Despite calls for market corrections in Toronto and Vancouver, real estate prices continue to head upward in Canada’s two most pricey housing markets.
In Canada’s most populous area, the Greater Toronto Area, homeowners saw the average selling price rise into the double digits. The average selling price for all types of properties reached $649,599, up an impressive 11 percent in May 2015 compared to May 2014, just a year ago.
On the west coast in Vancouver, homeowners also saw impressive gains. The average selling price for all types of properties reached $684,400, up an impressive 9.4 percent in May 2015 compared to May 2014. Although Vancouver’s numbers aren’t as impressive as Toronto’s increase, it’s still remains Canada’s priciest real estate market.
Detached Homes in High Demand
If you’re looking for a detached home in Toronto or Vancouver, be prepared to pay an arm and a leg. In Vancouver, the average price of a detached home was $1,104,900 in May 2015, up an impressive gain of 14 percent year-over-year. In Toronto it’s even more costly to buy a detached home. The average price of a detached home was $1,115,120 in May 2015, up an impressive 18 percent year-over-year.
Not only are prices up, home sales are up, too. In Toronto, 11,706 properties were sold in May 2015. Not only is this a new record, it’s an increase of 6.3 percent compared to last year. Vancouver saw an even more impressive increase in the number of homes sold. In Vancouver, 4,056 homes change hands, an increase of 23 percent.
Shortage of Listings Driving Up Home Prices
What’s leading to these massive price gains? It’s the classic tale of demand and supply. While home sales were up, both cities saw listings drop by five percent.
There continues to be a chronic shortage of listings in Toronto and Vancouver, making multiple offer situations commonplace. First-time homebuyers priced out of the market are forced to consider less costly options like condos or renting.
Are we heading towards a real estate bubble? Despite calls from the International Monetary Fund and the Bank of Canada that our housing market is overvalued, it shows no signs of letting up. Unless we see interest rates or unemployment rates shoot up, expect housing prices to remain high. The bottom line is there just isn’t enough housing to keep up with buyer demand. Until that changes, expect home prices to keep going up.
With mortgage rates near record lows it’s a great time to buy. You just have to be a little creative. Instead of a house, consider buying a condo. If you’re dead set on a house, consider moving to an up-and-coming neighbourhood less likely to attract multiple offers.