January has brought yet another spike in home prices as the Toronto Real Estate Board (TREB) reports in the Star that January saw a 22% year-over-year increase in the price for a home.
The average selling price was up $140,552 from a year ago, with the average selling price in the region being $770,745 in January.
Areas that saw more growth were low-rise, detached, semi-detached and town homes with 26-28% increases compared to last year. Even condos increased by 14.5% from the year before. It has been confirmed however, that there still is a relatively low number of listings in the market, half of what was available last year yet, the TREB still believes this year will see gains. Gains between 10-16% and single-family homes with the biggest demand.
Is this increase due to the amount of foreign buyers in our market?
A question that has been asked for some time now – we now have some data to provide an answer, for the time being. A recent article answers the above question as, no. TREB calculated that 4.9% of transactions involved offshore buyers – further proving that it is the lack of supply in the region, not foreign investors.
There are, however, real estate agents that challenge the above number. Some realtors can account that 20-30% of their business comes from foreign transactions.
This also causes a comparison of Toronto to Vancouver to be discussed, where they underestimated the amount of foreign ownership – which resulted in the tax that brought sales down 40% in January alone compared to a year earlier. People suspect the "Vancouver experience" is going to happen here.
In addition we now have a new President of the United States, Donald Trump. Take a look at our previous article addressing the Canadian real estate market amid a Trump takeover, where we discuss the market in 2017 and what might happen now that Donald Trump is president.
The findings were that Toronto was ranked 13th on the most unaffordable cities in the world list, prices have climbed 22% in Toronto, and Americans flooded the real estate pages in Toronto looking for family homes in the city, not vacation homes. Most importantly, it is too early to tell what will happen to our market now that Trump is in office.
With data showing there was minimal involvement with offshore investors, Americans looking for homes in Canadian cities now that Trump is president, and the very limited supply of homes in the city of Toronto – the fear is it will continue to increase because of the lack of supply and increase in demand.
All that is occurring in Toronto's market – the foreign investment, lack of supply, high demand, amount of money home buyers have on hand to initiate bidding wars and the seemingly never ending rise in home prices – William Strange, a professor of business economics at U of T can only sum it all up by saying, "it's the craziness of the market."
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