Average Selling Price Of A Home In Toronto Surged 33.2% In March

Written by BNN.ca

The relentless surge in Toronto home prices is forcing Canada’s federal government finance minister, Bill Morneau, Province of Ontario counterpart, Charles Sousa, and Toronto Mayor John Tory to meet to discuss how they can cool down the red-hot market.

The same day (Wednesday) the Toronto Real Estate Board reported the average selling price of a detached property in the city of Toronto had surged 33.2% Y-o-Y to $1,561,780, after having soared 27.7% in February compared with the same month a year ago, Morneau sent a letter to Sousa and Tory on Wednesday in which he said:

“I am concerned that dramatic house price increases will have long-term implications for housing affordability and housing market stability.

A combination of low interest rates and rising home prices has encouraged some Canadians to take on high levels of debt to get into the housing market, making them more susceptible to changing economic conditions.”

Morneau is calling on Sousa and Tory to hold the meeting at “the earliest opportunity,” while citing concerns about market stability.

Via Twitter, Tory let it be known that:

I'm looking forward to meeting with @Bill_Morneau and @SousaCharles soon to discuss the Toronto housing market.

going on to say:

“It’s deeply concerning to me because not only are people losing hope of having a home – a rental or an ownership home, but they’re losing even just the mathematical ability to contemplate what they hope for. The dream of home ownership has to be kept alive.”

It is not just politicians who are extremely concerned:

BMO Capital Markets Chief Economist Doug Porter told BNN via email:

“Demand is nearly insatiable. Policymakers simply have to take steps to cool demand, with some haste. … We are now approaching the rarified air Vancouver was in a year ago.

I suspect many folks are being offered prices they never thought they would get in their wildest dreams and are cashing in. Some may be influenced by bubble talk, but I believe most people respond to their own circumstances and the incentives that are staring them in the face.”

Said James O'Sullivan, head of Scotiabank:

"Double-digit price increases are not sustainable and they're not healthy. This market has been going straight up for a very long time so it's going to come to an end at some point and it's a question of how it ends. We want to see it correct smoothly, we want to see a soft landing and what that would argue for is actions sooner rather than later.

Our core belief is that we need to move through this spring market. The spring market is everything in housing. If at the end of that spring market Toronto still has higher volumes, strong double-digit price increases, then we think it will clearly be time for further action and we will be supportive of that action."

RBC CEO Dave McKay is also sounding the alarm on runaway house prices in Toronto, saying:

“I’m increasingly concerned by the unhealthy combination of factors that have driven the market to the current point of strain. Long-time persistent supply and demand imbalances in the GTA and Vancouver, low interest rates, and speculative activity...are mixing to push prices up to unsustainable levels, stressing household balance sheets and locking many people out of the housing market.

Any single solution is unlikely to be successful on its own. A complex problem like this requires a multi-faceted solution, which addresses supply constraints and speculative forces and is mindful of the rate environment, which can be a moderating force."

He said access to affordable housing is becoming a “distant dream”, especially in Vancouver and Toronto...[and] encouraged all three levels of government to coordinate their strategies, “and to do so reasonably quickly.”