Toronto summers are hot, and so is activity in the real estate market.
Homes for sale in Toronto are flying off the MLS — sales increased 18.6 per cent across the Greater Toronto Area from last year. June to July also saw the highest level of seasonally adjusted month-to-month data in 2018, with sales up 6.6 per cent and prices up 3.1 per cent.
“We have certainly experienced an increase in demand for ownership housing so far this summer,” says Jason Mercer, director of market analysis for the Toronto Real Estate Board, in its July market report.
However, when we look at the MLS Home Price Index Composite Benchmark for July 2018, a more accurate measure of how home prices trend in a particular region than averages, we can see it was down slightly year-over-year by 0.59 per cent to $768,400.
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Meanwhile, across the country, the Real Estate Board of Vancouver (REBGV) reports that July’s residential housing sales in Metro Vancouver reached their lowest levels since 2000.
Data from the Vancouver MLS shows that property sales decreased 30.1 per cent year-over-year.
“With fewer buyers active in today’s market, we’re seeing less upward pressure on home prices across the region,” Phil Moore, REBGV president, says. “This is most pronounced in the detached home market, but demand in the townhome and apartment markets is also relenting from the more frenetic pace experienced over the last few years.”
That didn’t stop the benchmark prices from rising far higher than Toronto.
The overall benchmark price for residential properties in Metro Vancouver is currently $1,087,500 — a 6.7 per cent increase over July 2017 and a 0.6 per cent decrease compared to June 2018.
It’s still far more expensive to buy a detached home in the Greater Vancouver Area versus the Greater Toronto Area, with benchmark prices $1,588,400 versus $923,800, although it’s slighter cheaper in both areas that it would have been in July 2017.
The trend towards prospective buyers choosing to purchase condos is the same in both these megacities and units remain in high demand.
Benchmark prices for Vancouver condos grew in the double-digits from last year by 13.6 per cent to $700,500. Similarly, Toronto condo prices grew 8.3 per cent to $501,400.
Condo prices are likely rising far faster than single-family home prices because they are far more affordable.
Prospective buyers are likely unable to save and borrow enough to buy a detached house, which remain almost double the price of condos in both cities.
The new federal-bank regulations, which went into effect January 1 of this year, made it even harder to buy such expensive properties. Prospective buyers now must have an income that can support a mortgage of at least 5.34 per cent, no matter their actual contract rate. This has severely reduced the amount that banks can lend and has likely forced many borrowers into the hands of credit unions and private lenders, who are not subject to the new regulations.
Prospective buyers who wish who remain living in either Toronto or Vancouver have limited options.
Although Toronto remains cheaper, sales are far more robust. Vancouver still takes the crown as the most expensive city in which to live in Canada, but fewer people can afford to live there and sales are slowing.
The real estate boards in each city remain optimistic about slower, but steady price growth in the future.
Zoocasa.com is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse homes across Canada on the website or the free iOS app.