investors Driving GTA Home Sales?
The extent of foreign investment in the GTA is a hot topic following intense scrutiny in Vancouver’s market, where the provincial Liberal government recently implemented a 15% tax on all foreign home purchases within the city. The move has since led to a 26%-drop in Vancouver home sales and speculation that the market may finally be cooling on the west coast.
Analysts have expressed concern that those deterred investors will set their sights on Toronto’s market instead, where such restrictions have yet to be implemented. All eyes will surely be on the data TREB is set to reveal in the coming months to see whether that’s the case.
Strong Sales in the Suburbs
Whether or not Toronto is in for such measures, Canada’s second-hottest housing market remains a tough act for home buyers. Detached houses are increasingly rare within the city limits, leading buyers to ‘drive until they qualify’ – a trend reflected in TREB’s monthly report, where sales in the 905 steadily outstrip those in Toronto proper.
Only 863 detached houses sold last month in the 416, compared to 3,586 in the 905. However, you’ll still need nearly seven figures to afford one, regardless of where you buy – the average house price hit $1,206,637 in Toronto and $905,610 in the burbs.
With the exception of condos, sales for every housing type exceeded Toronto levels outside city limits:
|Toronto MLS Sales & Average Price By Home Type August 1 – 31, 2016|
|Yr./Yr. % Change||14.8%||24.0%||22.1%||18.3%||23.3%||21.5%|
|Yr./Yr. % Change||-8.8%||15.6%||8.6%||16.4%||20.6%||17.6%|
|Yr./Yr. % Change||14.1%||25.8%||22.8%||16.9%||18.4%||17.7%|
|Yr./Yr. % Change||33.5%||28.6%||32.0%||9.8%||9.2%||9.8%|
Growing Incomes and Low Rates Boost Buyers
According to TREB President Larry Cerqua, improving incomes and lingering low mortgage rates continue to support buyer ambitions, despite tight supply. “The conditions underlying strong demand for ownership housing remained in place, including a relatively strong regional economy, growth in average earnings and low borrowing costs,” he stated in TREB’s release. “Unfortunately, we did not see any relief on the listings front, with the number of new listings down compared to last year. This situation continued to underpin very strong home price growth, irrespective of home type or area.”
As well, mortgage rates are on track to remain at record lows for at least the medium term; the Bank of Canada opted to hold its trend-setting interest rate at 0.5% in today’s announcement, citing weak employment and inflation growth.